For the next two years, Unilever will spend $2.4 billion (EUR 2 billion) to help high-growth industry sectors such as cosmetic goods, plant-based food, and e-commerce. In its quarterly earnings release, the retailer of goods like Dove soap, Lipton Tea, and Ben & Jerry’s ice cream presented those plans, which reported underlying revenue growth of 3.5 percent from a year ago during Q4 and net sales of $14.5 billion (EUR 12.1 billion), down 4.2 percent.
During the most recent year, revenues in North America grew 7.1 percent on higher demand for in-home food, ice cream, and hygiene products, while commercial food sales to restaurants and hotels were lower, along with sales of beauty products, due to shop closures and poor demand from homebound buyers. In the midst of greater demand worldwide for the full year, however, Unilever aims to concentrate on the luxury beauty segment, CEO Alan Jope said in a conference call to review progress.
In 2020, Unilever raised its ad investment by $192.4 million (EUR160 million) despite preserving its spending during lockdowns in the first half of the year. For the full year, the e-commerce division of the group expanded 61 percent to make up 9 percent of revenue as shoppers shopped from home. Last year, more than 50 percent of beauty purchases came from e-commerce platforms due to store closures, per its quarterly report.
This year, Unilever aims to position itself for faster growth, recognizing key segments that have produced positive results in the middle of the pandemic shocks that have put a drag on the recent financial success of the group, which in turn has frustrated investors.
Unilever has identified the main growth markets in the midst of volatility in which it aims to invest, such as plant-based foods, beauty goods, and e-commerce. Among health-conscious consumers and individuals who are more conscious of the environmental impact of food processing, vegan diets have become more common.
Beauty goods remain a high-growth segment for Unilever in emerging countries, but if the pandemic subsides, regions such as North America and Europe may be due for a rebound. So far, demand for e-commerce has risen despite the health crisis, and because of accessibility and product variety, it is likely that more customers will choose to buy online. Unilever will prioritize collaborations with businesses that pay a living wage to workers, substantially increase investment in manufacturers owned or run by underrepresented groups of people and develop the capabilities of its staff. As companies like Ben & Jerry’s take a stance on political topics, Unilever’s contribution to charities is apparent and Hellmann’s mayonnaise encourages shoppers to stop wasting food.
After briefly halting guidelines in 2020 when the health crisis clouded the outlook, the organization set a target of 3 percent to 5 percent revenue growth for 2021. However, when shopping patterns continue in flux, the organization experiences a number of cross-currents. Although customers have purchased more food to eat at home, if mass vaccines help stem the pandemic, there is a risk that restaurants and the wider hospitality sector will make a return. In the middle of its different supply chains, a turn back to past spending patterns will change the balance of the sale for Unilever again.