Unilever plans an innovation drive

Warc, 28 July 2014

LONDON: Unilever intends to put innovative products at the heart of its European strategy to stem a decline in sales caused by competition from discount retailers.

Speaking to investors in a conference call on Thursday, chief executive Paul Polman said the FMCG multinational is placing greater emphasis on innovation to improve its pricing mix and to increase sales, Marketing Week reported.

Second quarter sales fell 0.8% to €3.6bn in Europe, the company said, although there was a slight rise in the UK and overall global sales increased 3.8% to €12.7bn, including a 5.1% rise in emerging markets.

"In developed markets most consumers are not seeing a pick-up in the economy and they are increasingly value conscious. Competition is increasingly high," Polman said.

"We are taking balanced decisions on pricing, always with a watchful eye on consumer affordability," he added.

In a sign of where the Anglo-Dutch group may be heading, the company credited innovations such as its compressed deodorants and a new toothpaste brand, called Regenerate, for driving underlying sales growth.

Regenerate is supposed to have a "unique formula" that helps to rebuild tooth enamel. Priced at £10, and coming with a serum that costs £30, it is much more expensive than rival brands.

Innovation will take precedence in its European markets and Unilever said it is not planning to increase marketing spend to boost sales.

While marketing spend has increased in emerging markets and North America, the company said its brand-building efforts in Europe will concentrate on supporting its digital channels and moving spend away from non-working media.

"We are continuing to focus on innovation, portfolio reshaping and driving efficiency, doing the right things to adapt to a world that is increasingly volatile and unpredictable," said Polman.

Data sourced from Marketing Week; additional content by Warc