Unilever keeps spending behind its brands steady

CEO Alan Jope expects spend to be in line with last year, as the prestige of its brands is helping weather price increases.
DOVE-brand-Unilever

According to Unilever CEO Alan Jope, the CPG intends to “adequately” invest in its brands, while watching its competitive spend “like a hawk.”

During the company’s Q3 period ending Sept. 30, Unilever had a 2.5% sales uptick; for the year to date, it’s reporting 4.4% underlying sales growth, while a 4.1% increase in price offset a volume drop of 1.5%.

In what the CPG calls a good quarter, growth was driven by its prestige and functional nutrition brands, and recovery for its out of home, which the company says it continues to digitize.

“There are still strong variations across different parts of the Unilever portfolio,” Jope admits. “Prestige beauty had another strong quarter with growth of 24%,” he says. According to Jope, key Unilever brands are growing led by Vaseline, ice cream brand Magnum, Hellmann’s, Knorr and Dove. While household penetration has stalled despite robust demand, Hellmann’s has been a bright spot, Jope says, based around its food waste focused communications efforts.

Jope says deodorants, skin care, hair care all grew – up 4% – as usage occasions picked up in many countries.

With the pandemic abating, sanitizer sales have slowed down considerably, Jope reports, but still remain elevated, at least compared with historical levels.

At shelf, the company says product availability remains strong. However, the company warns that when it comes to the supply chain it’s a “volatile operating environment.” CFO Graeme Pitkethly said pressures on inflation – including supply chain issues and rising energy costs – are likely to result in further price increases. That makes ensuring consumers are willing to pay for a name brand that much more important.

“We are preoccupied with making sure that we are adequately supporting our brands,” Jope says. The company is watching its competitive spend, but Jope expects its full year 2020 spending of seven billion Euros to be around where the company will be by the end of 2021.

Meanwhile, aggregate ecomm sales grew 38% in Q3, while year to date it is up a whopping 46%. Business to consumer sales are up 23%, and Unilver’s total ecomm business now constitutes 12% of its whole turnover.

Jope reports that company growth is in part due to increasingly joining up with external partners, or as he put it, the way the company innovates is changing when it comes to “how we collaborate to innovate.”

Since 2002, Jope says Unilever has entered into 500 intellectual property-generating partners; recently, that has been to drive plant-based protein and biotech cleaning innovations.