Is Unilever Running Out Of Ideas?

A move by Unilver to shed some of its laundry brands reminds me of that ‘How Long Can P&G Last?‘ opinion piece I wrote back in June. In the piece I argued that ‘holding companies’ like P&G and Unilever with armies of brand managers are going to have a hard time creating real brands that connect with the modern consumer. (The piece caused quite a lot of discussion – go read!). Now, I notice that Unilever is backing out of a category it helped create – laundry products – because it didn’t think it could compete with P&G and private label brands.

We keep hearing stories about how P&G and Unilever are changing to become ideas-led companies but the latter’s wholesale removal from a category suggests that it’s simply not the case. Brandweek reports on the sale:

Global private equity firm Vestar Capital Partners today acquired Unilever’s North American laundry business for $1.08 billion in cash.

Brands such as Snuggle, Wisk, Surf and Sunlight will now be marketed and handled under a new company, The Sun Products Corp., which was formed when Vestar Capital Partners merged its business entity, Huish Detergents, with the newly acquired brands. Based in Salt Lake City, Huish Detergents is the largest manufacturer of private label detergents and fabric softeners in the U.S. Vestar bought the company in March 2007.

…Unilever Group chief executive Patrick Cescau said the move allows the company to focus on expanding leading brands outside of North America, while getting rid of “nonstrategic brands” with high turnover. In 2007, Unilever’s North American, Canadian and Puerto Rican laundry business resulted in $1 billion in turnover for the company.

Meanwhile new entrants such as Method seem to be doing rather well by introducing simple innovation such as concentrated and eco-friendly versions.

When it’s easier to sell part of your company to VCs rather than sell your products to consumers, maybe you should worry about whether you can help those non-”non-strategic brands” out too.

Brandweek
Unilever