Unilever ‘fully committed to Israel’ despite Ben & Jerry’s move to withdraw brand

Brand owner is continuing to put more money into media.

Unilever: has increased marketing spend by €400m year on year
Unilever: has increased marketing spend by €400m year on year

Unilever chief executive Alan Jope has said that the FMCG giant “remains fully committed to our business in Israel”, despite a decision by its brand Ben & Jerry’s this week to remove itself from the Israeli market next year.

Ben & Jerry’s said on Monday that sales in East Jerusalem and the West Bank, parts of which are under Israeli control, were “inconsistent with our values”, and that it would withdraw from the country when its deal with a Israeli distributor ends next year.

The United Nation Security Council stated in a 2016 resolution that Israeli settlements in the West Bank were “a flagrant violation under international law” – a position shared by most countries. But in 2019, under President Donald Trump, the US changed its position, saying the settlements were not necessarily illegal.

Unilever was attacked this week by Israeli’s new hardline prime minister Naftali Bennett, who warned there would be “severe consequences” to Ben & Jerry’s decision – while his coalition partner Yair Lapid called it a “shameful surrender to anti-Semitism”.

In response to a question during a call as Unilever revealed its half year results, Jope did not say whether he was in support of the move by Ben & Jerry’s, which has operational independence, but insisted it did not reflect a wider attitude across the company.

He added: “This was a decision that was taken by Ben and Jerry's and its independent board in line with an acquisition agreement that we signed 20 years ago; we've always recognised the importance of that agreement. Obviously, it's complex, and a matter that elicits very strong feelings. 

“I think the one message I want to underscore in this call is that Unilever remains fully committed to our business in Israel. We have four factories, including a recent €35m (£30m/$41m) investment and a new razor factory for Dollar Shave Club. We've got 2,000 employees and our head office and distribution centres, and in the factories, we've put a billion shekels (£222m/$306m) of investment into the country in the last 10 years. That's just the capital investment. And we're very active on the start-up community on social programmes in Israel. 

“I can assure you it is not our intent to regularly visit matters of this level of sensitivity, it's been a long-standing issue for Ben and Jerry's. We were aware of this decision by the brand and its independent board, but [it's] certainly not our intention that every quarter we'll have one quite as fiery as this one.”

‘Showing more of our wonderful creative to consumers’

For the first half of 2021, Unilever reported underlying sales growth of 5.4% year on year, while turnover was up 0.3% to €25.8bn. 

In a statement, Jope said the performance had been “driven by our continued focus on operational excellence”, and Unilever was “making good progress against the strategic choices outlined earlier this year, including the development of our portfolio into high growth spaces” such as prestige beauty and functional nutrition.

On the call, chief financial officer Graeme Pitkethly said Unilever had increased its brand and marketing investment by €400m year on year, equivalent to 0.8% – but said the rate remained consistent as a share of turnover, at about 14%.

He said that of the increase in spend, “the lion's share has gone on media, not advertising production, so we're showing more of our wonderful creative to consumers, which is what really matters at the end of the day”.

He said that the impact of the pandemic on media pricing varied widely and was linked to the situation in a given market, with deflation in some places, but added: “We don't expect to see a large deflationary market in media rates for this year and we're not in fact seeing that.”

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