Kraft Heinz’s £115bn aborted attempt at a merger with Unilever is surely the most superb example of corporate obtuseness in a long while.
In preparing their assault, Kraft and its private-equity backer, 3G Capital, must have taken the view that Unilever’s sustainability agenda and social values are simply marketing sizzle and that Unilever’s board, shareholders and customers would ditch them for the right price.
You can see why they might think that; even a few years ago, it would have seemed acutely naïve to believe that principles would be allowed to get in the way of wealth. Take Kraft’s takeover of the once fiercely principled Cadbury in 2010 and its subsequent abandonment of promises to sustain the Somerdale factory: morally and socially offensive, but accepted business practice.
So most commentators have taken the view that what analysts call "the 3G way" would have cost Unilever factories, jobs and its corporate culture. Even so, few dispute the crude business case: in the short term at least, the merger would have driven cost efficiencies and profitability. That’s good business. For Unilever, though, good business is nuanced: profitability harnessed to and driven by social purpose, not at the expense of it.
If you read last week’s brilliant analysis by Adam & Eve/DDB’s David Golding of the "culture versus collateral" divide, you’ll know that increasingly there are two approaches to effective marketing communications: one that deploys data and programmatic targeting and low-cost, fast, flexible copy to nudge consumers along the purchase path; and one that deploys creativity to create cultural moments that inspire consumer passion for a brand and, evidence shows, drives profits for the brand owners.
Both approaches can work, though the latter has higher risk but potentially greater financial reward. If you’ve got fire in your belly and passion in your breast, you can’t have read Golding’s piece and dreamed of creating that low-cost, fast and flexible copy.
Extending Golding’s argument into a wider context, businesses are increasingly dividing into two types: those that pursue profit without any deep social and environmental concerns and those that pursue profit through a commitment to sustainability and social responsibility. Both work, though the latter requires a longer-term view and an engineering of the company around its principles. But if you’ve got fire in your belly and passion in your breast, you want to work for the company that’s doing the right thing. Increasingly, consumers are making the same choice too. Bravo, Unilever.