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Unilever

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Unilever acquired several companies as part of its path to growth strategy to boost sales and market share. It acquired Slimfast, a leading diet food brand, to expand in the US nutritional supplement market. It acquired Ben & Jerry's for its superpremium ice cream segment. It acquired Bestfoods to combine operations and gain cost savings and market coverage in the food industry. However, by 2003 growth of Unilever's leading brands was declining, indicating issues with its acquisition-led growth strategy.

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AA Case AnalysisCase Analysis OnOn Unilever Path to Growth Strategy: Is It Working?Unilever Path to Growth Strategy: Is It Working? Presented by:Presented by: Patel Ankit ( 64 )Patel Ankit ( 64 ) Patel Ankur ( 65 )Patel Ankur ( 65 ) Patel Indra ( 71 )Patel Indra ( 71 ) Patel Nilesh ( 77 )Patel Nilesh ( 77 )
Introduction to UnileverIntroduction to Unilever Unilever was established in 1930 through the merger ofUnilever was established in 1930 through the merger of margarine unie and british based lever brothers it ismargarine unie and british based lever brothers it is soap and detergent company. Lever brother wassoap and detergent company. Lever brother was established in 1885. in 1917 lever brother beganestablished in 1885. in 1917 lever brother began diversified into food, acquiring fish and canned fooddiversified into food, acquiring fish and canned food business. At the time of their merger two companiesbusiness. At the time of their merger two companies are purchase raw material from many of the sameare purchase raw material from many of the same suppliers and both are involved in large scalesuppliers and both are involved in large scale marketing of household products and both are usedmarketing of household products and both are used similar distribution channel.similar distribution channel.
Cont…Cont… Unilever broad based product and geographicUnilever broad based product and geographic diversification in food, personal care and householddiversification in food, personal care and household products. In 2000 when the path to growth strategyproducts. In 2000 when the path to growth strategy introduce the company has 1600 brand of food,introduce the company has 1600 brand of food, personal care and household products, sales of 41.2personal care and household products, sales of 41.2 billion and having operation in more than 88 countries.billion and having operation in more than 88 countries. In 2003 unilever’s brand portfolio increasing from 500In 2003 unilever’s brand portfolio increasing from 500 to 600 brand sales of 48.8 billion.to 600 brand sales of 48.8 billion.
Elements of Unilever strategy:Elements of Unilever strategy: ► Reducing the size of portfolio from 1600 brand to 400Reducing the size of portfolio from 1600 brand to 400 core brand.core brand. ► Focus on R&D and advertising on leading brand.Focus on R&D and advertising on leading brand. ► Divesting underperforming brand and business.Divesting underperforming brand and business. ► Concentrating on product innovation to boost internalConcentrating on product innovation to boost internal growth of business.growth of business. ► Making new acquisition.Making new acquisition.
Acquisition done by unileverAcquisition done by unilever ► The Slimfast acquisitionThe Slimfast acquisition ► The Ben & Jerry’s acquisitionThe Ben & Jerry’s acquisition ► The Best food acquisition.The Best food acquisition.
The slimfast acquisitionThe slimfast acquisition Unilever acquired slimfast diet food for $2.3 billionUnilever acquired slimfast diet food for $2.3 billion cash in 2000. it was privately held company and U.Scash in 2000. it was privately held company and U.S market leader in the $1.3 billion and nutritionalmarket leader in the $1.3 billion and nutritional supplement industry having 45% of market share butsupplement industry having 45% of market share but the rival had a market share of about 25% andthe rival had a market share of about 25% and company’s total net assets was $160 million at the timecompany’s total net assets was $160 million at the time of acquisition. About 94% sales of slimfast product wasof acquisition. About 94% sales of slimfast product was in north america.in north america.
Why unilever acquired slimfast diet food…Why unilever acquired slimfast diet food… Unilever ready to acquired slimfast because companyUnilever ready to acquired slimfast because company was growing by 20% annually so, unilever hadwas growing by 20% annually so, unilever had opportunity to used the company’s global distributionopportunity to used the company’s global distribution capabilities to introduce slimfast in Europe, Australiacapabilities to introduce slimfast in Europe, Australia and other cities in developing countries. At the time ofand other cities in developing countries. At the time of acquisition slimfast begin to contribute positively to theacquisition slimfast begin to contribute positively to the unilever’s cahsflows in 2002 and slimfast had strongunilever’s cahsflows in 2002 and slimfast had strong management team.management team.
