Unilever is investing in its brands amidst price hikes

Strong price action across segments drove Q1 growth, allowing the company to stay competitive in advertising and R&D.

Unilever is “maintaining strong investment” in its top brands, as it is reporting strong sales growth, but also warning of price increases due to geopolitical events.

In Q1, Unilever, the maker of Hellmann’s, Dove, Q-Tips and Ben & Jerry’s, raised prices by over 8% in the first quarter and warned more hikes are forthcoming as it’s facing “unprecedented cost inflation.”

The Home Care segment, which took the strongest pricing action, had growth of 9.2% in Q1, Unilever says. Beauty & Personal Care grew 7.1%, driven by price and continued strong growth in Prestige Beauty and vitamins, minerals and supplements. According to the company, deodorants posted high single-digit growth, helped by tech-driven innovations behind Dove and Rexona, as well as Axe making a strong start to 2022.

Foods & Refreshment meanwhile, grew 6.5% through price. The CPG reports that Hellmann’s posted double-digit growth against a strong baseline in the prior two years, supported by a successful Superbowl advertising campaign. Unilever is saying ice cream is being driven by double-digit increases in the out-of-home channel. Magnum it says, is showing “strong growth momentum.”

Despite supply chain constraints, North America grew by 8.5%, through both price and volume increases. However, sales grew by a mere 0.7% in Europe as price growth was accompanied by a decline in volumes.

“We will continue to drive an ambitious saving program and increase prices thoughtfully, and these mitigating actions are really an essential component of our ability to protect the shape of our P&L and so invest competitively in advertising, R&D and capital expenditure,” said Alan Jope, Unilever’s CEO.

It’s watch-word, the company says, is “competitiveness,” particularly in its media advertising. It will not be using BMI as a way to get to a margin target, but will invest “what it takes to be competitive.” It’s going to remain competitive on promo spend, too.

The company says 80% of its brands are stable or growing brand power, with Jope noting it’s “winning with its brands.”

He cites Dove successfully introducing a new formulation body wash and Knorr bringing zero salt stock cubes into 15 markets, to access the growing salt sensitive consumer segment.

Unilever reports that ecommerce grew 27% in the quarter, across all main subchannels. It’s gone from ecommerce being 2% of its turnover to 14% in five years, and the company is “investing significant resources in channel expertise,” and designing products with the specific requirements of the channel in mind.

Unilever expects underlying sales growth in 2022 to be towards the top end of the previously guided range of 4.5% to 6.5%.