Unilever plc

UNILEVER PLC SWOT

& PESTLE ANALYSIS
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Unilever plc

Table of Contents

Company Overview ........................................................................................................................................ 3

Business Sector .............................................................................................................................................. 3
Operating Geography .................................................................................................................................... 3
Revenue ............................................................................................................................................................ 3
SWOT Analysis ............................................................................................................................................... 4
Strength......................................................................................................................................................... 5
Weakness ..................................................................................................................................................... 6
Opportunity .................................................................................................................................................. 6
Threat ............................................................................................................................................................. 7
PESTLE Analysis ............................................................................................................................................ 9
Political........................................................................................................................................................ 10
Economic .................................................................................................................................................... 10
Social ........................................................................................................................................................... 10
Technological ............................................................................................................................................ 11
Legal............................................................................................................................................................. 11
Environmental ........................................................................................................................................... 12
Major Competitors ........................................................................................................................................ 12
Major Brands ................................................................................................................................................. 12
Business Sectors / Diversification ........................................................................................................... 13
Top Acquisitions / Mergers / Alliances / Joint Ventures / Divestitures .......................................... 14
Unilever plc

The Unilever SWOT & PESTLE Sample Analysis report was published in August 2018.
The information and analysis are relevant to the data available before the publishing date.

Data in the actual ‘Complete Reports’ (available for purchase on the website) are updated
on a periodic basis.

Company Overview
Unilever Plc. is an Anglo-Dutch multinational consumer goods company founded in 1930, by the
merger of Dutch firm, Margarine Unie and British firm, Lever Brothers. The Company started off in the
1890's with William Hesketh Lever, founder of Lever Brothers, who wanted to make his vision for
cleanliness commonplace and penned down his ideas for the Sunlight Soap. Unilever has over 400
brands across food, personal care and household cleaning segments and is co-headquartered in
Rotterdam, Netherlands and London, U.K. With a range of over 400 unique brands, on any given day,
2.5 billion people use Unilever products in their daily life. The multinational FMCG, is parent to some
of the world's leading, household-name brands like Lipton, Knorr, Dove, Axe, Hellmann’s and Omo,
Lifebuoy, Sunsilk, Close-up etc. Kantar Worldpanel has hailed Unilever as the company with the
largest number of brands in the world. It is the world's 4th largest FMCG based on net sales as of
2017, after Nestle, P&G and PepsiCo. 12 of its brands generate sales of over €1 billion annually. It
has around 161,000 employees in more than 190 countries as of 2018.

Unilever's vision has a simple yet clear purpose, "to make sustainable living commonplace. We
believe this is the best long-term way for our business to grow." Unilever's USP or unique selling
proposition lies in its being one of the oldest FMCG companies in the world having the largest brand
portfolio, great brand recall by consumers, contributing immensely to sustainable living.

Business Sector
Fast Moving Consumer Goods (FMCG)

Operating Geography
United Kingdom, Netherlands, Global

Revenue
€53.7 billion – FY ending 31st Dec 2017 (y-o-y growth 2%)

€52.7 billion – FY ending 31st Dec 2016

Unilever plc

SWOT Analysis
The SWOT analysis for Unilever plc is presented below in a matrix format followed by a detailed
analysis:

Strength Weakness

1. Strong financial performance and strategy 1. Decline in grocery segment

2. Strong popular brands 2. Dependence on distributors and retailers
3. Evolving portfolio and developing
channels
4. Substantial strategic investments to drive
growth
5. R&D focus and integrated supply chain

Opportunity Threat

1. Potential in emerging markets 1. Global and regional competitors

2. Growing demand for premium and 2. Private label brands from retailers
specialized high-end products in skin care 3. Divergent global market environment
segment
Unilever plc

Strength
1. Strong Financial Performance and Strategy: Unilever has delivered sustainable high Return
on invested capital (ROIC) in the range of 17-19% over the past few years. Its Free Cash Flow as
percentage of Core Net Profit stood at 80% in 2016 and the organization aims to increase it further
to 90% by 2019. It declared a heathy dividend of €1.19 in 2015 and the dividend has been growing
by 8% since the last five years. The company has also significantly improved upon the working
capital and fixed asset efficiency. The investments made over the years in advertising, supply
chain and IT are also helping the company in higher savings retention. Unilever also ranked at
#147 in the Fortune Global 500 for the year 2016.