The Ben & Jerry’s acquisitionThe Ben & Jerry’s acquisition At the time it was acquired by unilever, ben & jerryAt the time it was acquired by unilever, ben & jerry produced and sells 50 superpremium icecream in aproduced and sells 50 superpremium icecream in a different flavor. About 35 of the flavors are packed indifferent flavor. About 35 of the flavors are packed in pint cartons for sales in super market, grocery storespint cartons for sales in super market, grocery stores and convenience stores and remaining flavors areand convenience stores and remaining flavors are packed in bulk tubs for sales in about 200 franchise andpacked in bulk tubs for sales in about 200 franchise and company owned shops, restaurants and food servicecompany owned shops, restaurants and food service account.account.
Cont…Cont… ► At the end of 1999 ben & jerry had 164 franchisedAt the end of 1999 ben & jerry had 164 franchised shop, 8 partnershop franchised, 12 scoopshop, 8 partnershop franchised, 12 scoop stationfranchise.stationfranchise. ► 9 company owned shops, internationally there are 99 company owned shops, internationally there are 9 franchised.franchised. ► It established its owned subsidiary in japan for theIt established its owned subsidiary in japan for the purpose of importing, marketing and distributing itspurpose of importing, marketing and distributing its product through japanese retail grocery stores.product through japanese retail grocery stores.
Why unilever acquired Ben & jerry’sWhy unilever acquired Ben & jerry’s ► Top executive of unilever icecream business believeTop executive of unilever icecream business believe that achieving 5 to 6% annual revenue growth and sawthat achieving 5 to 6% annual revenue growth and saw icecream as on the path to growth strategy.icecream as on the path to growth strategy. ► Good financial highlights in earlier period and sales wasGood financial highlights in earlier period and sales was increase year by year so, unilever believe that the ben &increase year by year so, unilever believe that the ben & jerry acquisition put in superpremium segment of thejerry acquisition put in superpremium segment of the icecream market for the first time and made unilever theicecream market for the first time and made unilever the world largest marketer of icecream products.world largest marketer of icecream products.
The Bestfood acquisition…The Bestfood acquisition… The Bestfood was a global company which engage inThe Bestfood was a global company which engage in producing and marketing consumer foods. Theproducing and marketing consumer foods. The company had sales offices and manufacturing operationcompany had sales offices and manufacturing operation in 60 countries and marketed its product in more thanin 60 countries and marketed its product in more than 110 countries. About 60% sales of bestfood outside110 countries. About 60% sales of bestfood outside united state. Bestfood employed more than 44000united state. Bestfood employed more than 44000 employees. It was one of the 10employees. It was one of the 10thth largest U.S baesd foodlargest U.S baesd food product company. In 1990 bestfood had annual revenueproduct company. In 1990 bestfood had annual revenue growth rate was 7.8% and EPS was 12.1% annualgrowth rate was 7.8% and EPS was 12.1% annual growth rate.growth rate.
Cont…Cont… ► The company had increased its dividend for 14The company had increased its dividend for 14 consecutive years.consecutive years. ► In 1998 bestfood sales was 2.7% and operating incomeIn 1998 bestfood sales was 2.7% and operating income was 9%was 9%
Core element of Bestfood strategy…Core element of Bestfood strategy… ► Globalisation of the company’s core consumer businessGlobalisation of the company’s core consumer business ► Constant improvement in cost effectiveness.Constant improvement in cost effectiveness. ► Seeking out and exploiting new market opportunitiesSeeking out and exploiting new market opportunities ► Using free cash flow to make strategic acquisition.Using free cash flow to make strategic acquisition.
Why unilever acquired Bestfood…Why unilever acquired Bestfood… ► Unilever believe that combining and integratingUnilever believe that combining and integrating operation of bestfood would result in cost savingoperation of bestfood would result in cost saving through combined purchasing, greater efficiency inthrough combined purchasing, greater efficiency in business operation and process, improvement inbusiness operation and process, improvement in marketing and distribution and increase economy ofmarketing and distribution and increase economy of scale.scale. ► Bestfood product had good geographical marketBestfood product had good geographical market coverage so that it would result in better position incoverage so that it would result in better position in food market.food market. ► Opportunity to introduce in Europe and latin america.Opportunity to introduce in Europe and latin america.
