Unilever has seemingly accepted the victory of its bitter rival Procter & Gamble in the battle for leadership of the $6 billion (€6.46bn; £4.11bn) US home laundry market.
For the time being content with its numero dos status, Unilever will instead accord precedence to profit. It is not expected, however, to cut back on advertising although trade promotions are likely to take a hit.
The Anglo-Dutch global giant will seek to maximize profits via the ancient ruse of shrinking its pack sizes. All, Surf and Wisk detergent packs will shrivel by 20% - but the instore price by only 10%. Retailers see this as a move to emphasize everyday low prices as opposed to short term price promotions.
But Unilever insists it is still “committed to growing both the top and bottom lines” on its US laundry brands. “We have given up some share but significantly stepped up profitability,” claims head of investor relation Howard Green. “In the rest of the world, where we lead the market, the emphasis has been on improving profitability as we continue to move share forward.”
The strategy has earned nods of approval from industry onlookers. Says Michael Hoye, president of Danbury, Connecticut consultancy Hoye & Partners: “I think it reflects a level of business maturity. I don't know that managing for share was ever terribly successful [for Unilever].”
Hoye’s comment is the understatement of the year, according to numbers (provided by Information Resources). In the 52 weeks ended April 21, P&G had seized 57% of the US market against Unilever’s 17%. Residual share was spread among Wal-Mart, Dollar and club stores.
Data sourced from: AdAge.com; additional content by WARC staff