UNILEVER

Introduction

Unilever:Unilever is a multi-national corporation, formed of Anglo-Dutch parentage

that owns many of the world's consumer product brands in foods, beverages,
cleaning agents and personal care products. Unilever employs nearly 180,000
people and had worldwide revenue of almost €40 billion in 2005.
Unilever is a dual-listed company consisting of Unilever NV in Rotterdam,
Netherlands and Unilever PLC in London, England. This arrangement is similar to
that of Reed Elsevier, and that of Royal Dutch Shell prior to their unified structure.
Both Unilever companies have the same directors and effectively operate as a single
business. The current non-executive Chairman of Unilever N.V. and PLC is Michael
Treschow while Paul Polman is Group Chief Executive. The company is widely listed
on the world's stock exchanges.

History & Origin

Unilever was created in 1930 by the merger of British soap maker Lever Brothers
and Dutch margarine producer Margarine Unie. It was a very logical merger, as palm
oil was a major raw material for both margarines and soaps and could be imported
more efficiently in larger quantities.
By 1980 soap and edible fats contributed just 40% of profits, compared with an
original 90%. In 1984 the company bought the brand Brooke Bond (maker of PG Tips
tea).
In 1987 Unilever strengthened its position in the world skin care market by acquiring
Chesebrough-Ponds, the maker of Ragú, Pond's, Aqua-Net, Cutex Nail Polish,
Pepsodent toothpaste, and Vaseline.
In 1989 Unilever bought Calvin Klein Cosmetics, Fabergé, and Elizabeth Arden, but
the latter was later sold (in 2000) to FFI Fragrances.
In 1996, Unilever purchased Helene Curtis Industries, giving the company "a
powerful new presence in the United States shampoo and deodorant market". The
purchase brought Unilever the Suave and Finesse hair-care product brands and
Degree deodorant brand.
In 2000 the company absorbed the American business Best Foods, strengthening its
presence in North America and extending its portfolio of foods brands.
In a single day in April 2000, it bought, ironically, both Ben & Jerry's, known for its
calorie-rich ice creams, and Slim Fast.

Core Business

Unilever’s core business is the food business. It is the no. 3 in the food business after
Nestle and Kraft foods.
Anglo-Dutch Unilever maker of Knorr soups, Hellmann's mayonnaise and Skippy
peanut butter, reported underlying 2006 sales growth of 3.8 percent in 2006. Within
that, its foods rose just 2.9 percent, while sales in the HPC unit, which sells soaps
and deodorants, grew 4.7 percent. "We expect that food growth will catch up
eventually with that of HPC, but we are not giving a timescale," Alan Jope, global
foods vice president for Unilever, said at the Reuters Food Summit in Chicago on
Wednesday. He highlighted two products that are spearheading its "vitality" program
toward healthier eating -- a yogurt-based "one shot" drink aimed at lowering
cholesterol levels and a soya-based fruit drink from South America.
One-shot yogurt drinks are now a 3 billion euro market in Europe, and Unilever
intends to launch a product containing plant sterols, which are claimed to lower
harmful cholesterol, on May 21 in the U.S. under its Promise brand at $1.00 a shot. It
has also launched its South American soya-based fruit drink in the UK under the
Adez brand, and this and a European Knorr Vie fruit-and-vegetable-shot drink are
also under consideration for launch into the U.S. market.

Sales Revenue & Value of Stocks

Unilever’s mission is to add vitality to life. It is estimated that people around the world
in 150 countries uses Unilever products 150 times a day. The 2006 sales revenue
was 39.6 billion pounds. Which came from the Americas 13.8 billion (36%), from
Europe 15.0 (38%) billion and from Asia/Africa 10.9 billion pounds (27%). Unilever
has approximately 206,000 employees working all over the world.

By 2010, Unilever plans to improve its financial standard by:

 Ungearearing free cash flow in the period 2005-2010 of €25-30 billion

 improvement in Return on Invested Capital
 Underlying sales growth of 3-5% p.a.
 Operating margin of over 15% by 2010 after normal restructuring
 Improving capital and tax efficiency

Value of Stocks:
Unilever PLC ordinary shares are listed on the London Stock Exchange and as
American Depositary Receipts in New York. Each ADR represents 1 underlying
ordinary PLC share. There are 1 714 727 700 NV ordinary shares in issue, each with
a nominal value of €0.16. There are 1 310 156 361 PLC ordinary shares in issue,
each with a nominal value of 31/9 pence. The equalization agreement between NV
and PLC is such that each NV ordinary share has the same rights and benefits as
each PLC ordinary share (Unilever NV ordinary shares are listed on the stock
exchanges in Amsterdam and as New York shares on the New York Stock
Exchange).