Conclusion…Conclusion… ► In 2003 growht in sales of its leading brand will beIn 2003 growht in sales of its leading brand will be declining.declining.

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Unilever

  • 1. AA Case AnalysisCase Analysis OnOn Unilever Path to Growth Strategy: Is It Working?Unilever Path to Growth Strategy: Is It Working? Presented by:Presented by: Patel Ankit ( 64 )Patel Ankit ( 64 ) Patel Ankur ( 65 )Patel Ankur ( 65 ) Patel Indra ( 71 )Patel Indra ( 71 ) Patel Nilesh ( 77 )Patel Nilesh ( 77 )
  • 2. Introduction to UnileverIntroduction to Unilever Unilever was established in 1930 through the merger ofUnilever was established in 1930 through the merger of margarine unie and british based lever brothers it ismargarine unie and british based lever brothers it is soap and detergent company. Lever brother wassoap and detergent company. Lever brother was established in 1885. in 1917 lever brother beganestablished in 1885. in 1917 lever brother began diversified into food, acquiring fish and canned fooddiversified into food, acquiring fish and canned food business. At the time of their merger two companiesbusiness. At the time of their merger two companies are purchase raw material from many of the sameare purchase raw material from many of the same suppliers and both are involved in large scalesuppliers and both are involved in large scale marketing of household products and both are usedmarketing of household products and both are used similar distribution channel.similar distribution channel.
  • 3. Cont…Cont… Unilever broad based product and geographicUnilever broad based product and geographic diversification in food, personal care and householddiversification in food, personal care and household products. In 2000 when the path to growth strategyproducts. In 2000 when the path to growth strategy introduce the company has 1600 brand of food,introduce the company has 1600 brand of food, personal care and household products, sales of 41.2personal care and household products, sales of 41.2 billion and having operation in more than 88 countries.billion and having operation in more than 88 countries. In 2003 unilever’s brand portfolio increasing from 500In 2003 unilever’s brand portfolio increasing from 500 to 600 brand sales of 48.8 billion.to 600 brand sales of 48.8 billion.
  • 4. Elements of Unilever strategy:Elements of Unilever strategy: ► Reducing the size of portfolio from 1600 brand to 400Reducing the size of portfolio from 1600 brand to 400 core brand.core brand. ► Focus on R&D and advertising on leading brand.Focus on R&D and advertising on leading brand. ► Divesting underperforming brand and business.Divesting underperforming brand and business. ► Concentrating on product innovation to boost internalConcentrating on product innovation to boost internal growth of business.growth of business. ► Making new acquisition.Making new acquisition.
  • 5. Acquisition done by unileverAcquisition done by unilever ► The Slimfast acquisitionThe Slimfast acquisition ► The Ben & Jerry’s acquisitionThe Ben & Jerry’s acquisition ► The Best food acquisition.The Best food acquisition.
  • 6. The slimfast acquisitionThe slimfast acquisition Unilever acquired slimfast diet food for $2.3 billionUnilever acquired slimfast diet food for $2.3 billion cash in 2000. it was privately held company and U.Scash in 2000. it was privately held company and U.S market leader in the $1.3 billion and nutritionalmarket leader in the $1.3 billion and nutritional supplement industry having 45% of market share butsupplement industry having 45% of market share but the rival had a market share of about 25% andthe rival had a market share of about 25% and company’s total net assets was $160 million at the timecompany’s total net assets was $160 million at the time of acquisition. About 94% sales of slimfast product wasof acquisition. About 94% sales of slimfast product was in north america.in north america.
  • 7. Why unilever acquired slimfast diet food…Why unilever acquired slimfast diet food… Unilever ready to acquired slimfast because companyUnilever ready to acquired slimfast because company was growing by 20% annually so, unilever hadwas growing by 20% annually so, unilever had opportunity to used the company’s global distributionopportunity to used the company’s global distribution capabilities to introduce slimfast in Europe, Australiacapabilities to introduce slimfast in Europe, Australia and other cities in developing countries. At the time ofand other cities in developing countries. At the time of acquisition slimfast begin to contribute positively to theacquisition slimfast begin to contribute positively to the unilever’s cahsflows in 2002 and slimfast had strongunilever’s cahsflows in 2002 and slimfast had strong management team.management team.
