Unilever plots innovation, advertising push

18 March 2010

LONDON: Unilever, the FMCG giant, will heighten its focus on innovation and advertising as it seeks to drive sales in Western Europe, where trading conditions have proved particularly adverse in the downturn.

"We expect to outperform the market in both volume growth and value share growth," said Doug Baillie, the company's chief executive for the region.

To achieve this aim, the owner of Knorr and Axe plans to launch a wide range of products this year, a strategy that is also favoured by Procter & Gamble.

"We want to bring 25 big innovations to the European market in 2010 and roll them out faster and to more markets than we did before," Baillie stated.

One of its most prominent new offerings is Dove for Men, which was rolled out in six markets simultaneously at the end of 2009, and will be available in 50 countries by the close of 2010.

Further items set to hit stores shelves in the near future include an anti-ageing toothpaste, which will be part of its Signal range, and a moisturising shower gel, to be released under the Dove banner.

Marco Gulpers, an analyst at ING, suggested that Unilever's more streamlined approach to innovation means it is "able to push promotional spend behind a few big launches more efficiently."

Despite the rise of own-label products, which are increasingly encroaching on the territory occupied by premium goods, Baillie also argued that brand owners are now more competitive on cost.

"We have seen an accelerated growth of private label in the 2008/2009 period but in the last three months, with the exception of Southern Europe, the market shares of private labels have come down," he said.

"Now that commodity costs have come down, the price gap between branded goods and private label narrowed."

Similarly, he asserted that it is possible for manufacturers to leverage broader trends that are at work in the market to their advantage.

"Consumers are trading down from dentists. Instead of going for a whitening treatment at the dentist, they buy a premium whitening toothpaste," Baillie stated.

"If you get the price right, bring innovation and support it with advertising, you can grow your volumes in a recession."

Finally, despite the fact some retailers have removed under-performing brands from their inventories, Unilever, which leads many of its core categories, has been able to strengthen its position in this area.

"Across Europe, the on-shelf availability at retailers is approximately 90%, which offers massive opportunities for improvement through better stock management at suppliers or preventing truck break-downs," Baillie said.

Data sourced from NASDAQ/Dow Jones Newswires; additional content by Warc staff