Manufacturing Globally

Unilever now owns about 400 brands, many of them local that can only be found in
certain countries. Unilever markets its products to 150 countries. Unilever has a
portfolio of brands that are popular across the globe - as well as regional products
and local varieties of famous-name goods. This diversity comes from two of their key
strengths:
 Strong roots in local markets and first-hand knowledge of the local culture.
 World-class business expertise applied internationally to serve consumers
everywhere.
The brands fall almost entirely into three categories:
 Food & Beverages,
 Home
 Personal Care

Major Selling Products

One of the largest consumer goods firms in the world, Unilever produces numerous
brand name foods, personal care items, and home care products.
About 54 percent of revenues are generated in the foods sector, which includes such
brands as Knorr soup mixes, bouillons, and seasonings; Amora, Calvé, Hellmann's,
and Wish-Bone dressings; Bertolli olive oil and other Italian foodstuffs; Rama, Blue
Band, and Country Crock margarines; Becel and Flora heart-healthy foods;
Heartbrand, Ben & Jerry's, and Breyers ice cream; Lipton tea; and Slim-Fast weight-
management products.
Approximately 28 percent of sales come from the personal care area. Brands include
the Lux female beauty line, Dove and Lifebuoy soap, Pond's skin care products,
Rexona deodorants, Suave and Sunsilk hair care items, Signal and Close Up oral
care products, and the Axe male grooming line, as well as such miscellaneous
brands as Q-Tips and Vaseline
Unilever's third major sector is that of home care products, which is responsible for
about 18 percent of turnover; brands include Omo, Skip, Wisk, Surf, and All laundry
detergents, Comfort and Snuggle fabric conditioners and softeners, Sunlight dish
detergents, and Cif and Domestos household cleaners. Unilever maintains more than
300 production facilities around the world and has operations in more than 100
countries. About 34 percent of revenues originate in Western Europe, 22 percent in
North America, 18 percent in the Asia-Pacific region, 13 percent in Latin America, 9
percent in Africa, the Middle East, and Turkey, and 4 percent in central
Europe/Russia.

Competition

Top Unilever Competitors:

Company Location
Proctor & Gamble Cincinnati,OH
Kraft Foods Northfield, IL
Nestle Vevey, Switzerland

Strategy

“With confidence in our ability to grow we launched a renewed, bold vision for the
company – to double our size while improving our environmental footprint. With our
portfolio of brands, presence in emerging markets and long-standing commitment to
shared value creation, we believe your company is well placed to deliver on this
ambition.”
Where they will win

Growth priorities
Their ambition is to win share and grow volume profitably across their categories and
countries – and they believe they have the tools in place to do so. They have a
portfolio fit for growth, with strong brands and many leading category positions.
Geographically, their outstanding presence in the emerging markets leaves them well
positioned to win where much of the future growth will be. Yet, they are also
determined to grow in the developed world, which represents around half of their
business and where the bulk of the world’s wealth will remain for many years to
come.

How they will win

Winning with brands and innovation

Brands and innovation are at the heart of their business model. They aim to offer
abroad portfolio those appeals to consumers with different needs and budgets.
Unilever brands must also offer product quality that is recognised as superior by their
consumers and supported by excellent marketing. Meanwhile, their innovation
programme is focused on being ‘bigger, better, faster’. This means leveraging
technology to create bigger, better innovation platforms that are then rolled out faster
to multiple markets. Brands and innovation are at the heart of everything they do.
They develop their products to keep pace with changes in consumer lifestyles and to
appeal to people at all income levels. Success means getting bigger and better
innovations into the market faster, supported by the very best marketing.

Superior products
Their aim is to give people a great experience when they use their brands – better
than the competition. They are investing in improving product quality and making
stronger functional claims. They are also focusing on design, packaging, marketing
and advertising, in order to get their brand benefits across more persuasively.
Take Knorr Stockpot bouillon. Using a unique jelly technology that delivers
homemade taste and quality, this product is helping people create a special meal at
home instead of eating out. A major success in the UK where it enabled Knorr to
become market leader in stocks, Stockpot (marketed under different names in
different countries) is also performing well in Belgium, Greece, Ireland and Poland. It
helped create the bouillon category in China and they are now rolling it out to other
markets.

