Unilever
Unilever is a prominent Anglo-Dutch consumer goods conglomerate, established in 1929 from the merger of British soap maker Lever Brothers and Dutch margarine producer Margarine Unie. The company, headquartered in London, operates in over 190 countries and offers approximately 400 brands, primarily in personal care, home care, and food and beverages. With an annual revenue of around $63 billion in 2023, Unilever has successfully expanded its reach through acquisitions, becoming a significant player in various markets.
Throughout its history, Unilever has experienced both triumphs and challenges, including a restructuring phase in the 1990s that focused on centralizing operations and developing a cohesive global strategy. The company emphasizes sustainability, having launched the Sustainable Living Plan in 2010 to minimize its environmental impact and improve health outcomes, particularly in emerging markets. Despite facing shifts in consumer preferences and competitive pressures, Unilever remains a key influencer in the consumer goods industry, adapting its strategies to align with market demands and sustainability goals. As of early 2024, Unilever is exploring the separation of its ice cream business to sharpen its focus and drive growth.
Unilever
The Anglo-Dutch consumer goods conglomerate was formed in 1929 through a merger between British soap maker Lever Brothers and a Dutch margarine making company, Margarine Unie. Though long listed on stock exchanges as two separate companies (Unilever PLC and Unilever NV), Unilever has always had a common board of directors, and in 2020 a corporate legal unification process ended with Unilever PLC serving as the sole parent company going forward.
The company had approximately 400 brands in 2024, and its focus has been in the major product categories of personal care, home care, and food and beverages.
With an annual revenue of about $63 billion in 2023, according to Forbes, much of the company's success has been due to its long-held strategy of expansion through acquisitions. Over the years, the company has built economies of scale that enabled the company to persevere in tough markets. The company has also had a major first mover’s advantage in emerging or developing markets. Unilever operated in more than 190 countries. Even before the merger of 1929, Lever Brothers had established a thriving soaps and detergent industry with successful brands such as Lux and Lifebuoy.
Company Information
Date Founded: 1929
Industry: Consumer goods
Corporate Headquarters: London, England
Type: Public
History
Unilever expanded by acquiring highly operational brands. In 1919, Lever Brothers bought Crossfield of Warrington. In one of Unilever’s first major forays into the food business, Unilever bought out the owner of Frosted Foods brand Bachelor Foods in 1943. In the 1950s, Unilever shifted focus to personal care and launched successful brands such as Signal, Dove, and Sunsilk. But acquisitions have not always been easy for Unilever. In 1985, Unilever made a hostile bid to buy family-owned company Richardson-Vicks, Inc, the owner of cold remedy brands Vicks VapoRub and Nyquil. But the owners of the target company fought takeover attempts from Unilever. Negotiations did not go well. Unilever lost the deal to American multinational Procter & Gamble (P&G). But in 1987, Unilever more than made up for the loss by buying out American personal-care company Chesebrough-Ponds, for $3 billion in cash. With brands like Pond’s and Vaseline, Unilever became the fourth-largest skincare company in the world by the end of the decade.
However, between the ’70s and ’80s, a decentralized mode of operations, lack of cohesive regional marketing strategies, and managerial incompetence in some regions led to substantial loss in market shares for Unilever. At the same time, competitors like P&G and Nestle were growing with a strong regional focus. For example, when P&G launched detergent brand Tide in Europe and the United States, Unilever, an industry leader in the detergents business, lost about three-quarters of its market share in the United States and Britain due to a lack of centralized strategic response to competition and poor innovation.
In the 1990s, Unilever began a major restructuring process to create a more centralized managerial framework and to start building Unilever as a global consumer goods brand. Selling companies that were no longer central to its core businesses was the first step in the process.
In the food business, Unilever acquired frozen desserts brand Breyers from American firm Kraft Foods in 1993 and the major American ice cream company Ben & Jerry’s in 2000, making Unilever the world’s largest ice cream company. But one of the key buys for Unilever was acquiring Bestfoods, the owner of brands such as Knorr, Skippy, and Hellman’s, for $24.3 billion in 2000, one of the largest cash transactions in business history that made Unilever the world’s biggest food company.
Having emerged with a clear global strategy by the turn of the millennium, Unilever launched the Vitality program, which would be a key marketing strategy across all product categories. The company’s new mission was to "add vitality to life" and would "meet every day needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life." While the personal care and home care products division gained from the strategy due to the focus on health and sustainability, the foods division struggled. The foods business faced two main challenges: coping with swiftly changing consumer behavior against fatty and unhealthy foods and a matured foods industry in Europe and the United States, where Unilever sold most of its food and beverage products. Post 2005, the company chose to channel resources towards innovations in personal care divisions with growth focus on emerging markets.
In the 2010s, Unilever sold off several of its best-known food brands, passing off the Skippy peanut butter brand to Hormel Foods, the Slim-Fast brand of nutritional shakes and other meal replacements to Kainos Capital, two salad dressing brands to Pinnacle Foods, its meat snacks business to Jack Link's, and its pasta sauces business to Mizkan, among other sales. It also split off its food spreads business, including margarine brand I Can't Believe It's Not Butter, into a standalone company in 2015. Its acquisitions during this period were more modest; the most noteworthy of these were Talenti Gelato, the largest US-based gelato brand, in 2014 and the Dollar Shave Club, a startup selling personal grooming products for men, in 2016. The smaller food production company Kraft Heinz made an offer to purchase Unilever for $143 billion in February 2017; Unilever declined. Toward the end of the decade, the company returned to its more aggressive acquisition behavior, picking up multiple personal care and cosmetics businesses and brands in 2017. That year it also acquired two tea brands, an ice cream business, and an organic foods business.