2. Strong Popular Brands: Unilever has strong brands across major FMCG segments. It has 13
core brands with sales of €1 billion or above as of 2016. Its Sustainable Living brands like Dove,
Lifebuoy and Knorr aim at delivering social and environmental impacts and account for half of the
organization's growth.

3. Evolving Portfolio and Developing Channels: Unilever has invested in evolving and
diversifying its portfolio of products. The acquisition of Dollar Shave Club, the online men's razor
seller which sells blades per months subscription opened the door for Unilever's entry into men’s
shaving segment which is currently dominated by P&G’s Gillette. This also develops and
strengthens Unilever's e-commerce channels. The acquisition of Blueair marks Unilever's entry in
indoor air purification technology extending its water purification business and strengthens its
Home Care portfolio. In a strategic move to strengthen its presence in the Chinese market,
Unilever is using the online channel, Alimama - Alibaba’s ad network and marketing services
platform. Alimama’s Taobao Affiliate Network helps position Unilever as a unique seller, advertiser
and sponsor in the online market.

4. Substantial Strategic Investments to Drive Growth: Unilever has made substantial business
investments in the past seven years in strategic areas. Unilever has invested an additional +€10
bn cumulative (2009-16) in additional brand & marketing and an additional +€5 bn cumulative
(2009-16) in Supply Chain and Information Technology. Merger & Acquisitions is another key area
where Unilever has invested substantially, with +€10 bn cumulative (2009-16) spending. These
investments have resulted in considerable growth and Unilever will continue to drive growth from
these investments backed by additional spending in the coming years.
Unilever plc

5. R&D Focus and Integrated Supply Chain: Unilever spends over €1 billion a year on Research
and Development in order to build and improvise brands through innovation leveraged by science
and technology. It has six R&D centers globally with over 6,000 R&D experts. It also recently
established a Strategic Science Group which works on long term scientific solutions and
complements the R&D division. According to global research and advisory firm Gartner, Unilever’s
integrated supply chain is one of the best across FMCG companies globally. Unilever has over
300 factories as of 2015 and has significantly invested in efficiency and eco-production. It’s
UltraLogistik network helps it to reduce costs and emissions impact of its supply chain on the
environment. UltraLogistik operations has helped Unilever reduce CO2 emissions by around 21%
in more than 14 countries over the last 5 years.

Weakness
1. Decline in Grocery Segment: Unilever's share in the grocery segment has significantly declined
over the past decade. The grocery segment performed poorly in the competitive European market
facing a steep decline from 25% in 2008 to 12% in 2015. One of the primary reasons for this slide
was the gradual divestment of major food brands by the company and the other reason being the
grocery segment becoming highly commoditized. In the Asian and African markets, Unilever is
facing tough competition from mass-market and local players. Also, with global grocery sales
moving online, Unilever has not been able to preserve its share in the grocery segment.

2. Dependence on Distributors and Retailers: Unilever does not directly sell its products except
for some specific brands in beauty and skin care and men’s grooming portal - Dollar Shave Club.
It majorly depends on distributors and retailers who are part of its supply chain and help in
reaching the products to the end-consumer. Any conflict with the distributors or retailers can
impact its sales in the market. A recent instance of the above was the dispute with UK retailer
Tesco in October 2016 over the pricing of some brands including Marmite and Ben & Jerry’s.
Tesco had apparently refused to hike up the prices of Unilever’s brands by 10% as directed by
the company. This had affected supply of Unilever’s products in Tesco’s stores across UK and
Irish markets.

Opportunity
1. Potential in Emerging Markets: Emerging markets are the key to growth for FMCG companies
like Unilever. Unilever has set itself a target of doubling its sales by 2020 and this can be achieved
by aggressive expansion in markets across the Asian subcontinent, ASEAN region, Africa and
Unilever plc

Latin America. Developed markets are expected to deliver a growth of only 1-2% over the next
five years due to market saturation. Unilever currently (as of 2018) generates 58% of the sales
from developing markets which it aims to escalate to 70% of its total sales by 2020.

