'Killer D's' drive Unilever gains

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As in the rest of the world, the killer "D's"-Dove and deodorant-are primary driving forces for Unilever in Eastern Europe.

Like almost everywhere, Unilever is No. 1 in deodorants in the region, with sexed-up Axe and Rexona (Degree's sibling) leading the way. Dove, launched only in 2002 in Russia, already is nearing $100 million in sales, according to Deutsche Bank, eclipsing Western personal-care megeabrand Nivea, from Beiersdorf.

Unilever signaled its commitment to the region with a two-day event last June in Warsaw for investors. There, Unilever executives pointed to Poland as a leading-edge case in the "One Unilever" corporate streamlining ultimately adopted by the whole company. Unusual among big global marketers operating in Eastern Europe, Unilever has combined the region with Western Europe in a single operating unit with profit-loss responsibility and oversight of media and non-advertising initiatives.

Speaking at the Warsaw conference, Unilever Chief Financial Officer Rudy Markham said Eastern Europe accounts for only about $2 billion in sales, or about 4% of Unilever sales. But he painted that as a positive. "With almost 50% of Europe's population and growing fast, and only 10% of our European turnover," he said, "there's plenty of room for growth."

Russia alone accounts for about a third of Unilever sales in the region.

"Russia is a great example of what Unilever is capable of when it focuses on its biggest brands and truly taps the synergies" that were supposed to come from combining home and personal care with food and beverage, Deutsche Bank analyst William Schmitz said in a research note. Unilever has tripled its business in Russia since 2000 and became profitable there in 2002, he said.

Unilever's Lipton tea and Knorr soup business gives it the chance to grow and build scale in Eastern Europe in basic categories P&G and other personal-care rivals lack..
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