Widespread appeal
Product superiority is essential, but they also need to offer a broad range of choice
which meets differing consumer needs and price points wherever they operate.
In the UK, understanding that consumers are looking for value without compromising
on quality, and recognising the importance of fragrance in communicating a product’s
benefits, they developed a range of liquid concentrates for Surf detergent with added
essential oils, resulting in 29% growth.
In Russia, despite a severe economic recession, they achieved growth of more than
20% in tea sales by offering choice across multiple price points with three distinctive
brands – Lipton, Brooke Bond and Beseda.
And in India, where water quality remains a major concern, the breakthrough
technology of Pureit, our in-home purification system, is providing safe and affordable
drinking water with complete protection from the water-borne germs that cause
diseases. In 2009, Pureit provided safe drinking water for more than 15 million
people in 3 million households in India.

Bigger, better, faster innovations

Successful innovation is based on deep consumer insight. The balance they seek to
achieve is to marry global strength in R&D with local knowledge of people’s habits,
tastes and behaviours.
To grow at the rate they want to focus investment on products that can work globally
rather than on launches in just a few countries. They have also doubled the number
of big projects they are working on. They are already seeing results. They have rolled
out Axe Dark Temptation deodorant to 56 markets, Lipton Pyramid fruit tea bags to
38 markets and Clear shampoo to 35 markets.
For a product to work at a global level, it needs to address unmet needs with superior
technology and a clear consumer concept.
R&D must deliver breakthrough science in areas that really matter to consumers,
with products that do what they claim. Success on this scale requires strict priorities
and big ideas.
Within R&D, part of prioritising is getting the balance right between the short and the
long term. With an eye to their future growth plans, during 2009 they developed a
more robust process for fuelling their longer-term innovation pipeline. Called the
Genesis Programme, it spans our foods and home and personal care categories and
focuses on the breakthrough ideas that they expect will deliver the biggest wins.
From 2011 they should begin to see some of these innovations in their products.
They continued to invest substantially in R&D, despite the economic environment. In
2009, they opened a new R&D centre in Shanghai.
Located in a country which is increasingly recognised as a world leader in developing
high-end innovations, the new centre further underscores their commitment to driving
growth through R&D. They also started to leverage the power of their global network
of R&D labs by getting them working interdependently on key projects.
They put in place more rigorous planning processes to make sure that the right level
and quality of resource is put behind the activities to ensure the projects succeed.
And they have stepped up their focus on a number of areas identified as critical to
success such as open innovation, clinical and patents.

Winning in the market place

The biggest opportunity for Unilever and their customers’ lies in growing the size of
their categories, which they will strive to achieve through innovation and market
development. They will further enhance and broaden their relationship with
customers – working together on areas of mutual benefit such as consumer
research, shopper behaviour and merchandising. To sustain winning customer
relationships and to enable growth, they will also need to be consistently brilliant at
customer service and in-store execution.
Their biggest growth opportunity lies in expanding the markets in which they
compete. In developing and emerging countries there is huge potential for future
growth as more and more people start consuming personal and household products
for the first time. To realise this potential, they will need to partner with their
customers in both the developed and developing markets.
Lead market development
The world’s population, currently 6.8 billion, is set to grow to 7.7 billion by 2020.
Today, 5.9 billion live in developing and emerging markets – countries such as Brazil,
India and Indonesia where Unilever has deep roots and a wide presence. They
already reach many more consumers than their competitors in these markets.
Market development is about developing and growing categories.
There are three ways of doing this:
 more users (increasing market penetration);
 more usage (increasing consumption);
 more benefits (getting consumers to buy higher value products).

Take Axe. In recognising that fragrance is a major reason why people choose one
brand over another, new fragrance launches are helping to increase market
penetration, introduce new users to the brand and ensure their product mix remains
up to date.
This, in turn, has helped Axe become the world’s leading male deodorant and shower
gel. Putting market development into practice requires a rigorous, consistent
approach across all our categories. During 2009 their global category development
teams produced market development models for every category. These models are
now with their country teams who are using them as the basis of plans for their local
markets. This approach has already shown excellent results in many of the markets
in which they operate.

