Consumer goods giant Unilever is to increase marketing spend by £1bn and slash 1,200 of its brands in a radical attempt to almost triple sales growth by 2004.
Niall FitzGerald, chairman of the Persil to PG Tips group, says resources will be thrown behind 400 leading brands, such as Calvin Klein, Dove and Magnum ice cream, with marketing support increased by almost a third in five years.
The company already invests £3.5bn, about 13 per cent of sales, in advertising and promotion.
A total of 25,000 jobs – ten per cent of the workforce – will be axed in the next five years and about 100 manufacturing sites will be sold off. Underperforming businesses, including the company’s European bakery operation, will come under review while the unsatisfactory Elizabeth Arden cosmetics business will also be restructured, with the threat of further job losses.
“Less will be more,” said FitzGerald at the company’s annual results presentation this week.
He outlined targets for top line growth, up from two per cent this year to five per cent by 2004 and six per cent for the top 400 brands, and operating margins up from 11 per cent to 15 per cent. Unilever is committed to achieving double digit earnings growth.
The company has 27 sites in the UK, employing 16,500 people. FitzGerald refuses to say where the axe would fall on staff, or reveal which brands would disappear, although the majority are expected to be food items. The 1,200 brands earmarked for disposal contribute only eight per cent of turnover. Unilever has already announced it will ditch Pears soap and detergent Radion. Other brands reportedly on the hitlist include Ponds, Timotei, Brut, and Salon Selectives.
The company hopes its cost-cutting programme will achieve savings of £1bn by 2004.