Unilever gets boost from global “eat-at-home” trend

Posted by Daniel Palmer on 8th May 2009

Unilever has reported organic sales growth of 4.8% for the first quarter despite a fall in volumes.

The consumer products group said higher pricing had been a strong contributor to their growth and noted that their Australian operations had a strong quarter.

“Organic growth of 4.8 % was underpinned by continuing double digit growth in our D&E (developing and emerging) markets and strong performance in our Americas region,” CFO Jim Lawrence advised. “Growth continues to be broad based with particularly strong performances in Indonesia, South Africa, Australia, Russia and Vietnam.”

The maker of Flora, Streets and Lipton reported that their strategies had shifted in line with changing consumer behaviour.

“The effects of falling house prices, excessive credit card debt, falling equity prices and job security fears are contributing to on-going consumer habit changes,” CEO Paul Polman noted. “Never has consumer behaviour changed so rapidly. We are clearly seeing a premium placed by consumers on value.”

“For example we see:
• coupon searches on the web at record highs;
• substantial hits on our branded web sites from consumers looking for value recipes;
• consumers shopping more frequently with smaller baskets;
• consumers switching towards perceived value channels;
• consumers sticking closely to a shopping list, with less impulse buying becoming more common – even in men; and
• we see value in many categories becoming even more of a discriminator of choice.”

Mr Polman said that private label had made market share gains but it was “not all bad news” as private label growth was not across the board and consumers are choosing to eat at-home more often.

“There are some categories where private label has benefited from the economic slowdown – but not everywhere and not a consistent picture,” he advised. “For companies that are close to the consumer and shopper, it is not all bad news. I continue to believe that strong, well supported brands, committed to innovation, can win in this environment and we are seeing evidence of that in selected places – even North America and Europe.”

“For example, brands like Hellmans, Bertolli and Ragu in the US are clearly benefiting from increased sandwich and pasta consumption at home as well as a good innovation pipeline.”

“We feel good about the progress made, but recognise that there is more to do,” Mr Polman concluded.

The company has suspended profit targets indefinitely.