Unilever is clearing its cupboards of unwanted clutter, sweeping
aside niche, marginal or non-strategic brands to make more room for core
labels. Hundreds of brands from the giant’s 1800-strong portfolio face
the chop or a reduced marketing spend as part of a strategy to achieve
The pounds 48bn company has yet to finalise which brands, from frozen
food to toiletries, will be axed but it is understood several Elida
Faberge brands have already been designated as B-brands to be sold or
put out to pasture (Marketing, June 3).
They include Pears Shampoo, Ponds, Timotei, Addiction, Brut, Lux, and
new launch Fusion.
Meanwhile the company is upping investment in so-called A-brands, which
include Dove, Impulse, Lynx, Organics, Vaseline Intensive Care and
Which brands should go?
Leading the initiative is chairman Niall Fitzgerald, who has been
refining Unilever into a more focused beast for some time, reducing the
company’s 57 categories of products to 14 and disposing of non-core
assets such as speciality chemicals.
The company belief was reiterated by co-chairman Antony Burgmans last
month, following a reported fall in sales in the first quarter and a 4%
slide in pre-tax profits to pounds 666m.
’We want to put more energy into the big A-brands, which have the
biggest growth potential. Our efforts are much too diffuse,’ he
Not that Unilever is in any way a small company. Even now its product
categories cover a vast span: ice-cream, tea-based beverages, yellow
fats, personal wash, fabric wash, mass skincare, prestige products
(Calvin Klein perfumes etc), deodorants, haircare, oral care, household,
frozen foods, culinary and industrial cleaning goods.
So how does a company decide which brands are As or Bs? And how can it
be sure that valuable brands are not thrown out with the rubbish?
According to Alex Batchelor, Interbrand Newell and Sorrell’s brand
valuation director and ex-Unilever marketer, there are four simple
- ’How big is the brand? This is measured by things like volume, value
and customer numbers. Once brands get to a certain size they can be
self-sustaining, used for spin-offs or used to fund other things. An
example is Lynx, which is now huge after an investment phase of three or
four years. However, some brands such as Mentadent, never make a return
on investment and in the long term are not worth retaining.
- ’Loyalty. How big is the brand’s following and to what extent would
people search it out, even if it wasn’t supported? As a global player,
Unilever also has to consider how popular the brand is in other
- ’Potential. What is its potential for growth outside its core audience
and what is the potential for brand extensions?’
- ’Trends. Should companies ’go with the flow’ or spend time, money and
effort trying to turn around declining brands? Unilever has enough
strong products in its portfolio that it doesn’t need to push water
Batchelor adds: ’You have to keep in mind what economic value can be
derived from a brand, however. You can’t babysit a brand like Pears just
because it has a 200-year heritage and you have an emotional attachment
to it. If there are no unserved or untapped Pears customers, it is
better to refocus your efforts to new and expanding sectors,’ he
Observers agree that choosing which brands must go is tough, with senior
decision-makers often defending a brand they nurtured in the past, or
other staff becoming disgruntled if they feel they are working on a
Often the management time spent turning around underperforming or weak
brands is completely disproportionate to the bottom-line payback. It
would be much better to concentrate on making the profitable brands more
Weaker brands can pay off
John Elstan, analyst at West LB Panmure, adds it is important to
maintain a balance.
’It’s a tricky situation. There’s no point in decimating a local brand
just for the sake of purity, but Unilever does need to follow the lead
set by rivals such as Procter & Gamble, Nestle and Danone, and focus
more clearly on core products.’
Potential dangers are that brands which are sold off may end up in the
hands of aggressive competitors, or become runaway successes, making the
previous management look second-rate.
Many argue that reducing marketing spend is not the answer, with
retailers unwilling and unlikely to stock unsupported products.
P&G last rationalised four years ago, ridding itself of brands such as
Insignia and Blue Stratos, to leave a portfolio of around 300 brands
which it supports heavily.
P&G’s personal care marketing director, Nick Hotham, says: ’Our belief
is that our brands are family jewels and we need to find a way of making
them successful over time. We have been criticised in the past for
plugging away at weaker brands, but it often pays off. Olay is now seven
times bigger than it was when we acquired it in 1987 and is now worth
Hotham adds that P&G’s category management programme now helps the
company focus on core competencies by feeding the strong and starving
But weaker brands can often thrive in other environments. EMVI is
interested in turning around some of the Elida Faberge brands, having
successfully marketed Harmony which it bought from Unilever last
’We gained a big brand with 90% awareness and have since invested in it
to make it more contemporary and appealing internationally,’ says EMVI
chief executive, Mike Jatania.
’By continuing to dispose of non-core brands, Unilever can focus on big
global brands and reduce marketing, production, storage and distribution
costs. It is increasingly difficult for a global company to manage local
brands,’ he says.
Miners International managing director, Stewart Chambers, agrees:
’Judging whether a brand is an A or B is in the eye of the beholder.
Miners had been regarded as peripheral by its previous owners Max
Factor, Revlon and P&G. It once had an pounds 8m turnover but was left
to do nothing. We’ve supported it and brought it back to having a pounds
5m turnover but this has been extremely time-consuming. Larger players
don’t believe it’s worth the effort.’
The surge of own-label products has also put pressure on secondary
brands, creating another reason to dispose of them and focus on core
strengths and - crucially in this market - new product development.
Recent examples, particularly in the US, show the giants P&G and
Unilever being pipped to the post in NPD by smaller, nimbler players.
Streamlining the portfolio should speed up the traditionally slow-moving
bureaucracy and allow the company to reap the benefits of its pounds
576m R&D budget (2% of worldwide sales).
’It makes sense to dispose of non-core brands. There is increasing
competition for shelf space and retailers are continually asking ’what
does this product add to the category?’’ says Jatania.
Unilever, like its arch-rival P&G, recognises it needs to lose weight to
move quickly and aggressively. The B-brand cull is only just
Pre-tax profit 1998
Marketing spend 1998 pounds 3.75bn
Ammirati Puris Lintas
J Walter Thompson
Ogilvy & Mather