2. Growing Demand for Premium and Specialized High-End Products in Skin Care Segment:
There is a strong growing demand for premium skin care products across markets. The global
skin care market was US $121 billion as of 2016 and is expected to reach US $196 billion by 2024
according to Grand View Research, Inc. and the premium segment occupies about 30% which
comes to US $37 billion in 2016. In developed markets such as North America and Western
Europe despite slowdown in consumer spending, there is a growing demand for premium products
in the mass products segments. In developing and emerging markets like the Indian-subcontinent
and Middle East, demand for premium personal care products is set to increase according to
Trefis Research as there is growing disposable income and greater awareness. Further the
natural skin care segment is expected to grow by a CAGR of 10% through 2019. Thus, premium
skin and personal care segment has good potential for Unilever, a segment in which it already
has a strong footprint.

Threat
1. Global and Regional Competitors: Unilever faces tough competition across its business
segments from global and regional competitors. Consumer product giants like Colgate Palmolive
and P&G are pursuing aggressive growth and expansion strategies in personal care segments
and pose a direct challenge to Unilever. Reckitt Benckiser is also a major competitor in Asian and
European markets.

2. Private Label Brands from Retailers: Private label brands from top retailers pose direct threat
to FMCG companies like Unilever who are majorly dependent on these retailers for sale of their
products. Costco uses Kirkland Signature as its private brand whilst Walmart's own house brands
include Sam’s Choice, Equate and Great Value that directly compete against Unilever’s products.
Online retailer Amazon has come up with its own range of private brands like Amazon Elements
and Bama Bear in personal and baby care segment and Happy Belly and Wickedly Prime in the
foods segment which have gained popularity over the past year.

3. Divergent Global Market Environment: Unilever is facing a divergent environment across its
major markets. In India, one of Unilever’s major markets, the demonetization initiative announced
by the government in November 2016, is expected to have a considerable lasting impact on the
Unilever plc

business and economy and may result in a slowdown, affecting sales of its subsidiary, Hindustan
Unilever. Further, the introduction of Goods and Services Tax (GST) in later part of 2017, is
expected to change the market dynamics. In Latin Americas (LATAM region), there has been
significant cost rise due to the impact of currency devaluations. Volatile political and economic
climate in major markets like Russia and Turkey also pose significant threats to Unilever. Other
Asian markets, particularly the South-East Asia is experiencing subdued pricing, impacting
margins of FMCG companies.
Unilever plc

PESTLE Analysis
The PESTLE analysis for Unilever plc is presented below in a matrix format followed by a detailed
analysis:

Political Economic Social

1. Trade protectionist policies 1. Conflict with distributors 1. Growing demand for

of Trump administration over product price rise due premium skin-care
to currency impact of products in emerging
Brexit markets
2. Sharp fluctuations in
currency markets

Technological Legal Environmental

1. Implementation of 1. Regulatory approvals 1. Actionable steps to address

integrated supply chain delay decision making and climate change within the
with Ultralogistik business growth value chain
2. Leveraging ‘People Data 2. Change in tax laws and
Centres’ to understand regulations
consumer behaviour
Unilever plc

Political
1. Trade protectionist policies of Trump administration: Increased protectionism policies
impacts global trade and more often than not these are influenced by political factors and issues.
Unilever being a European company may find tough market conditions for operating in the U.S as
new regulations are likely to be introduced impacting foreign companies. Trump administration
has already withdrawn from Trans-Pacific Partnership trade agreement and is expected to bring
many more administrative changes to trade deals and partnerships.

Economic
1. Conflict with distributors over product price rise due to currency impact of Brexit: Post-
Brexit the GBP depreciated significantly which resulted in Unilever increasing its product prices in
UK markets. Unilever majorly depends on distributors and retailers who are part of its supply chain
helping them reach its products to the end-consumer. Any conflict with the distributors or retailers
can impact its sales in the market. A recent instance of the above was the dispute with UK retailer
Tesco in October 2016 over the pricing of some brands including Marmite and Ben & Jerry’s due
to the currency impact. Tesco had apparently refused to hike up the prices of Unilever’s brands
by 10% as directed by the company. This had affected supply of Unilever’s products across
Tesco’s stores across UK and Irish markets.

