Unilever CEO: Authenticity will guide our brand purpose

Unilever, known for its commitment to purpose-driven brands, is poised for a shift under the leadership of its new CEO.

Hein Schumacher, former chief financial officer of Heinz, assumed the role of CEO at the consumer goods powerhouse in July. In a recent investor update on 26 October, he announced that the company would no longer forcefully impose purpose onto all its brands.

Under Alan Jope's leadership, Unilever has been criticized for prioritizing purpose over growth.

However, Schumacher does not completely disregard the idea of purpose. He acknowledges that Unilever's dedication to fulfilling its purpose inspires many individuals to become part of and remain with the company.

"When executed effectively and accompanied by credibility, brand purpose can yield significant results," he mentioned, citing instances such as Dove and Lifebuoy.

"However, we will not impose this approach on every brand in our portfolio, as it may not be applicable for certain brands, and that is perfectly acceptable," he emphasized.

The CEO expressed his desire for this to "simplify" the responsibilities of the company's brands.

In recent years, the discussion surrounding the sustainability and purpose of brands has potentially produced more controversy than clarity.

Hein Schumacher, Unilever

In 2022, a major Unilever investor and founder of Fundsmith Equity, Terry Smith, launched an attack on the company’s focus on purpose across all its brands.

He stated that any company that believes it is necessary to define the purpose of Hellmann's mayonnaise has clearly lost its focus. Former CEO Jope had faced criticism but remained dedicated to emphasizing the company's purpose. He highlighted the significant growth in the Prestige business as evidence that incorporating purpose into the core of a business leads to sustainable growth.

Schumacher, the successor, acknowledged that the debate surrounding brands' sustainability and purpose has potentially generated more controversy than clarity in recent years. Moreover, he stated that Unilever's approach to this matter has not significantly contributed to the advancement of purpose.

‘Spread too thin’

He intended to differentiate the overall sustainability agenda of the business from the concept of incorporating a social or environmental purpose into each brand proposition. All brands will actively contribute to Unilever's sustainability goals, which he emphasized would not be abandoned. Nevertheless, not every brand will require a purpose in the sense that Dove does, for instance.

During his conversation with investors, Schumacher utilized the occasion to disclose his evaluation of Unilever's advantages and disadvantages after assuming the position for a few months.

He confidently expressed that Unilever possesses numerous strengths such as its robust market positions, successful brand penetration, and high-quality personnel. However, he also identified several weaknesses.

The quality of performance has fallen short across various key metrics, as indicated by struggling volume growth figures and declining gross margins, according to his statement.

Schumacher's analysis of the company's failure to meet its potential emphasizes that the business is currently stretched too thin. The company lacks sufficient discernment in investing behind its brands, particularly in prioritizing the largest brands and most significant opportunities.

Instead of distributing investment evenly among all its brands, Schumacher announced that the company will now focus on prioritizing its 30 "power brands" for brand and marketing expenditure. These brands, which account for over 70% of Unilever's revenue, are regarded as the most significant growth opportunities for the company. Schumacher pledged to further increase Unilever's total brand and marketing investment, similar to what was done last year, and is currently on track to achieve this target for this year. He emphasized that this is an indispensable initiative for the company.

However, he pledged that this investment will be “more focused” and “more consistent”, and that the company wants to see higher returns on their marketing spend.

‘Performance culture’

Schumacher highlighted another key priority, which is his dedication to establishing a "performance culture" at Unilever. According to him, while Unilever boasts an exceptional pool of talented individuals worldwide, the current performance culture does not measure up.

The CEO understands this as Unilever employees dedicating their efforts to a smaller number of tasks and excelling at them.

"This begins with the top management," he mentioned, using the occasion to declare a set of fresh leadership appointments.

These appointments were largely internal promotions and include incoming chief growth and marketing officer, Esi Eggleston Bracey, who currently is head of Unilever’s USA business.