More than half of Unilever’s overall sales in the twenty-first century have come from the emerging markets in personal care. Unilever was among the first companies to exploit emerging markets in India, Turkey, and Latin America, which later became the company’s profit centers as competition in Europe and America got tougher. One of Unilever’s strengths was to persevere in markets that had unstable governments or had economic issues. As a result, when the situations normalized, Unilever was already there as an established consumer goods company to reap the benefits.
In 2018, it was announced that Unilever would be consolidating its headquarters in the Netherlands after decades of maintaining dual headquarters there and in England. The company stated that having a single headquarters would make it easier to conduct mergers and acquisitions and that the Netherlands was chosen because that side of the business was larger than the British side, denying speculation that the move was related to the United Kingdom's decision to exit the European Union. However, by 2020 the company announced that it had changed course with a decision to consolidate under its British side and London headquarters, a process that officially came to completion later that year. Emphasizing that operations and staffing in the Netherlands would continue as usual, the company stated that this represented the best move for the flexibility and simplicity of the company.
In an attempt to fuel growth by sharpening its focus, Unilever announced in early 2024 that it planned to conduct a separation of its ice cream business, which included the Ben & Jerry's brand.
Impact
About two billion households use a Unilever product every day, either for personal care or home care. It became increasingly important for a company of the size of Unilever to be environmentally responsible, given the scale of its use of natural resources for its production needs. In 2010, CEO Paulus Polman launched the Sustainable Living Plan aimed at minimizing Unilever’s environmental footprint and increasing long-term profitability. Some of the goals in the plan included helping about one billion people achieve better health and well-being, especially in emerging countries, and reduce the environmental damage done by its products by half. Some of the steps taken in this direction produced good results. For example, Lifebuoy launched a campaign in countries such as India, Bangladesh, Pakistan, and Indonesia to encourage handwashing among the rural poor, which helped decrease instances of diarrhea by 25 percent. Polman also looked at ways to rationalize palm oil production, a major culprit in increased deforestation. Unilever has been reported to have sourced about 47 percent of its supplies sustainably. Under continued scrutiny and a new CEO starting in 2023, the company announced plans to reconfigure its sustainability strategies and goals.
Bibliography
"Company Profile for Unilever." The Guardian, 11 Oct. 2010, www.theguardian.com/sustainable-business/profile-unilever. Accessed 4 Apr. 2024.
"Completion of Unilever's Unification." Unilever, 30 Nov. 2020, www.unilever.com/news/press-and-media/press-releases/2020/completion-of-unilevers-unification/. Accessed 4 Apr. 2024.
Crudele, John. "Unilever Sets Deal for Pond’s." The New York Times, 1 Dec. 1986, www.nytimes.com/1986/12/02/business/unilever-sets-deal-for-pond-s.html. Accessed 1 May 2023.
"In Search of the Good Business." The Economist, 9 Aug. 2014, www.economist.com/news/business/21611103-second-time-its-120-year-history-unilever-trying-redefine-what-it-means-be. Accessed 1 May 2023.
Johnson, Tom. "Unilever Nabs Bestfoods for $24.3B." CNNMoney, 6 June 2000, money.cnn.com/2000/06/06/deals/bestfoods. Accessed 1 May 2023.
Jones, Geoffrey, and Peter Miskell. "Acquisitions and Firm Growth: Creating Unilever’s Ice Cream and Tea Business." Business History, vol. 49, no. 1, 2007, pp. 8–28.
Jones, Geoffrey. Renewing Unilever: Transformation and Tradition. Oxford UP, 2005.
Lipin, Steven. "Unilever to Sell Chemical Unit To ICI for About $8 Billion." Wall Street Journal, 7 May 1997, www.wsj.com/articles/SB862959397479024500. Accessed 1 May 2023.
Team, Trefis. "The Rise of Personal Care in Unilever’s Portfolio." Forbes, 1 June 2015, www.forbes.com/sites/greatspeculations/2015/06/01/the-rise-of-personal-care-in-unilevers-portfolio. Accessed 1 May 2023.
Thain, Greg, and John Bradley. "Unilever." FMCG: The Power of Fast-moving Consumer Goods. First Edition Design, 2014, pp. 434–445.
"Unilever." Forbes, 2024, www.forbes.com/companies/unilever. Accessed 4 Apr. 2024.
"Unilever to Accelerate Growth Action Plan through Separation of Ice Cream and Launch of Productivity Programme." Unilever, 19 Mar. 2024, www.unilever.com/news/press-and-media/press-releases/2024/unilever-to-accelerate-growth-action-plan-through-separation-of-ice-cream-and-launch-of-productivity-programme/. Accessed 4 Apr. 2024.
"Why Unilever Is Abandoning Its London Base for Headquarters in the Netherlands." Fortune, 15 Mar. 2018, fortune.com/2018/03/15/unilever-uk-headquarters-netherlands. Accessed 1 May 2023.