19 Jul 2018
Posted in Retail
Continued evolution of product portfolio is crucial for Unilever to return to pricing growth
Following today’s release of Unilever’s Q2 2018 results,
Ronan Stafford, Lead Analyst at GlobalData, a leading data and analytics company, comments:
‘‘Unilever’s second quarter results indicating strong volume growth, but weak pricing growth, shows how the company needs to keep evolving its brand portfolio to increase its exposure to premium personal care categories and emerging markets.
”Building brands with purpose will be key to long-term pricing growth.
”Unilever’s sale of the spreads business to KKR, completed in July 2018, and heavy M&A activity with 24 new deals signed since the start of 2015, show that Unilever’s product portfolio is in flux. However, initiatives such as the New Vision Fund, backing women of color entrepreneurs, offer a strong route forward.
”Price competition will stay strong in most developed economies in the coming years, and is a major threat facing Unilever. This will be driven by the continued strength of discounters, strategic alliances in supply chains between large players such as Tesco and Carrefour, and disruption from online players such as Amazon, and direct to consumer sites like Dollar Shave Club, which Unilever acquired in 2016.
”Unilever’s growth in the first half of the year has been almost entirely volume dependent. Underlying volume growth (excluding spreads) reached 2.5%, compared with underlying sales growth (excluding spreads) of 2.7%.
”Currency fluctuations and supply chain disruptions in Brazil dampened pricing growth and while these disruptions will likely ease over the coming months, long-term pricing growth will come from Unilever’s continued efforts to evolve its product offering.”