Unilever price cuts aid recovery

06 November 2009

LONDON: Unilever, the world's third-biggest food and consumer goods group, has taken one further step towards recovery with a 3.6% rise in third-quarter sales.

The Anglo-Dutch firm's second successive quarter of volume growth has been triggered partly by selective price cuts, as well as strong sales of ice-cream brands such as Magnum and Ben & Jerry's.

Despite shelling out more on marketing in recent months, Unilever has also benefited from falling prices for key commodities including edible oils and packaging.

Chief executive Paul Polman, who took the helm in January after quitting Procter & Gamble, believes that price cutting is the best way to restore volume growth in the downturn.

In the first quarter of the year, it was the opposite strategy - that of price rises - that prompted extra sales for the firm.

"We expect volume growth in the fourth quarter and we don't see anything to slow up our underlying momentum," said finance director Jim Lawrence.

While trading conditions for top Unilever brands such as Knorr, Hellman's and Dove remained challenging as a result of high unemployment and low consumer confidence, Lawrence believed that it continued to sell affordable products to a range of consumers.

Data sourced from Reuters; additional content by WARC staff