Unilever pledges boost to ‘brand and marketing’ spend

FMCG giant’s commitment to invest in marketing during cost-of-living crisis contrasts with many companies cutting back adspend

Unilever has said it will continue to protect investment across its brand portfolio and increase its marketing spend in the second half of 2022, thanks to strong pricing of its products and a hike in revenues.

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The Anglo-Dutch FMCG group made the commitment in a trading update for its third quarter 2022, reporting a 17.8% surge in turnover to €15.8bn (£13.7bn), with underlying sales growth of 10.6%, compared with the same period in 2021.

In an investor call, Alan Jope, Unilever’s outgoing chief executive, said that some 70% of its brands were testing superiorly to their rivals and that the group was careful not just to focus on price but value.

Among its product categories, beauty and wellbeing experienced the largest growth, up 24.4% to €3.3bn (with underlying sales up 10.6%), personal care was up 20% to €3.6bn (USG up 8.9%), home care grew 22% to €3.2bn (USG up 13.6%), nutrition up 4.8% to €3.3bn (USG up 11.8%) and ice cream up 20.8% to €2.4bn (USG up 13.2%).

Unilever’s “billion+ Euro brands” accounted for more than half of the group’s turnover, and grew by 14%, helped by strong performances from Omo, Hellmann’s, Rexona, Magnum and Lux. Price growth was up 12.5%, while volumes fell 1.6%.

In a statement, Unilever said: “Investment in growth is our priority, and we will continue to protect investment levels. In the second half of 2022, we expect to increase spend in brand and marketing, R&D and capital expenditure, as we did in the first half.”

Jope said: “Unilever has delivered another quarter of growth in challenging macroeconomic conditions. Underlying sales growth improved to 10.6%, led by further increases in pricing with only a limited impact on volume, and we now expect underlying sales growth for the full year 2022 to be above 8%.

“We have delivered growth in each of our five business groups, led by a strong performance from our ‘billion+ Euro’ brands, growing 14% in the quarter. Strong pricing allows us to continue to drive increased investment behind our brands.”

But, Jope noted that the macroeconomic outlook remained “mixed” due to high inflation.

“The delivery of consistent growth remains our first priority,” he added.

Chris Daly, chief executive of the Chartered Institute of Marketing, said that Unilever’s results were “particularly impressive against a backdrop of rising costs and long-term inflation”.

He continued: “The group has invested heavily in ecommerce and digital marketing in recent years, ‘E-everything’, as the company calls it – and are now reaping the rewards as shoppers continue to favour online purchasing, bolstering their bid to reach customers in whichever way they prefer to shop.

“Unilever has also championed purpose-driven products with sustainability at its heart. Despite the cost-of-living crisis forcing consumers to make sacrifices, these key factors are still very important in the minds of consumers.

“Whilst today’s results are good news for Unilever, the threat of rising prices and continued shortages in the run-up to Christmas still present a challenge to the organisation. However, it seems that Unilever’s digital-first strategy has established a solid foundation for growth next year.”

This article was first seen on Campaign UK.