Queasy rider to Unilever’s health

Equating the company that brings you PG Tips, Persil and Lynx toiletries with the Devil might seem laughable at first. Until you realise that an influential US Christian lobbying group with 1 million members is in deadly earnest about it. The American Family Association is trying to organise a national boycott in a market where Unilever does 20 per cent of its global business. The charge? That Unilever is sponsoring prime-time network programmes that sizzle with sex, violence and profanity – like NYPD Blue.

Serious though this may be, it palls into insignificance compared to another affliction facing Unilever. What might be called npd blues.

Outwardly, Unilever is the model of a highly successful global packaged goods company. Sales and profits mount in a way that few shareholders or City pundits could fault. Over the past three years, Unilever has bought 72 businesses worldwide, the latest of them Reckitt & Colman’s food interests. And it is successfully penetrating some of tomorrow’s most promising markets, China and India.

But Unilever has a problem, which all this aggressive activity helps to mask. It lacks an innovative edge, which in the past has allowed others to beat it where it really matters – with new product development, the company’s long-term life insurance policy.

The company has long since recognised this and put into operation a remedial strategy. The gist of it is accelerated development. Innovation, increasingly sourced from collaborative ventures, is accorded a much greater corporate priority. The product, carefully shielded from bureaucratic interference, is hustled to market and once there rolled out internationally as speedily as possible.

Persil Power might seem to epitomise the folly of this policy. But, as Unilever points out, detergents are only a small part of its overall product portfolio. And, as if to prove the point, top Unilever executives have obligingly refrained from slaughtering a scapegoat.

The worrying thing for Unilever is: could it happen again? Is the “accelerator” experience a syndrome? While a fiasco of Power proportions seems unlikely, results in other areas of product development are not altogether promising. Neither the Liptonice nor Yolka co-ventures have covered themselves in glory. And the jury is out on new products such as Chicken Tonight and Calvin Klein’s cK one fragrance.

Unilever has correctly diagnosed its corporate ailment, but whether the surgery will be successful remains to be seen.

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