Win with winning customer

There is a growing trend in the retail industry towards consolidation, with fewer but
larger retailers. Thanks to our global scale and local knowledge, Unilever is ideally
placed to help those customers achieve their own growth ambitions.
In 2008 they opened in New Jersey the first of a network of customer insight and
innovation centres to work directly with retailers. The centre covers everything from
merchandising and store layout, to displays and packaging. Through the centre, they
work with customers to design and test concepts without going to the expense of real
in-store pilots. Since opening, the centre has generated significant growth
opportunities. Their London centre has since opened and they plan to open three
more in 2010 in Paris, Shanghai and Săo Paulo.

Be an execution powerhouse
Market development and great relationships with customers will only be points of
advantage if they execute with excellence.
This is not a complicated concept. It is about the everyday disciplines of ensuring that
they are delivering to their customers the products they want, in the quantities they
ordered at the time they are needed. This involves having a customer-focused
approach across their brand building, customer development and supply chain
teams.
During 2009 they focused much more closely on ‘sales fundamentals’, a set of
company-wide measures covering every aspect of their in-store presence. They have
performed well against these measures, which have been one of the many drivers in
improving customer service in most of their key countries.
The detail of what works in one type of store won’t work for all, however. A
superstore in the US is very different from a local retailer in a small town in China,
both in terms of the products it carries and the way those products are sold. But for
each type of store, by channel and geography, there is a perfect concept – namely,
what the shop would look like if it were the perfect sales vehicle for their categories
and brands.
They developed the perfect store concept in the AAC region (Asia, Africa and Central
& Eastern Europe) in early 2009. They began implementing it in modern trade outlets
across the region, focusing on the region’s largest four categories – skin cleansing,
hair, fabric cleaning and tea. In some smaller outlets, they even succeeded in
executing the transformation overnight, taking the competition by surprise and
maximising the impact of the change.
Over the next few years their aim is to continue implementing the perfect store
concept across the AAC region, while in the coming year, the concept is being rolled
out around the business.

Winning through continuous improvement

They will aim to reinforce their continuous improvement philosophy by further
developing a customer and consumer-led, agile value chain. their focus will be in
three areas. They will prioritise speed and flexibility in the supply chain to deliver
growth. Secondly they will leverage their global network capabilities and scale more
aggressively. Finally they will work to get a better return on their advertising and
promotional expenditure – one of their most significant areas of cost.
Delivering sustained, profitable growth requires a philosophy of continuous
improvement. This means being fast and flexible in the supply chain while keeping
costs competitive. It will also require us to make the most of their scale and aim for
the best return on every euro they spend on advertising and promotion.

Fast and flexible – and increasingly competitive

Winning in the market is about being fast and agile to meet the changing needs of
today’s customers and consumers. Of course, being competitive on cost is vital, but
rather than having a purely cost-based agenda for their supply chain, they have
widened their focus to ensure that they are more responsive to the constantly
changing needs of their customers.

Delivering significant value

During 2009 they launched a single strategy for the supply chain – One Unilever
Supply Chain – putting customers and consumers at the heart of everything they do.
The principal objectives for their supply chain are to deliver top-quality products with
world-class service at a competitive cost. It’s a big ambition that:
 supports top-line growth through speeding up the roll-out
 of global launches;
 ensures their products are constantly on the shelf;
 increases profits by simplifying their structure and reducing waste;
 improves cash flow by reducing stock and providing better payment terms.

The rewards are significant. In 2009, as part of this, their One Unilever Supply Chain
team contributed significantly to delivering €1.4 billion in savings.

The advantages of global scale

Unilever has a global reach wider than many of its competitors. This gives them a
tremendous opportunity for improving efficiencies by leveraging their scale. They are
doing this in three critical areas:
 procurement;
 manufacturing;
 back office services.

Single procurement strategy

Having a single, global procurement strategy means that where bigger is better, they
are getting the benefits. For many items, buying globally gives them economies of
scale. For example, significantly reducing the number of tomato ingredients that are
used in their products from 300 to just 39 enhanced the consistency of product
quality and, at the same time, substantially reduced costs.

Regional sourcing operations

In manufacturing, they believe that most of the economies of scale are to be found at
the regional level. To capture these, they are creating three regional sourcing
companies. These are located in Singapore and Switzerland, where the Americas
sourcing company will co-locate with the European company.

Internal services under one roof

Even with activities such as IT, travel, office services, accounts payable and
accounts receivable, there are big opportunities to leverage global scale. So in 2009
they set up a new business unit, Unilever Enterprise Support (UES). It will be
operational in April 2010 and will bring together many of these activities as a key part
of their initiatives to drive down costs.

