Unilever maintains marketing spend but rethinks priorities

Unilever: introduced new messaging for brands including Persil
Unilever: introduced new messaging for brands including Persil

FMCG giant reported flat underlying sales in first quarter, due to decline in Asian markets.

Unilever is reviewing all discretionary marketing spend in light of the coronavirus pandemic "to ensure it’s effective and appropriate", but is maintaining its level of brand and marketing investment, which it said is working harder than before.

Speaking on an investor call as the business announced its first-quarter results this morning (Thursday), chief financial officer Graeme Pitkethly said: "Advertising production has stopped and media rates have declined, so we can increase our advertising reach for the same level of spend."

The company, which owns brands spanning home care, personal care, food and drink, was "dynamically reallocating" its BMI, he said, to reflect both changing behaviours – such as people spending most of their time at home – and changing levels of demand between categories.

"We’re shifting BMI that might have been spent on outdoor advertising, for example, and dialling up areas with the highest return on investment, such as skin cleansing, home and hygiene brands," he said.

This strategy is in contrast to the likes of Coca-Cola, which has paused all marketing spend as it experiences a 25% fall in sales volumes.

Unilever reported total turnover for the first three months of 2020 of €12.4bn (£10.8bn) and underlying sales growth of 0% worldwide – but different regions saw contrasting results, based on the stage they are at in the progression of the coronavirus outbreak.

In the Americas, underlying sales were up 4.8%, thanks partly to stockpiling in the US. In Europe, they grew a more modest 1.4%. In Asia and the rest of the world, they were down 3.7%, as a result particularly of the early impact of the pandemic on China.

Of Unilever’s three business divisions, food and refreshment experienced the biggest hit. Pitkethly said that out-of-home ice-cream sales had typically fallen by half once a given country had introduced a lockdown, while food-service sales declined by two-thirds.

Subscribe today for just $116 a year

Get the very latest news and insight from Campaign with unrestricted access to campaignlive.com , plus get exclusive discounts to Campaign events

Become a subscriber

GET YOUR CAMPAIGN DAILY FIX

The latest work, news, advice, comment and analysis, sent to you every day

register free