Unilever has become synonymous with the idea of placing purpose at the heart of its brands – but its new CEO looks set to change that.
Former Heinz chief financial officer Hein Schumacher took over as CEO of the consumer goods giant in July. Today (26 October) he told investors that the company would stop “force fitting” purpose to all its brands.
Under the leadership of his predecessor Alan Jope, Unilever faced criticism for focusing on purpose at the expense of growth.
Schumacher did not dismiss the concept of purpose outright, however, acknowledging the company’s focus on delivering on purpose “inspires many people to join and stay with Unilever”.
“When done well, and with credibility, [brand purpose] can be highly effective,” he said, pointing to examples like Dove and Lifebuoy.
“But we will not force fit this across the entire portfolio, for some brands it simply won’t be relevant and that’s okay,” he added.
The CEO continued he hoped this would “simplify” the job of the company’s brands.
In recent years, debate around brands’ sustainability and purpose has arguably generated more heat than light.
Hein Schumacher, Unilever
In 2022, a major Unilever investor and founder of Fundsmith Equity, Terry Smith, launched an attack on the company’s focus on purpose across all its brands.
“A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot,” he said.
Previous CEO Jope had stuck with the company’s commitment to purpose in the face of criticism. Earlier this year he pointed to the strong growth the company was seeing in its Prestige business as an example of how “putting purpose at the heart of your business is a pathway to sustainable growth”.
While his successor Schumacher today stated he saw purpose as a growth-driver for certain brands, he said Unilever’s approach to the issue had not “advanced the cause of purpose”.
“In recent years, debate around brands’ sustainability and purpose has arguably generated more heat than light,” he acknowledged.
He sought to separate the business’ overarching sustainability agenda from the idea of integrating a social or environmental purpose into every brand proposition. Every brand will be “full active participants” in Unilever’s sustainability objectives, which he stressed it is “not walking away from”. However, not all brands will need a purpose, in the way Dove has, for example.
‘Spread too thin’
Speaking to investors, Schumacher took the opportunity to share his assessment of Unilever’s strengths and weaknesses, having been in the role for a few months now.
He asserted that Unilever is a “company of many strengths” thanks to its strong category positions, brand penetration and calibre of its people. But he also identified a number of weaknesses.
“Across a number of important metrics, the quality of performance has fallen short,” he stated, pointing to struggling volume growth figures and declining gross margins.
A theme of Schumacher’s diagnosis of why the company has failed to deliver on its potential is that the business is currently “spread too thin”. When investing behind its brands, the company has “insufficient discrimination when it comes to prioritising the biggest brands and biggest opportunities”.
Rather than spreading investment equally across all its brands, Schumacher said the company will now prioritise brand and marketing spend behind its 30 “power brands”. These brands, which represent more than 70% of Unilever’s revenue, are those the company has classed as the biggest opportunities to improve growth at the company.
Schumacher committed to increasing Unilever’s absolute level of brand and marketing investment, as it did last year, and as it is “on course” to do this year. He described this is a “must” for the company.
However, he pledged that this investment will be “more focused” and “more consistent”, and that the company wants to see higher returns on their marketing spend.
Another priority outlined by Schumacher is his commitment to drive a “performance culture” at Unilever.
“We have an outstanding global talent base, but not the performance culture to match,” he said.
What this means to the CEO is Unilever staff focusing on fewer things but doing them better.
“This starts at the top,” he said, taking the opportunity to announce a series of new leadership appointments.
These appointments were largely internal promotions and include incoming chief growth and marketing officer, Esi Eggleston Bracey, who currently is head of Unilever’s USA business.