Unilever to boost brand and marketing spend as sales jump by 10.6%

Unilever plans to increase spend in brand and marketing, R&D and capital expenditure for the second half of 2022. According to the company, its full-year underlying operating margin expectation for 2022 remains at 16%, and it continues to expect to improve margin in 2023 and 2024, through pricing, mix and savings. According to the FMCG giant, its underlying sales growth for the third quarter of 2022 accelerated to 10.6%, resulting in a revenue of about US$15.77 billion. "Investment in growth is our priority, and we will continue to protect investment levels," Unilever said.

On an individual geography level, Asia Pacific Africa grew 12.5% to US$7.0 billion and 0.3% from volume, driven by strong performances from Home Care and Ice Cream. More specifically, Unilever's sales growth in Southeast Asia benefitted from lapping the prior year lockdown effect in some markets. Indonesia delivered price-driven growth, while volumes were affected by a reduction in stock in-trade levels. Vietnam, the Philippines and Thailand delivered double-digit growth which was boosted by lapping the lockdowns in the prior year.

China also returned to slightly positive growth. South Asia continued to grow strongly through both price and volume. India showed strong growth with double-digit pricing and positive volumes, supported by innovations and continued strength of its premium portfolio. Overall, emerging markets grew 13.3% to about US$9.1 billion with a 14.9% contribution from price and volume at (1.4)%.

Meanwhile, developed markets increased by 7.1% to about US$6.5 billion, with 9.3% from price and (2.0)% from volume. North America grew 8.3%, boosted by strong performances of Nutrition and Ice Cream. Europe delivered 5.4% growth, helped by double-digit growth in Ice Cream.

CEO Alan Jope explained that the company expects underlying sales growth for 2022 to be above 8%. "Unilever has delivered another quarter of growth in challenging macroeconomic conditions," he said.

According to him, Unilever delivered growth in each of its five business groups, led by a strong performance from its billion+ Euro brands, growing 14% in the quarter. Strong pricing also allowed Unilever to continue to drive increased investment behind its brands. The billion+ Euro brands accounted for more than 50% of Group turnover and grew by 14% led by strong performances from OMO, Hellmann’s, Rexona, Magnum and Lux.

At the same time, Unilever has been operating as a simpler and more category-focused organisation. Jope said previously that the move to five category-focused business groups - beauty and well-being, personal care, home care, nutrition, and ice cream - will enable it to be more responsive to consumer and channel trends, with crystal-clear accountability for delivery.

According to him then, the new organisational model was developed over the last year and is designed to continue the step-up that it is seeing in the performance of its business. This also led to changes to its marketing teams in Asia Pacific. Kartik Chandrasekhar is now head of oral care and skin cleansing for developing and emerging markets, along with global brand lead of Pepsodent, while Triveni Rajagopal is personal care digital transformation lead. At the same time, Chiradeep Gupta was also named VP, personal care, head of media and global integrated media strategy lead based in London.

"Our organisation is now better structured to deliver consistent growth through a simpler, more category-focused operating model. The full benefits will be realised over time, and we are seeing encouraging early signs of improved accountability and faster decision-making," Jope said in the Q3 2022 financial statement.

Beauty and Wellbeing grew 6.7%, driven by price with slightly negative volume primarily due to core Skin Care and Hair Care. Personal Care underlying sales were up 8.9%, led by increased pricing and a lower volume decline as Deodorants returned to volume growth.

Home Care delivered 13.6% underlying sales growth with a volume decline of 3.6%, having taken the highest pricing action given its exposure to input cost increases. Nutrition grew 11.8% with virtually flat volume due to strong performances in Dressings and Food Solutions. Ice Cream improved underlying sales by 13.2%, driven by double-digit price growth in both in-home and out-of-home. Volume was up 1.0%, helped by a strong summer season in Europe compared to the prior year.

Separately, on a leadership level, Jope is retiring from the company next December after five years as CEO. Unilever is currently on the hunt for a successor and will consider both internal and external candidates.

As CEO, the FMCG giant made critical changes to its strategy, structure and organisation that position it for success. He was appointed CEO in January 2019 and joined Unilever in 1985 as a marketing trainee. He gradually climbed the ranks and worked in leadership roles in North America for 14 years and Asia for 13 years.

Digital Marketing Asia is back for its 10th year! 10 years of exclusive insights, experience sharing and great success stories. Join us for three days of hyper-focused presentation topics across six tracks on 15 - 17 November and connect with 1000+ of the world's brightest minds in the marketing world to learn and upscale from 85+ speakers from the hottest regional and global brands. Click here to register now!

Related articles:
Unilever hunts for new CEO as Alan Jope retires end of 2023
Unilever raises ad spend by US$200m, hikes prices by 11.2%
Unilever promotes media and digital hub lead Javed Jafri to new role
Unilever unveils special logo just for Malaysia market
Unilever marketing leadership sees shuffle amidst structural simplification