Shauna Lewis
Jan 13, 2022

Unilever has 'lost the plot' over sustainability messaging, says major shareholder

British fund manager Terry Smith said FMCG company should be "focusing on the fundamentals of the business" rather than defining the "purpose of Hellmann's mayonnaise".

Unilever: Accused of 'losing the plot' by shareholder
Unilever: Accused of 'losing the plot' by shareholder

One of Unilever’s major shareholders has criticised the company after it performed badly for his fund, arguing its “publicity displaying sustainability credentials” meant it had "lost the plot".

British fund manager Terry Smith, founder of fund manager Fundsmith, cited examples including Unilever's refusal to supply Ben & Jerry’s ice cream in the West Bank—Palestinian territory occupied by Israel. He also went on to mention Unilever’s food waste campaign for Hellmann’s, “Cook clever, waste less”, aimed at tackling food waste in the UK.

In a letter to investors, Smith wrote: “A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert—salads and sandwiches).”

Ian Whittaker, Campaign columnist and founder and managing director of Liberty Sky Advisors, suggested that Smith's comments were sparked by "frustration, there’s no doubt about it".

He continued: “But he [does put] that it's just a case of management not focusing on the right things. This is not him at the moment pushing for management change, but it is making a suggestion to them that maybe they ought to concentrate more on the bottom line.”

He noted Smith’s responsibility to his investors—who will have observed Unilever's shares fall around 9% in the past 12 months—adding: “Even if you get 5% of your customers who are essentially annoyed at what is going on, then that has an impact.”

In his letter, Smith argued that Unilever should be "focusing on the fundamentals of the business", but ultimately concluded that its “strong brands and distribution will triumph in the end”.

Fundsmith Equity Fund owns around £888 million of Unilver stock and is a top 10 shareholder in the brand owner. The FMCG giant was one of Fundsmith's bottom five performers, a list that also included PayPal and Brown-Forman.

Unilever is one of the world’s largest advertisers and spent 7.1 billion euros (US$8.3 billion) on brand marketing investment last year, according to its annual financial report.

Unilever declined to comment, adding that it was currently in a closed accounting period.

Campaign UK

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