Investors are losing patience with Unilever’s ethical dilemma

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Unilever pricing problem

While the FTSE 100 has long said its values ​​should not detract from growth, some analysts fear corporate campaigns may overshadow important financial matters.

While total sales volume in the third quarter rose to £11.3 billion, a 4% increase over the previous year, all of Unilever’s sales growth came from higher prices rather than volume, according to company filings.

Analysts at Bloomberg say the company appears to have suffered a loss of market share across its three divisions — food, beauty and home care — “which will not be easily offset.”

Another broker warned, “prices for raw materials, packaging and distribution are going up. There is only so much of that extra cost that you can add to the Marmite Basin before consumers skip the spread completely.”

Despite the concerns, Richard Cobb of market research firm Mintel says, sending home brands into a battle to save the planet is now expected by consumers, and therefore unavoidable. But he cautioned that for this to work, brands must not superficially embrace their new values.

“Customers don’t like to be talked to or taken down. They don’t want to sacrifice quality but want brands they know are taking action on sustainability,” Cope adds.

“They want not to worry, to be able to trust that companies are committed to these things. And to be fair, that’s what Unilever’s strategy is all about.”

Certainly, no one could reasonably accuse Unilever of petty opportunistic situations.

The company first launched its “Sustainable Living Plan” in 2010 and has been talking about green issues long before its investors began embracing ESG (Environmental, Social and Governance) goals.

Under former president Paul Pullman, who departed in 2018, the company launched a new model that sought to reframe sustainability not as an optional add-on but as something fundamental to its future.

“We shouldn’t be ashamed of growth,” Pullman said in 2010. “But growth at any cost is not worth it.”

Among its many pledges, Unilever pledged to source more ingredients from sustainable farms, reduce the use of materials that cannot be recycled and help tackle poor sanitation in developing countries.

Since then, the company has continued to expand its commitments. Job, Pullman’s successor, championed the issues with similar enthusiasm and extended the “purpose” clause to each of his individual brands.

In 2019, he warned that even big sellers like Marmite and Pot Noodle could be sold out if they couldn’t find a purpose.

Hopes remain on Job.

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