  • 8. The Ben & Jerry’s acquisitionThe Ben & Jerry’s acquisition At the time it was acquired by unilever, ben & jerryAt the time it was acquired by unilever, ben & jerry produced and sells 50 superpremium icecream in aproduced and sells 50 superpremium icecream in a different flavor. About 35 of the flavors are packed indifferent flavor. About 35 of the flavors are packed in pint cartons for sales in super market, grocery storespint cartons for sales in super market, grocery stores and convenience stores and remaining flavors areand convenience stores and remaining flavors are packed in bulk tubs for sales in about 200 franchise andpacked in bulk tubs for sales in about 200 franchise and company owned shops, restaurants and food servicecompany owned shops, restaurants and food service account.account.
  • 9. Cont…Cont… ► At the end of 1999 ben & jerry had 164 franchisedAt the end of 1999 ben & jerry had 164 franchised shop, 8 partnershop franchised, 12 scoopshop, 8 partnershop franchised, 12 scoop stationfranchise.stationfranchise. ► 9 company owned shops, internationally there are 99 company owned shops, internationally there are 9 franchised.franchised. ► It established its owned subsidiary in japan for theIt established its owned subsidiary in japan for the purpose of importing, marketing and distributing itspurpose of importing, marketing and distributing its product through japanese retail grocery stores.product through japanese retail grocery stores.
  • 10. Why unilever acquired Ben & jerry’sWhy unilever acquired Ben & jerry’s ► Top executive of unilever icecream business believeTop executive of unilever icecream business believe that achieving 5 to 6% annual revenue growth and sawthat achieving 5 to 6% annual revenue growth and saw icecream as on the path to growth strategy.icecream as on the path to growth strategy. ► Good financial highlights in earlier period and sales wasGood financial highlights in earlier period and sales was increase year by year so, unilever believe that the ben &increase year by year so, unilever believe that the ben & jerry acquisition put in superpremium segment of thejerry acquisition put in superpremium segment of the icecream market for the first time and made unilever theicecream market for the first time and made unilever the world largest marketer of icecream products.world largest marketer of icecream products.
  • 11. The Bestfood acquisition…The Bestfood acquisition… The Bestfood was a global company which engage inThe Bestfood was a global company which engage in producing and marketing consumer foods. Theproducing and marketing consumer foods. The company had sales offices and manufacturing operationcompany had sales offices and manufacturing operation in 60 countries and marketed its product in more thanin 60 countries and marketed its product in more than 110 countries. About 60% sales of bestfood outside110 countries. About 60% sales of bestfood outside united state. Bestfood employed more than 44000united state. Bestfood employed more than 44000 employees. It was one of the 10employees. It was one of the 10thth largest U.S baesd foodlargest U.S baesd food product company. In 1990 bestfood had annual revenueproduct company. In 1990 bestfood had annual revenue growth rate was 7.8% and EPS was 12.1% annualgrowth rate was 7.8% and EPS was 12.1% annual growth rate.growth rate.
  • 12. Cont…Cont… ► The company had increased its dividend for 14The company had increased its dividend for 14 consecutive years.consecutive years. ► In 1998 bestfood sales was 2.7% and operating incomeIn 1998 bestfood sales was 2.7% and operating income was 9%was 9%
  • 13. Core element of Bestfood strategy…Core element of Bestfood strategy… ► Globalisation of the company’s core consumer businessGlobalisation of the company’s core consumer business ► Constant improvement in cost effectiveness.Constant improvement in cost effectiveness. ► Seeking out and exploiting new market opportunitiesSeeking out and exploiting new market opportunities ► Using free cash flow to make strategic acquisition.Using free cash flow to make strategic acquisition.
  • 14. Why unilever acquired Bestfood…Why unilever acquired Bestfood… ► Unilever believe that combining and integratingUnilever believe that combining and integrating operation of bestfood would result in cost savingoperation of bestfood would result in cost saving through combined purchasing, greater efficiency inthrough combined purchasing, greater efficiency in business operation and process, improvement inbusiness operation and process, improvement in marketing and distribution and increase economy ofmarketing and distribution and increase economy of scale.scale. ► Bestfood product had good geographical marketBestfood product had good geographical market coverage so that it would result in better position incoverage so that it would result in better position in food market.food market. ► Opportunity to introduce in Europe and latin america.Opportunity to introduce in Europe and latin america.
  • 15. Conclusion…Conclusion… ► In 2003 growht in sales of its leading brand will beIn 2003 growht in sales of its leading brand will be declining.declining.