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Corporate Focus Foods: Unilever Annual 2002
Making Time Marketing Ltd, Jan 2004, Pages: 205
The Corporate Focus Foods Annual 2002 provides a detailed strategic overview of Unilever’s development, particularly in the Foods category, until the end of 2002. The analysis covers strategic developments alongside events and developments in operating countries and within product categories.
Corporate Focus comments:
- 2002 was an important year for Unilever as it showed how the recent changes made by the company are beginning to have an impact on the top-line results.
- Following the three major acquisitions made in 2000, the businesses have been integrated and Unilever is starting to develop brands like Knorr and Hellmann’s into major global brands that provide platforms for new product development.
- The programme of disposals has been highly active as Unilever has disposed of business that are seen as non-core, unprofitable or having little global scope for development.
- As well as providing “power” brands, all three major 2000 acquisitions importantly strengthened Unilever’s presence in the USA, where the group has now achieved critical mass. The importance of the US to Unilever’s turnover has increased.
Unilever was founded on soap and margarine - both products essentially sharing the same raw materials – with diversification into other business areas starting in the midfifties. The company’s geographical profile spans the globe, with the majority of its
operations in Europe (40% of sales) and North America (26%). However, Unilever also has a growing presence in developing and emerging markets where the major opportunities for long term growth and profitability lie: Asia - Pacific (16%), Latin America (11%), and Africa/Middle East (7%).
The Unilever group is made up of the two parent companies - Unilever NV (based in Rotterdam) and Unilever PLC (London). Since 1930, NV and PLC have acted as practically one entity, with the same set of directors and united by a series of agreements which state that all shareholders participate in the wealth of the whole business. Unilever NV and Unilever PLC’s worldwide subsidiaries agree to co-operate
with each other in every area of business and in terms of information technology.
There are three fundamental evolutionary phases in the company’s history to date. The first was the establishment of a tightly focused worldwide, and vertically integrated, soap and margarine business. The second phase started in the mid-fifties when rapid growth in the Western world resulted in increased competition and lower margins in the company’s traditional categories. Unilever’s strategy was an active diversification programme through acquisition. The vigour with which this was pursued, while successfully introducing the company into valuable new categories, also brought in a lot of peripheral activities. The third phase, dating back to the eighties and in which the company is still heavily involved, is a massive, ongoing rationalisation, restructuring and refocusing of its entire worldwide operations. In effect, Unilever is reinventing itself. The pace of this rationalisation has been accelerated with the implantation of Path to Growth in 1999. This is designed to lead to greater profitability through focusing resources on 400 leading brands, rather than the considerably larger number that Unilever previously marketed. In addition, the company has been actively disposing of non-core interests. This strategy is already showing signs of success.
Unilever is the third largest food producer, and the second largest detergent company in the world. Unilever also plays a leading role in the more fragmented, but fast growing, personal products area. Unilever holds a global number one or two position in its markets in core product categories. Foods make up the majority of Unilever’s portfolio, accounting for 56% of total sales and 44% of operating profits in 2002.
Home Care & Professional Cleaning represent 18% of turnover and Personal Care 25%.
Unilever’s thirteen core business sectors are: ice cream, tea-based beverages, culinary products, hair care, skin care and deodorants (all with superior growth potential);spreads, oral care, laundry care and household care (steady growth); and frozen foods, fragrances and professional cleaning (selective growth).
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