In SA and around the world Unilever has become synonymous with quality products, brand building and being a leading employer.
With a global mission to add vitality to life, this leading FMCG giant meets everyday needs for nutrition, hygiene and personal care with 400 brands that help millions of people feel and look good.
Many an expert has said that recessions are times of a great opportunity. Unilever was created in 1930 (at the start of the Great Depression) through the merger of Dutch Margarine-Unie and British Lever Brothers.
Today's recession is considered as much of an opportunity for the multinational company as it was then.
Unilever's 2008 annual report shows it increased underlying sales growth by 7,4%. Though exchange rates saw turnover increase by only 0,8%, net profit was up by 28%, boosted by profits from international disposals.
The greatest potential for growth is seen as being in Africa, Asia, and central and eastern Europe with underlying growth of 14, 2% while that for Western Europe is 1,3% and the Americas 6, 4%.
In the FMCG sector products stay with one from cradle to grave. Therefore, it is not surprising that Unilever should see its greatest prospects coming from the developing world where it is estimated that the region will account for 70% of the world's population by 2025.
The SA firm and the developing and emerging market, which has provided exponential growth in turnover in the past two years, plays a significant role in the global business contributing as much as 50% to growth, says Unilever SA chairman Gail Klintworth. With local turnover at R1,3bn* (see footnote) in 2008, Unilever SA intends to achieve an average underlying growth of 4% to 5% over inflation per annum to double turnover and improve profitability by 2015.
The full force of international know-how, coupled with local market knowledge and a R500m/year kitty, is being brought to bear on brand development and promotion to meet this ambitious target. Though a leader in seven of nine categories - washing powders, household cleaners, bath soap, deodorants, soups, seasonings and oils (margarine) - Klintworth says there is room to achieve more and make strides in the hair care and tea markets.
" There is a lot of room to gain a bigger share in the market. Our brand strength in SA is exceptional. Consumers love them and in most homes one will find some, if not all, Unilever brands and our innovation of brands ensures that they remain suitable to the market," she says.
During 2006/2007 the global company underwent a period of consolidation. It merged its home and personal care and food divisions, which had operated as two completely independent businesses, and disposed of other noncore businesses. Whether this is an example of good management and leadership or simply fortuitous is debatable. However, the restructuring left the company leaner and meaner as the recession bit.
"The recession has been good for us. It has forced us to look at real affordability and we have been able to deliver R470m in savings to the consumer," she says.
The local company has also invested heavily in capital expenditure. A new IT transaction system is up and running; each factory has undergone significant capital investment to ensure increased capacity; and in July a R370m state-of-the-art warehouse was opened in Pietermaritzburg. This is the first of two mega warehouses that will form the backbone of the new distribution network in SA.
Rated as the largest advertising spender in the FMCG sector with a spend of R645m in 2008 according to Nielsen Media research, the company has not cut its communication spend, despite the recession. Rather it has significantly increased this investment and become smart about how it communicates its products' messages.
Though trimming costs, Unilever has not gone on a job cutting exercise nor has it cut its graduate recruitment, training and development budget.
A significant driver of growth is customer service and in Unilever's case, this is the retailer that ensures their product reaches the consumers. According to Klintworth, there has been so much change during the personal and home care and food division merger two years ago that there was a "wobble" in customer service. This is back on track and the company wants to be the number one choice for customers.
WHAT IT MEANS
 Attained turnover of R1,3bn in 2008
Aiming for underlying growth of 4%-5%
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The recession has also focused thinking on maintaining brand promise. The company continually benchmarks its products against branded and unbranded competitors. "Monitoring any kind of consumer complaint is core to our DNA," says Klintworth, pointing out that the company is going to get tougher on quality and standards worldwide.
There is an astute awareness that decades of success can result in self-satisfaction that leads to a loss of competitive edge. As a remedy, Unilever has sought to actively inject competition in an action orientated 30-day turnaround strategy that demands high performance.
Positioning SA as the test market for success within the global company context is perhaps a personal mission for Klintworth. SA is a unique country that is small, with a concentrated population of 45m-50m people. The population is a perfect mix of modern and older generations across a microcosm of FMCG LSMs - from the richest to the poorest - which makes it ideal, she says.
For example, SA work on the innovation and brand propositioning of Sunlight has resulted in it becoming the most successful global brand and the fastest growing in the UK. Similarly the Knorr instore "What's for dinner?" promotion is going global and Rama's growth has been meteoric.
* Unilever has subsequently corrected this figure. The correct turnover for 2008 was R10,7bn.