2. Sharp fluctuations in currency markets: The increased political and economic certainty globally
has caused sharp fluctuations in the currency market. Unilever consolidates and reports its
financial statements in Euros, it is subject to translation risks of its assets and earnings of foreign
subsidiaries. The UK's decision to leave EU caused major depreciation of the GPB in 2016, which
impacted Unilever's UK market sales. These fluctuations cannot always be passed on to the end-
consumer through price increases thus impacting the company's margins.

Social
1. Growing demand for premium skin-care products in emerging markets: Disposable
consumer income is increasing across developing and emerging markets. These markets also
have a high percentage of young population which is also leading to expansion in the middle-class
segment. In developing and emerging markets like the Indian-subcontinent and Middle East,
demand for premium personal care products is set to increase according to Trefis Research as
there is growing disposable income and greater awareness. Further the natural skin care segment
Unilever plc

is expected to grow by a CAGR of 10% through 2019. Thus, premium skin and personal care
segment has good potential for Unilever, a segment in which it already has a strong footprint.

Technological
1. Implementation of integrated supply chain with Ultralogistik: Unilever’s integrated supply
chain is one of the best across FMCG companies globally. Unilever has over 300 factories as of
2015 and has significantly invested in efficiency and eco-production. Its UltraLogistik network
helps it to reduce costs and emissions impact of its supply chain on the environment. It also gives
the company benefits of economies of scale, gives real time visibility and reporting and helps to
implement best practices across a region.

2. Leveraging ‘People Data Centres’ to understand consumer behaviour: Consumer and

Market Insights (CMI) group division has created a data analytics unit, ‘‘People Data Centres’
which analyzes data from social media, consumer carelines and digital marketing platforms which
are turned into actionable business decisions that help in sales and revenue growth. Unilever also
maps consumer purchase journeys in digital channels which helps in better segmentation and
understanding online behavioral patterns.

Legal
1. Change in tax laws and regulations: Changes to tax laws and regulations can have a major
impact on Unilever's business. This area is particularly in focus after major political and
administrative changes globally, mainly the Brexit referendum and election of Donald Trump as
U.S. President. Tax laws and their interpretations are frequently changing which may lead
Unilever at the risk of unexpected tax exposures.

2. Amnesty allegations regarding child labor: Unilever along with other companies is facing
allegations from Amnesty International regarding usage of child labor in palm oil which is used by
the company. In 2016, Amnesty reported, that it has traced the palm oil used by Unilever as
produced by Wilmar International. The allegations further substantiate that children do back-
breaking physical labor on Wilmar's refineries in Indonesia. The allegations if proved, may cause
legal issues for Unilever in many markets and also lead to consumer boycott.
Unilever plc

Environmental
1. Actionable steps to address climate change within the value chain: Unilever aims to address
sustainability in each of its operations and has integrated addressing climate change initiatives
within its value chain. The company has committed to being carbon positive in its operations by
2030 with complete usage of electricity from renewable sources. Also, Unilever aims to eliminate
usage of coal from its energy mix by 2020. Amongst other initiatives Unilever is addressing
consumer disposal and recycling, deforestation, water recycling and sustainable packaging of
products. Unilever is one of the few organizations globally which has been named a leader of the
Household & Personal Products Industry Group in the Dow Jones Sustainability Index (DJSI).

Major Competitors
• Procter & Gamble
• Colgate-Palmolive
• Kimberley Clark
• Henkel
• Loreal
• Nestle
• PepsiCo
• Reckitt Benckiser
• ConAgra
• Johnson & Son

Major Brands
• Axe/Lynx
• Blue Band
• Dermalogica
• Dove
• Flora / Becel
• Heartbrand
• Hellmann's and Best Foods
• Knorr
• Surf
Unilever plc

