Unilever responds to ‘return of nationalism’ with local products focus

Unilever is focusing on local products in response to the “return of nationalism” among consumers and appetite for local products.

Speaking on a results call today (26 January), Unilever’s CEO Paul Polman said it has seen the world become more “multipolar” with local tastes and nationalism playing a bigger role in consumers’ lives.

“This is global. In the UK you like your Marmite and Colman’s and we respect you for that. In the Netherlands people like Unox, which we respect. We actually are very well placed by having the right mix of local and global brands,” he said.

“Some brands are global like Ben & Jerry’s and Dove, doing extremely well for us, but there are some brands more tailored to local markets that fit into our strategy, all with the intention of making whatever country we work in great again.”

The FMCG giant’s full-year results for 2016 show underlying sales were up 3.7%. The company is targeting south of between 3% and 5% in 2017 but is warning conditions will remain challenging.

Unilever has been hit by the fall in the value of the pound, which caused it to increase prices across a range of its products. That led to a short-lived spat with Tesco.

When questioned about the decision to raise prices, Polman insisted it was the “the right one” after seeing a 20% devaluation of the pound.

“The UK makes up less than 5% of our business. We have to ensure that our brands not only offer great value for money, we also have to look at the effects of currency devaluations. That’s true for us and the rest of the industry, otherwise you end up being unsustainable,” he explained.

Some brands are global like Ben & Jerry’s and Dove, doing extremely well for us, but there are some brands more tailored to local markets that fit into our strategy, all with the intention of making whatever country we work in great again.

Paul Polman, Unilever

Unilever is also concerned about more direct impacts from Brexit on its business. Earlier this week, Prime Minister Theresa May unveiled plans to form ‘sector deals’ as part of her industrial strategy to boost the economy, in which she said she will prioritise areas like science and technology.

Polman said that in light of May’s new strategy, he will put “all of his energy” into “minimising the negative effects” for the UK and Europe.

He explained: “We are the second biggest investors in research in the UK and have two research centres. I will work on and continue to work with the current government to ensure that that environment stays competitive. Not just for ourselves but for the UK.”

Rolling out innovations much faster

Meanwhile, its global ecommerce business saw sales grow 50% in 2016, with online sales in the UK growing at around 7%.

In 2016, Unilever acquired various new businesses in order to diversify its business models “and stay competitive”. Online-only subscription service Dollar Shave Club grew 50%, its mobile indoor air purification brand Blue Air grew 80%.

“We’re developing new channels organically and through those acquisitions. They are new ways to build the equity of our brands. With Dollar Shave Club, which is a direct-to-consumer subscription model, there is a high level of one-to-one engagement between the club member and the brand. And we will keep building our capabilities with Amazon and Alibaba,” Polman said.

Unilever’s CFO Graeme Pitkethly added that the company was able to roll out its new innovations “much faster” in 2016 due to its ‘Change4Growth’ programme, which looks to make the business simpler and more agile. In the UK, it brought new Hellman’s BBQ sauces to market within six months of conception.

He concluded: “We are putting more resources directly in our markets where it really matters. It will make us more consumer and customer centric and be ready in an ever-changing world to be more connected with our ‘Digital 2.0’ programme, where we aim to deliver consumer-centric multichannel media with a mobile first approach.”