CORRECT: =INTERVIEW: Unilever W-Europe Chief Aims To Outgrow Market
15 März 2010 - 7:52PM
Dow Jones News
Consumer goods giant Unilever NV (UN) aims to grow its sales in
Western Europe this year more than the overall market expands
there, by launching new products and keeping tight controls on
costs, its top manager for the region said in an interview.
"We expect to outperform the market in both volume growth and
value share growth," Doug Baillie, Unilever's Chief Executive for
Western Europe, told Dow Jones Newswires, adding that innovations
are the main driver behind this growth.
Anglo-Dutch Unilever, the world's third largest consumer goods
group measured by sales, expects to achieve that despite the
likelihood that trading conditions in European markets, seen as its
toughest region, will remain difficult.
"We want to bring 25 big innovations to the European market in
2010 and roll them out faster and to more markets than we did
before," said Baillie, who started his career at Unilever in South
Africa in 1978 and took the job as regional CEO for Western Europe
two years ago.
The food, household and personal care group believes it can
successfully attract demanding but price sensitive customers and as
well as capitalize on a deceleration in growth of private label
products.
When Unilever Chief Executive Paul Polman took the job of CEO
last year, he said Western Europe will be managed for volume
growth, rather than profitability--a move welcomed by the market
which has criticized the company for being too focused on profit
margins while investments in volume growth lagged. Analysts say
much of Polman's success will depend on whether he manages to get
Europe back to consistent quality growth.
But the company will face stiff competition from rivals who are
also looking to lure consumers with new products.
Peer Reckitt Benckiser Group PLC (RB.LN) recently announced a
13% rise in sales in 2009, mainly driven by innovations, and has
high hopes this year for a hands-free soap-dispenser. The
U.K.-based company said between 35% and 40% of sales come from
innovations it introduced in the three preceding years.
Globally, Unilever, the maker of brands such as Ben&Jerry's
ice cream, Lipton tea and Dove soap, expects to double turnover
from the top 30 innovations in 2010 with innovations generating 30%
of sales in the past eight quarters.
ING analyst Marco Gulpers said Unilever has an advantage over
competitors as they are leading in most product categories, which
makes it more likely retailers will put their innovations on the
shelves.
Unilever's innovation pipeline ranges from re-launches of
existing products to the introduction of new products such as an
anti-ageing toothpaste, under its Signal brand, or a new
moisturizing shower gel under its Dove brand.
Unilever declined to disclose when and in how many markets it
will roll out its 25 innovations in 2010. It rolled out its new
Dove for men, an innovation from 2009, in 6 markets simultaneously
in the fourth quarter of last year whereby it will be available in
50 markets at the end of 2010.
The ING analyst said a faster roll-out is important to stay
ahead of competition from vendors of own-store private label
products who will be quick to launch the same offering under their
own brand.
In the past, Unilever's innovations were much more fragmented,
said Gulpers. "Now, they are able to push promotional spend behind
a few big launches more efficiently."
Unilever's Baillie believes consumers are willing to pay more
for new products despite the uncertain economic climate. "Consumers
are trading down from dentists. Instead of going for a whitening
treatment at the dentist, they buy a premium whitening toothpaste,"
said Baillie. "If you get the price right, bring innovation and
support it with advertising, you can grow your volumes in a
recession."
In line with last year's spike, Unilever intends to
significantly increase its advertising and promotional spend in
2010 while remaining aggressive on cost savings.
Ensuring the availability of a portfolio of brands at different
price levels across categories also helped boost volumes in 2009.
Baillie said the acquisition of the personal care brands of Sara
Lee last year, a deal which will be finalized this year, helped
them fill in the last gaps in its product portfolio across
Europe.
Unilever also hopes to cash in on the apparent waning growth of
private label brands, a segment which is most developed in
Europe.
"We have seen an accelerated growth of private label in the
2008/2009 period but in the last three months, with the exception
of Southern Europe, the market shares of private labels have come
down," Baillie said, adding it was price more than anything else
that fuelled the growth of private label. "Now that commodity costs
have come down, the price gap between branded goods and private
label narrowed."
Volumes could also get a boost from a better availability of
products at the retailer's shelves.
"Across Europe, the on-shelf availability at retailers is
approximately 90%, which offers massive opportunities for
improvement through better stock management at suppliers or
preventing truck break-downs," Baillie said.
By Anna Marij van der Meulen; Dow Jones Newswires, +31-20-5715
201; annamarij.vandermeulen@dowjones.com
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