• Magnum
For the complete list read more: https://www.unilever.com/brands/

Business Sectors / Diversification

Fast Moving Consumer

Goods

Food and Dental Men’s

Cleaning Ice Cream
Grocery Care Grooming

Refreshments Bath and

Deodrants Home Care
Shower

Premium Soaps and

Skin Care
Cosmetics Detergents
ss
Unilever plc

Top Acquisitions / Mergers / Alliances / Joint Ventures /

Divestitures

Name of the Business

Year Type Objective/Synergy Achieved
Company Segment
Pukka Herbs Organic herbal 2017 Acquisition The acquisition has strengthened
Limited tea business Unilever’s tea business. Pukka is a
premium brand in the natural, organic,
health and wellness segment which is
fast-growing, attractive and scalable.
Living Proof Premium hair 2017 Acquisition Living Proof is advantageous to the
Inc. care Prestige Hair retail market which is very
attractive; it brought along with it brands
like Dermalogica, Kate Somerville,
Murad and Ren.
Hourglass Luxury colour 2017 Acquisition It is the first colour brand in Unilever’s
cosmetics Prestige portfolio which is acclaimed for
brand its breakthrough formulations and
technological innovation, including the
use of active ingredients in complexion
products.
Quala Quala’s 2017 Acquisition This strengthened Unilever's position in
personal care shampoos, toothpaste, men’s grooming
and home care and fabric conditioners in South
brands America.
AdeS Soy beverage 2017 Divestiture/ Unilever sold AdeS soy beverage
business Sale business in Latin America to Coca Cola
FEMSA and the Coca Cola Company so
that its potential is fully realised within
the Coca Cola system.
Seventh Home and 2016 Acquisition This helped meet the rising demand for
Generation Personal Care high quality products and added a
Products distribution network covering the
Company ‘natural’ category in grocery, mass
Unilever plc

merchandise and e-commerce

channels.
Dollar Shave Men’s 2016 Acquisition This helped widen Unilever's portfolio of
Club grooming e- full male grooming business that had
commerce transformed the shaving category with
portal its lifestyle brands.
GROM Premium 2015 Acquisition The acquisition strengthened Unilever’s
Italian Gelato ice cream portfolio and further helped in
Business capitalising the growth of the premium
gelato market.
Murad Leading 2015 Acquisition As an expert ‘Doctor brand’, Murad
clinical offers products in a differentiated clinical
skincare brand and holistic well-being segment. It has a
loyal following that gives it excellent
potential for expansion.
Dermalogica Leading 2015 Acquisition Added premium skincare products to
skincare brand Unilever's portfolio.

Unilever Plc. SWOT & PESTLE analysis has been conducted and reviewed by senior
analysts from Barakaat Consulting.

The Unilever SWOT & PESTLE Sample Analysis report was published in August 2018.
The information and analysis are relevant to the data available before the publishing date.

Data in the actual ‘Complete Reports’ (available for purchase on the website) are updated
on a periodic basis.
Unilever plc

References
1. Annual Report 2018 -
https://assets.unilever.com/files/92ui5egz/production/9fbb2cb4402c390d78734e74baa53603223
abd8c.pdf/unilever-annual-report-and-accounts-2018.pdf
2. Unilever website - https://www.unilever.com/
3. Unilever company profile - https://en.wikipedia.org/wiki/Unilever
4. Investors Presentation - https://www.unilever.com/investors/results-presentations/
5. Brands - https://www.unilever.com/brands/
6. Press releases - https://www.unilever.com/news/press-and-media/press-releases/
7. Skin Care Products Market Size is Projected to Reach USD 194,961 Million by 2024 - Valuates
Reports - https://www.prnewswire.com/in/news-releases/skin-care-products-market-size-is-
projected-to-reach-usd-194-961-million-by-2024-valuates-reports-898829153.html
8. Unilever competitors and similar companies - https://craft.co/unilever/competitors
9. Trade wars, Trump tariffs and protectionism explained - https://www.bbc.com/news/world-
43512098
10. Sustainability Reporting Centre - https://www.unilever.com/planet-and-society/sustainability-
reporting-centre/
Unilever plc

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• Company annual reports and SEC filings (10-K, 20-F, 10-Q etc)
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• Investors presentations
• An aggregation of the experiences, judgments, and insights of our analysts who go through
volumes of data to extract meaningful information to create these analytical reports which equip
our clients to take their research forward or make business decisions with acuity.
Unilever plc

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Unilever plc

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