Is Nestle and P&G’s loss Unilever’s gain?

Unilever is this week claiming a major coup in hiring former Procter & Gamble marketer and ex-Nestl矦inance chief Paul Polman as its new chief executive. The first outsider to run the company in 80 years is expected to take over from Patrick Cescau at the end of the year.

David%20Benady%20120x120Unilever is this week claiming a major coup in hiring former Procter & Gamble marketer and ex-Nestlé finance chief Paul Polman as its new chief executive. The first outsider to run the company in 80 years is expected to take over from Patrick Cescau at the end of the year.

Polman, a renowned brand builder, spent 25 years at Procter & Gamble, rising up the hierarchy to group president for Western Europe. But he resigned in 2005 after it became clear that he was not in line for the top job at P&G. He defected to Nestlé in 2006 taking on the role of finance director with an expectation that he would get a crack at the top job. But he was passed over again and the chief executive’s role went to Nestle’s America head Paul Bulcke. Polman was given Bulcke’s old job of running Nestlé’s Americas operations to keep him in the fold.

One view is that Unilever’s new boss is a third-hand cast off from two rivals who have been giving it a trouncing over the past decade. Polman didn’t get anywhere near the top slot at P&G and was rejected by Nestlé. Then he turns up as boss of Unilever.

However, this downbeat assessment is certainly not shared by City investors, whose clamour to buy Unilever shares on the news added £1bn to the company’s value in a day.

P&G flew into crisis mode when Polman’s appointment was announced this week. Would he be breaching the two-year non-compete clause in his contract? No, he had been out of P&G for three years, so it is all above board.

But this raises the question of what useful insider knowledge Polman will bring with him to Unilever from its rivals. Unilever competes with Nestle in a few areas. It is the world’s number one ice-cream maker, while Nestle is number two. Unilever owns Knorr stock cubes against Nestle’s Maggi brand. Polman may bring some insights into Nestle’s plans in functional foods, where Unilever is also keen to be a strong player.

But in home and personal care, Polman’s P&G experience will prove invaluable. Unilever says it is unthinkable that he would stoop so low as to use any specific knowledge about P&G’s strategies for the Anglo-Dutch company’s gain.

But his experience could prove extremely useful in the brand wars between Unilever’s Persil/Omo and Surf versus P&G’s Tide, Ariel, Daz and Bold, in soap, (Dove, Lux and Pears versus Ivory, Camay and Zest), toothcare (Signal and Mentadent against Crest and Oral-B), deodorants (Lynx/Axe and Sure/Rexona versus Old Spice and Secret) and haircare (Timotei versus Wella and Head & Shoulders).

Some believe that above all, Polman’s insights into Procter & Gamble’s relationships with retailers will prove highly beneficial to Unilever. P&G has developed a wide ranging retail philosophy summed up in its “two moments of truth” insight – the first moment is consumers encountering the brand on shelf, the second when they use it at home. P&G recognises it is good at the second, but needs to concentrate more on the first. P&G’s ability to advise retailers on the most profitable ways to stock their shelves and promote goods has given them a powerful inside track with the likes of Walmart, Tesco and Carrefour. But Unilever has already taken a leaf out of P&G’s book. Each of its top executives handles a key retail account. Chief executive Patrick Cescau handles the Walmart account and relationships with its chief executive Lee Scott while other retail relationships are divied up amongst the management board.

It seems Polman’s experience of P&G’s command and control structure will help him continue the One Unilever programme initiated by Cescau which is attempting to make the Anglo-Dutch giant more efficient, fleeter of foot and faster to market.

One thing is for sure. Big brand warfare will get considerably more fierce in coming years as retailers ramp up the own label onslaught against brands, cost price inflation reshapes brand hierarchies and as environmental and ethical trends remake manufacturing processes.

Polman’s appointment at Unilever is another factor turning up the heat in the increasingly frantic rivalry between fmcg giants.

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