A little more than a year after announcing a cull of its 1,600 brands, Unilever claims it's already directing 94% of its $6 billion advertising and promotions budget to around 400 "focus" brands.
The company still has 970 "active" brands, excluding those gained from the $24.3 billion acquisition of Bestfoods last October. From that 970, 250 to 300 have been targeted for delisting by the end of 2002.
Another 200 have been identified as suitable for "merger and migration" into other focus brands over the next two years. A review of the Bestfoods brands - which include Hellmann's mayonnaise and Skippy peanut Butter - will be completed in the first half of this year.
"This [migration] is a complex process," says Co-chairman Niall FitzGerald. "No one else has [done it] on this scale. It is easy to change a name - the marketing challenge is to bring the consumer with you."
He claims the challenge to focus resource behind 400 leading brands "will be met and on time."
After buying Bestfoods, Unilever's biggest brand is now Knorr, worth more than $1 billion. Other international "power" brands include Lipton tea and Dove personal care products.
Last year, the company spent 13.8% of sales on advertising and promotion. By 2004, the target is 15%, representing an additional $1.6 billion over the five years since 1999.
Mr. FitzGerald, announcing Unilever's 2000 annual results Feb. 8 in London, said the "Path to Growth" strategy of "brand focus, innovation and cost reduction" was "well on plan."
Innovation would provide the "fuel for growth," he said. Among the 20 "big-hit" initiatives planned for 2001 and expected to generate $1.4 billion in additional sales in the full year are:
Persil Capsules - one-dose liquid detergent pouches rolling out to the U.K. at the end of March after a soft launch last October in Holland. The company hopes they'll be as successful as Persil Tablets, recently launched in the U.S., which it claims have a 25% share of the U.K. detergent market.
Enjoy - A $20 million-backed upscale frozen ready meal from U.K. subsidiary Bird's Eye, which from this week will go on sale in petrol forecourts, video stores and liquor stores as well as supermarkets. The concept came from sister Italian company Findus which launched a similar range, 4 Saltin Padella, three years ago.
Other recent innovations include:
Myhome - the laundry and home cleaning service on test in the U.S. and India, having completed a year-long pilot in the U.K. A decision will be taken on its future soon, Mr. FitzGerald confirms.
Rituals - a virtual store on the Web and an actual store in Amsterdam, opened last October, selling 175 body and home products based around everyday rituals from drinking tea to taking a bath.
Among recent "big-hit" products, he said, are: ProActiv spread, with sales of $93 million-plus in Europe after three months; Carte D'Or, Magnum snack sizes and Breyer's Parlour in the ice cream business which have added $153 million in 2000; Dove personal care range extensions which contributed $158 million last year, and Mods, Vaseline and Dove shampoo launches in East Asia which generated more than $111.6 million.
Underlying profits rose 16% in 2000, but large, planned, exceptional costs and goodwill write-offs from its total $28 billion worth of acquisitions last year, led to a 39% drop in profits before tax of $2.5 billion in the year to Dec. 31, 2000. Sales were up 7% at $40.7 billion. All figures are based on average 1999 exchange rates.
Mr. FitzGerald declared himself "reasonably confident" about the outlook for 2001, despite concerns of an economic slowdown in the U.S. economy. More than 60% of Bestfoods' business is outside the U.S., he said, adding that the company had had a "cracking year" in Asia and a "good recovery" in Latin America.
Copyright February 2001, Crain Communications Inc.