The Legacy That Got Left on the Shelf - Unilever and Emerging Markets
The world's second-biggest consumer-goods firm is finally beginning to make the most of the advantage it was handed in emerging economies
WHEN a consumer-goods company casts around for the best growth prospects, rarely does anything look more promising than emerging economies. These markets are growing so rapidly that within just two years they will account for half of all the world's consumer spending, estimates Harish Manwani, head of the Asian and African businesses of Unilever, a giant of the world's consumer-goods industries. But even with more than a century of experience in some of these countries, Unilever tripped up.
Few companies have had the head start in places like Africa, China, India and Latin America that Unilever enjoyed. Yet despite the Anglo-Dutch giant's formidable range of products and unprecedented depth of local knowledge, when rivals began to push harder its empire came under threat. Unilever was forced to re-examine its legacy and to act on what it found. Now the results are coming through.
Unilever's low point came in September 2004, when its share price slumped after it shocked investors with a profits warning. Just four months later its prospects dimmed further when its arch-rival, Procter & Gamble (P&G), agreed to buy Gillette for $57 billion. The deal greatly bolstered the American company's formidable arsenal of global brands. Unilever needed to change urgently.
That would involve removing unnecessary complexity and bureaucracy, much of it accumulated over decades of operating in almost every country in the world. But change had to begin at the top. Listed on both the London and Amsterdam stock exchanges, Unilever used to be run almost by committee, with two joint chairmen, one appointed from Britain and the other from the Netherlands. In February 2005 its management structure was altered: Patrick Cescau, the joint chairman from the British side, became the sole chief executive.
Mr Cescau, a soft-spoken Frenchman, is a Unilever
WHEN a consumer-goods company casts around for the best growth prospects, rarely does anything look more promising than emerging economies. These markets are growing so rapidly that within just two years they will account for half of all the world's consumer spending, estimates Harish Manwani, head of the Asian and African businesses of Unilever, a giant of the world's consumer-goods industries. But even with more than a century of experience in some of these countries, Unilever tripped up.
Few companies have had the head start in places like Africa, China, India and Latin America that Unilever enjoyed. Yet despite the Anglo-Dutch giant's formidable range of products and unprecedented depth of local knowledge, when rivals began to push harder its empire came under threat. Unilever was forced to re-examine its legacy and to act on what it found. Now the results are coming through.
Unilever's low point came in September 2004, when its share price slumped after it shocked investors with a profits warning. Just four months later its prospects dimmed further when its arch-rival, Procter & Gamble (P&G), agreed to buy Gillette for $57 billion. The deal greatly bolstered the American company's formidable arsenal of global brands. Unilever needed to change urgently.
That would involve removing unnecessary complexity and bureaucracy, much of it accumulated over decades of operating in almost every country in the world. But change had to begin at the top. Listed on both the London and Amsterdam stock exchanges, Unilever used to be run almost by committee, with two joint chairmen, one appointed from Britain and the other from the Netherlands. In February 2005 its management structure was altered: Patrick Cescau, the joint chairman from the British side, became the sole chief executive.
Mr Cescau, a soft-spoken Frenchman, is a Unilever