Unilever has given the clearest indication yet that it will scale back its ‘woke’ agenda as investors were disappointed with the unveiling of its turnaround plan.Thank you for reading this post, don't forget to subscribe!
Hein Schumacher, who assumed control from Alan Jopp in July, announced that he would cease ‘coerced’ social justice messaging on brands.
He stated that brands expressing political stances could be ‘unwanted distractions’.
Some investors urged the consumer goods titan to abandon ‘virtue signalling’ and concentrate on profits.
Jopp placed social purpose at the forefront of the Hellmann’s mayonnaise maker’s strategy, vowing to sell brands that provided ‘something more important than merely making your hair lustrous, your skin smooth, your clothes bright, or your food delightful. Unable to advocate for’.
Schumacher mentioned that social purpose is crucial for marketing some brands, but for others, it is a ‘distraction’, adding: ‘Not every brand should have a social or environmental purpose. We do not wish to impose this unnecessarily on brands.’
Last year, investor Terry Smith criticized Unilever for posting ‘absurd’ metrics on everything from sustainability to Knorr stock cubes. Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said the focus would be on ‘reducing’ social messaging while prioritizing growth.
However, investors were disappointed. Expectations were high for Schumacher, but shares in the British company, whose brands include Dove soap and Magnum ice cream, dropped 2.8 percent or 113.5p to 3900p.
Schumacher’s strategy will center on 30 ‘power’ brands that constitute 70 percent of Unilever’s business. These include staples like Dove, Vaseline, and Ben & Jerry’s.
New Direction: Hein Schumacher
However, the city’s reaction was subdued, with analysts stating that the update failed to ‘impress us greatly’. Yesterday’s decline resulted in a 12 percent drop in the stock over the past six months. AJ Bell analyst Danny Hewson said: ‘This is inadequate to generate excitement in the market, particularly when combined with the mixed third-quarter figures.’
In its third-quarter results, Unilever reported a 5.2 percent increase in sales due to price hikes. However, volumes decreased by 0.6 percent, while Europe suffered a 10.7 percent decline.
Responding to the skeptics from the City, Schumacher pledged: ‘We have the ability to make a difference. “It’s ensuring that we are mindful of the things that need to change.”
Unilever’s initial move is to sell its shaving and grooming business, Dollar Shave Club, to US private equity behemoth Nexus. Although the news of Alan Jopp’s replacement with Schumacher surprised those expecting a prominent figure from the consumer world, Schumacher’s track record demonstrates his ruthlessness.
At the Dutch dairy cooperative FrieslandCampina, he oversaw a restructuring that involved divesting assets, closing factories, and reducing jobs.