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Consumer goods giant Unilever has never been one to shy away from current trends.
Whether it be trialling facial recognition software or calling on the industry to step up its efforts on plastic waste, the Anglo-Dutch company likes to keep a keen eye on what’s going on in the world and respond in its own inimitable fashion.
However, there are certain geopolitical events that CEO Paul Polman may want to be less affiliated with.
When Unilever recently announced a review of its dual-headed structure pundits and analysts immediately linked the move to Brexit.
The company has reportedly been deliberating moving its operations in London to its Rotterdam headquarters, which would simplify the current structure of having two headquarters and two stock market listings, in favour of a single legal entity in the Netherlands.
Should it come to pass, Unilever would follow in the footsteps of other firms such as Royal Dutch Shell and Thomson Reuters, which have made similar intimations - at a time when UK prime minister Theresa May is seeking to forestall a mass-exodus of corporations out of London as the country divorces itself from the EU.
Not Political
While Brexit represents the unavoidable elephant in the room, Unilever's move is actually less political than it appears upon first glance.
Polman has indicated that the decision was strongly influenced by the unsolicited $143 billion takeover bid by the US company Kraft Heinz last year.
This left Unilever's management somewhat shaken, and the company pledged to investigate its London-based system of corporate governance, which prioritises shareholders interests over those of stakeholders.
Thus, Unilever's plans centralise the executive and governing structures within Dutch system would allow for more safeguards to be put in place and preempt another surprise takeover bid.
At the same time, the company has also bought back €5 billion in shares in London and Rotterdam, in order to strengthen the link between its economic interests and voting rights for company shareholders, while simplifying its capital structure and improving corporate governance.
It also brought its advertising more in-house, with the creation of 17 'U-Studios' in 12 countries.
'In marketing, we are creating more of our own content in house while making existing assets go further,' Unilever commented in its most recent annual report. 'Our 17 U-Studios in 12 countries are creating content for brand teams faster and around 30% cheaper than external agencies.
'In addition, we are using our global and agency networks in order to access efficient production solutions and locations. We continue to apply zero-based budgeting to improve efficiencies in areas such as brand and marketing investment.'
Deep Roots
However, the company is unlikely to abandon its British connections, not least because of deep roots extending back to its interwar origins, when the British Lever Brothers merged with Margarine Unie of the Netherlands in 1929.
More recently, Unilever’s expansion through its newly-opened Advanced Manufacturing Centre near Liverpool is set to upscale the business' R&D position in the UK.
The facility is part of the company’s investment in its Port Sunlight hub, which recently partnered with the University of Liverpool and HEFCE to support the product development of its home and personal care categories.
Further Expansion
As part of its streamlining operations, the company has also offloaded underperforming subdivisions, while also increasing its presence in emerging markets.
Unilever recently sold off its Alsa baking and dessert business to Dr. Oetker, which includes a manufacturing unit in France, while it also completed its acquisition of the personal care and home care brands of Quala, the Latin American consumer goods company.
It also increased its presence in Korea, with the takeover of cosmetics company Carver Korea, thereby positioning itself stronger in the world’s fourth-largest skincare market.
It looks that regardless of Unilever’s decision on where it will end up, its ambitions remain forward-looking and, more importantly, global. In response, the UK government will have to show its continued efforts to allow for that kind of environment.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Kevin Duggan. Click subscribe to sign up to ESM: The European Supermarket Magazine.