The best return on brand and customer investment

Unilever is the second biggest advertiser in the world. Improving the return on their
brand and customer support is one of the biggest things they can do to achieve
growth.
There is a tendency to think that analysing this kind of return on investment is some
form of mystery. They believe it is simply about being rigorous in applying their best
evaluation and development techniques.

Everyday disciplines done brilliantly

First, they decide on the best ways spend their of investing. They do this on three
levels:
 allocating investment across geographies, categories and brands;
 allocating investment across particular projects and product launches;
 allocating spend locally across marketing channels and promotions.

Before they invest, they use a number of tools to answer the questions: how much
should they be investing; and how can they maximise its effectiveness? During and
after the investment, they use other tools to look at whether it is working, how it could
work better and what to do next. This is not about replacing creativity with analytics
and measurement; it is about doing both brilliantly.
Through focusing on these basics, they are already seeing great improvements in
return on investment in a number of areas. For example, their US foods business has
increased returns by over 45% in six years, helped by its use of econometric
modelling.

Future trends
Looking ahead, there are two big themes that will dominate their media planning:
how they make best use of digital media and, given the rise in prominence of global
retailers, how they can make the most of in-store investments.

Winning with people

It is vital that they have the talent and organisation in place to match their growth
ambition. Across the business, they are therefore looking ahead at what they need to
achieve, and aim to equip ourselves with the necessary people, skills and capabilities
to get there.
They also know that engagement and a culture based on living their values are
essential for keeping the best people. They believe their operating framework allows
them to balance scale and global expertise to develop successful products with the
local consumer intimacy needed to market and sell them.
Doubling in size is a challenging prospect. From a talent and organisational
perspective, it cannot be business as usual. They will have to have in place the
people and structures necessary to manage on a larger scale.
Their operating framework seeks to combine global scale, power and strength with
local consumer intimacy. Taking advantage of this in all their chosen markets and
categories – as we are already doing in many areas – will be critical in ensuring our
success.
To do this we need to have a team capable of delivering, and to offer the career
potential and working environment that make Unilever the best place to be.

Developing a team fit for growth

Some of their major markets are doubling in size every five to six years, while their
own growth ambitions mean that having enough people with the right skills is a
challenge in itself. Getting the right number and quality of people in the pipeline for
the future does not happen by accident. It requires an understanding of what is
already in the business that can be built upon, and what will be needed in the future
as markets develop.
In 2009 they launched their ‘talent and organisation readiness programme’, which will
do just what it says: make sure their organisation and their talent are ready for
growth. They are assessing those areas of the business most crucial to their strategy
to define their specific goals, and whether they have the structure and the talent to
deliver them. Where they identify gaps, they focus on developing targeted solutions.
This may involve one or more of the following:
 changing organisational structures;
 revising their recruitment strategy and approach;
 reviewing their retention schemes;
 improving core processes such as decision making;
 focusing on culture and employee engagement;
 using development and training programmes to build capability levels.

So far they have carried out four pilot programmes in China, Indonesia and Germany,
and in their skin category. These have given them important new insights.
A diverse team for the widest range of consumers
An important part of developing the Unilever workforce of the future is diversity. They
need a diverse team – across gender, nationality, race, creed, culture – to be able to
connect with the widest range of consumers and to take their performance to a
higher level.
They are already making progress. Their Board of Directors comprises six
nationalities and the nine members of the Unilever Executive team come from six
different countries. This combination delivers a wealth of experience in emerging
markets which is critical to their future business success.
In terms of gender, the number of women in senior positions has increased. For
example, the proportion of women now at vice president level has gone up by around
one third since 2007.

A place to succeed
As important as development programmes and organisational structures is having a
performance culture that rewards people and teams who deliver. Only by inspiring
their people and motivating them to succeed will we deliver their growth ambition.
People, integrity and values have always been central to Unilever, and will continue
to be so. But within that context they are determined to become faster, more focused
and more competitive. In 2009 they updated some of their performance management
tools, for example introducing a global performance and talent management system.
Measuring cultural change is an inexact science, but they put great effort into
engaging with employees to find out whether they understand the company’s vision
and their role within it, what their views are about Unilever, and what they believe
needs to change for them to achieve their ambitions. In 2009 they began an
employee engagement programme that will ensure employees are involved in
Unilever’s vision and plans for the future.