28 Jan 22 Unilever realigns focus on product categories amid claims it’s lost its way
Global FMCG giant Unilever will lay off about 1,500 managers around the world and restructure its business around five distinct groups, a model that will simplify the company’s structure so it can be more directly responsive to consumer trends and create more clear accountability for delivery.
The five category-specific business groups, each of which will be accountable for delivering its own strategy, growth and profit globally, are: Beauty and Wellbeing, Personal Care, Home Care, Nutrition and Ice Cream.
They will be led, respectively, by Fernando Fernandez, Fabian Garcia, Peter ter Kulve, Hanneke Faber and Matt Close — all company vets who will hold the president title for their unit. The appointments are effective April 1.
Additionally, Unilever is promoting Chief Operating Officer Nitin Paranjpe to the dual role of chief transformation officer and chief people officer. Chief Supply Chain Officer Reginaldo Ecclissato will act as chief business operations officer, while Sunny Jain, president of beauty and personal care, will depart.
Unilever expects to cut about 1,500 jobs in the restructuring, a measure that arrives amid mounting investor criticism that the marketer doesn’t have its priorities straight.
Unilever is enacting a corporate overhaul at a critical juncture, with the owner of Hellmann’s mayonnaise and Dove facing growing questions around its branding and growth strategy. The changes align with a more traditional structure for a consumer goods giant, with business units centered on specific product categories.
It’s an attempt by the marketer to introduce greater simplicity at a time when operations are increasingly complex across the industry, with pandemic-related pressures — including an out-of-whack supply chain and rising inflation — and the mandate to accelerate digital initiatives arounds areas like e-commerce ramping up.
The individual groups will receive tech and operational support from Unilever Business Operations, while a more lean Unilever Corporate Centre will set the overall strategy.
“Our new organisational model has been developed over the last year and is designed to continue the step-up we are seeing in the performance of our business,” said Unilever CEO Alan Jope in a statement. “Moving to five category-focused Business Groups will enable us to be more responsive to consumer and channel trends, with crystal-clear accountability for delivery. Growth remains our top priority and these changes will underpin our pursuit of this.”
Unilever is contending with steep challenges particular to its organisation. The company was recently castigated by investor Fundsmith for prioritising progressive marketing messages over business fundamentals. Unilever has been well-known for years for campaigns that promote concepts like body positivity and sustainability.
Recent efforts include a ban on the use of the word “normal” in the advertising and packaging of beauty and personal care brands, a concept overseen by Jain, who will now depart to set up an investment fund centered on technology megatrends.
Ben & Jerry’s, which has long sat at the left end of the political spectrum, last year was caught in a tussle with upper management after moving to halt sales in Occupied Palestinian Territory while continuing operations in Israel through a different arrangement. It was an incident called out by Fundsmith, along with Hellmann’s social causes.
“A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot,” wrote Fundsmith chief Terry Smith in a note.
Unilever then received a fresh flogging last week for a botched takeover bid for the consumer health unit GlaxoSmithKline, which owns brands like Advil. The CPG giant initially expressed confidence in the acquisition attempt, but just days later announced its $68-billion offer was turned down, as reported in Fierce Pharma.
The situation has been painted as a debacle for Unilever and led to further outcry from Fundsmith. Activist investor Nelson Peltz has since taken on a stake in Unilever, which could spur further changes, per Bloomberg.
Meanwhile, Unilever is introducing some belt-tightening to go along with the reshuffle. Among the 1,500 planned layoffs, 15% will come from senior management and 5% from junior management roles. The job cuts will not impact factory workers.
Source: FoodDive.com; Unilever