The new chief executive of FMCG giant Unilever has set out a new strategy to deliver “faster growth” after admitting the FMCG had “underperformed” in recent times.
Hein Schumacher disclosed the plans, which he has been working on since taking over from his predecessor Alan Jope in January this year, in a presentation to shareholders yesterday (26 October).
Unilever’s strategy is of keen interest to the marketing community not just because of its $7.3 billion+ annual budget but also because it is one of the pioneers of brand purpose marketing, which was brought to the fore by Jope’s predecessor Paul Polman during the 2010s.
Schumacher has to an extent cooled on the trend, with his presentation diagnosing that the company has been guilty of “force-fitting purpose in every brand”, although on the other hand he claimed that “when done well with credibility, brand purpose can be highly effective”.
It appears that brand leaders will be allowed to decide for themselves whether their brand needs an overt purpose.
“Brands will be encouraged to continue social purpose or environmental purpose as part of their overall brand proposition. But we will not force fit this across the entire portfolio. For some brands, it simply won’t be relevant,” Schumacher said.
The CEO also plans to boost Unilever’s investment in marketing as well as in R&D, saying it will “increase the absolute level of brand and marketing investment just as we did in 2022 and are on course to do in 2023”.
The company invested €7.8 billion ($8.2 billion) in 2022 compared to €6.9 billion ($7.3 billion) in 2021. Unilever's marketing investment had been on a downward trajectory since 2017 when it invested €7.6 billion ($8 billIon).
“We will ensure that our brand and marketing investment spend is more focused with more deliberate allocation behind bigger platforms, more consistent, fully funding our power brands, more digital and more effective increasing returns of marketing spend,” he said.
The power brands Schumacher refers to number 30 in total and include Dove, Lynx/Axe and Ben & Jerry’s. They have been dubbed power brands because they drive 70% of Unilever’s business, which is comprised of 400 brands.
Unilever’s new chief growth and marketing officer, Esi Eggleston Bracy, who joined yesterday, will lead its marketing investment. She replaces Conny Braams, chief digital and commercial officer, who left in May after nearly 34 years with the company.
In a further change of course from Polman’s strategy Schumacher talked about the next phase of Unilever’s sustainability journey. Polman made a big splash with long-term sustainability targets set out in a 2013 initiative called Project Sunlight that was backed by a high-profile marketing campaign.
Schumacher underscored that sustainability permeates all aspects of the business, but “everything we do in this area must have material impact for the benefit of Unilever as well as for the environment and the societies we serve. The best way we can do that is by radically focusing our sustainability efforts.”
Rather than long-term “aspirational goals” Unilever will “short-term our work” by setting “real steady meaningful progress on the big issues. Quarter on quarter, year on year.”
He added: “We’re not stepping away from sustainability, we’re stepping into it in a different and I believe more impactful way.”
‘Unilever stretched its desire to be purposeful far too broadly’
One observer who welcomes Schumacher’s change of emphasis on purpose is Chris Norman, CEO and founder of Good Agency.
“Unilever stretched its desire to be purposeful far too broadly,” he said. “By focusing their attention on those brands with true purpose, they will increase the value and authenticity of those brands.
“Far too many brands are claiming purpose without any evidence or demonstration of their commitment. Unilever’s business as a whole needs to continue to be driven by purposeful ambitions to have a positive impact on society and the environment, but not all their brands should be purpose-driven.”
Norman believes that brands should only ever communicate purpose if they can clearly communicate thier positive impact on a specific and relevant social and/or environmental issue.
“That is how value is created for the brand, the business, the individuals who engage and wider society,” he insists. “Far too many brands feel they can communicate purpose without those foundation stones, and that creates no value and at worst it damages the brand's reputation.
‘Trend for management to describe marketing as an investment’
Ian Whittaker, founder and managing director of Liberty Sky Advisors, added that Schumacher’s remarks “reinforce the recent trend we have seen from top managements at major listed companies, such as Coca-Cola and Tesco, saying that marketing is an investment not a cost and that it has played a central role in driving top line growth”.
“I would say it reinforces the idea of marketing as intangible capex ie just as firms invest in physical plant to build long term sales, they do the way in marketing to boost top and bottom line growth,” he said.