The CEO of Unilever, Hein Schumacher, states that giving certain brands a social purpose ‘would not be relevant’ – Unilever/ReutersThank you for reading this post, don't forget to subscribe!
Unilever has decided to no longer attempt to “force-fit” all of its brands with a social purpose, according to its new CEO, following backlash over the company’s “ethic-signalling”.
Hein Schumacher, who assumed the role from Alan Jopp in July, explained that for some brands, it would either not be relevant or an unwanted distraction to give them a social or environmental purpose.
He further added, “I believe that we should not impose social and environmental purpose on every brand.”
This marks a shift in approach from Mr. Jope, who previously placed social purpose at the core of Unilever’s strategy. In 2019, he committed to selling off brands that couldn’t represent anything more significant than enhancing hair shine, softening skin, whitening clothes, or making food delicious.
The city reacted strongly to this stance, as there is growing frustration with major companies prioritizing trendy causes over profits.
Terry Smith, one of Britain’s most well-known investors, criticized Unilever for being excessively focused on its public image and accused the company of engaging in “virtue signalling” instead of concentrating on financial performance.
He stated in January of last year: “A company that feels the need to define the purpose of Hellman’s mayonnaise has, in our opinion, clearly lost its way.”
During his remarks on Thursday, Mr. Schumacher stated that Unilever was “not completely abandoning purpose-led brands.” He mentioned that for certain brands, such as Dove, it made sense to give them a social or environmental purpose because it made them more appealing to consumers. Dove employs the concept of “real beauty” in its marketing campaigns, featuring women with various body types.
The Unilever CEO also highlighted Ben & Jerry’s as another brand with a “clear purpose”.
The ice cream brand is well-known for taking stances on political matters, advocating for environmental protection, and supporting causes such as LGBTQ+ and refugee rights.
However, Unilever has clashed with Ben & Jerry’s over its activism in the past. In July of last year, Mr. Jope advised the ice cream company to avoid “wandering into geopolitics” after it attempted to boycott the Palestinian occupied territories. Unilever subsequently sold Ben & Jerry’s Israeli operations.
Since the beginning of the Israel–Hamas conflict, Ben & Jerry’s has not publicly addressed the issue.
Mr. Schumacher commented on Thursday, saying: “They have been vocal in the past because of Ben & Jerry’s social mission. I have no comment on the conflict at this time. This is not a topic up for discussion.”
These remarks came as Mr. Schumacher announced extensive changes at the company aimed at addressing poor performance. This includes a complete reorganization of the company’s leadership team, with Fernando Fernandez, president of the beauty and wellness business, taking on the role of chief financial officer. He is replacing Graeme Pitkethly, who is retiring. Unilever is also changing the heads of its nutrition and ice cream divisions.
Mr. Schumacher said, “Our growth, productivity, and returns have all been below par.
“Unilever has numerous strengths, including its market position, strong brands, unparalleled global presence, and talented and passionate workforce. However, there has been a gap between these internal strengths and our performance quality.
Unilever reported a 5.2 percent increase in underlying sales for the three months leading up to October compared to the previous year, thanks to higher prices.
However, sales volumes in Europe dropped by 10 percent due to reduced demand, which was attributed to unfavorable summer weather.
As part of the change in strategy, Mr. Schumacher stated that the company did not plan to make any major or transformative acquisitions. This comes after a disastrous failed attempt last year to acquire GlaxoSmithKline’s consumer healthcare division for £50 billion.
Investors were not convinced that Mr. Schumacher’s plans were groundbreaking enough, resulting in a 3.5 percent drop in Unilever shares at the time of the announcement.
Jefferies analysts remarked that there was “not much to get excited about” in the latest update, and that it was “light on the numbers and changes”.
Since assuming the role of CEO, Mr. Schumacher has also faced pressure to address Unilever’s decision to sell its products in Russia.
Earlier this year, The Telegraph revealed that Ukrainian veterans had directly written to Mr. Schumacher, urging him to withdraw from Russia in response to the invasion of Ukraine. He cautioned Unilever employees about the risks associated with involvement in the conflict.
On Thursday, Mr. Schumacher stated that Unilever would continue to assess its options, adding, “It is evident that the containment measures we have implemented reduce Unilever’s economic contribution to the Russian state.”