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Unilever in Western Europe
12th November 2008
2
� A snapshot
� The journey so far
� Transformation in action –UK/IRE cluster
� Winning in challenging times
Unilever in Western Europe
3
Western Europe in Unilever
% of Unilever *
Turnover
Contribution to Profit
29%
34%
Employees
Factories
15%
25%
* 2007 Actuals
4
Organisation
Nordics-SWE-NOR-FIN
UK/IRE DACH-Ger-Aus-CH
BNL-NL
-BEL
SpainPortItaly
Greece
France
9 managed units23,000 employees>€12 billion in sales
5
DACH
BNL
ITALY
FRANCE
UK/IRENORDICS
SPAINGREECE
Western Europe by Geography/Category
Personal Care, 16
Home Care, 14
Ice Cream, 16
Foods, 54
Geography Category
23
20
12
15
14
6
64
% Share of Turnover, 2007
6
A core portfolio with strong category positions
7
And strong leadership in key geographies
8
…and strong trusted brands
9
� A snapshot
� The journey so far
� Transformation in action –UK/IRE cluster
� Winning in challenging times
Unilever in Western Europe
10
Where we were in 2005….
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
Dec-0
3
Mar-0
4
Jun -0
4
Sep-0
4
Dec-0
4
Mar-0
5
Jun-
05
Sep-0
5
Dec-0
5
Mar-0
6
The need for change…
Key deliverables of the change program
•Return the business to competitive growth
•Focus investments on the core portfolio
•Radically simplify the business and reduce costs • Improve profitability
MAT USG% Trend
11
MAT USG% Trend
-3
-2
-1
0
1
2
3
Dec-05 M ar-06 Jun-06 Sep-06 Dec-06 M ar-07 Jun-07 Sep-07 Dec-07 M ar-08 Jun-08
Getting back to growth
12
Catching up with market growth but not yet competitive
(source Nielsen)
2006 2007 2008 MAT
Market
Unilever
13
Increased support levels in our priority categories
MAT 2008 Share of Spend/Share of Market in Western Europe
Savoury >100
Dressings >100
SCC =100
Leaf Tea >100
Ice Cream >100
Foods >100
* Non leadership positions** but competitive in our key markets
Skin >100
Deo >100
Hair* <100
Oral* <100
Home Care** <100
HPC <100
Mindshare guidelines: >100 = investing to grow vs branded competition
14
Improving operating margins
Underlying Improvement in Operating Margin* in Western Europe
2005 2006 2007 YTD 08
+60bps+130bps
-60bps-110bps
* Operating Margin excl. RDIs
15
Unilever to reduce by 20 000 over next 4 years. 50-60 Sourcing Units closed/streamlined
Q2 ’07 Unilever Announcement
Accelerating the Transformation
16
Western Europe at the forefront
17
Accelerating the Western Europe Transformation
PortfolioManagement
Supply chain One UnileverNew Indirects
initiatives
Re-shape the portfolio Re-configure the business
Re-vamp capabilities- Customer & Brilliant Consumer M arketingRe-vamp capabilities- Customer & Brilliant Consumer M arketing
Re-energise the organisationRe-energise the organisation
18
UK Germany FR NOR
Re-shaping the portfolio
• Significant disposal program �
�• Increase the value from non-strategic brands
19
Re-configuring the business - Supply Chain
Past Now
OpcoOpcoOpco
Country A
OpcoOpcoOpco
Country B
OpcoOpcoOpco
Country C
One UCountry a
One UCountry b
One UCountry c
USCC
= source, make, plan, deliver
Establishing Unilever Supply Chain Company in Switzerland
20
Re-configuring the business - Supply Chain
• Before Transformation • Post Transformation (2010)
>90 factories
24,000 people
>600 warehouses
<65 factories
19,500 people
<300 warehouses
21
Re-configuring the business - One U & indirects
(2005)Pre-One Unilever
(2007)One Unilever
(2007)New Strategic
Focus
(2008) Multi-Country
& Multi-Category Org
65 x 2017 x 20
17 x 159 x 15
Fewer touch points
Quicker decisions
Improved
performance
Country/Category
matrix
Total people reduction including Supply Chain: 8400
22
Re-configuring the business-Transforming IT and aligning processes..
• Before Transformation • Post Transformation (2009)
Fragmented processes
High maintenance costs
1,200 persons in transactional processes
Fragmented processes
> 90 local HR systems
No measurement of HR service
Harmonised processes
Economies of scale
Faster roll out of technology
425 FTEs
Harmonised processes
1 global HR ERP system
Full visibility
HR
Fin
ance
23
Re-configuring the business- ..and externally recognised
24
Re-configuring the business- …at speed..
Unilever SAP is being implemented much faster than comparable European FMCG SAP programmes
Unilever SAP implementation
25
Win With Customers - Western Europe
1
2
3
4
5
Main sources of benefits from Win with Customers Western Europe
Optimising Promotional Sell-out
Unilever Trade Terms
Increased Distribution
Core assortment
In Store Execution
26
Core Assortment Case Study - Carrefour
• Higher value lines moved to eye level
• Delivered 9% Growth• European programme for accelerated growth,
acknowledged by the customer as best practice
Before After
27
Complete the transformation: key jobs to be done
Organisation
One Unilever Systems and Processes
MCO/MSO structure in place
HRT
Focus now on competitive go to market execution
T- finance
Factory Transformation
Distribution Transformation
�
�
SAP implementation Q1 09
Q2 09
Supply Chain ‘09/’10
Q4 09
28
A massive agenda with significant benefit
• From • To
A complex, slow moving organisation
Country led factory and distribution networks
Multiple Finance and HR systems and processes
65 OpCos
90 factories>600 depots
3 legacy systems+100 processes
A simpler, cost efficient, customer facing operation
A single EuropeanSupply Chain Company
Single European system and standard processes
9 MCO/MSOs
65 factories<300 depots
1 SAP1 HR
29
� a core portfolio of strong category and leading bra nd positions
� a region under massive transformation and making go od progress
� a region not yet back to competitive growth but poi sed to do so
� a team of really committed people determined to fin ish the transformation and win
Summary
30
� A snapshot
� The journey so far
� Transformation in action –UK/IRE cluster
� Winning in challenging times
Unilever in Western Europe
31
Handover to Dave
32
� A snapshot
� The journey so far
� Transformation in action –UK/IRE cluster
� Winning in challenging times
Unilever in Western Europe
33
Getting back to competitive growth
� Markets, consumers, customers
� 6 P’s toolbox
� Operational excellence
� Winning Mindset
34
The perfect storm…
35
2008 Trading Environment
Source: Nielsen
Markets are slowing… …with a significant impact on volumes..
36
2008 Consumer Environment
…and shopper habits are changing
Source: Nielsen
37
LETTER TO ENECODear Sir/Madam
I acknowledge receipt of your letter dated 1 May in which for thethird time, you request that I pay the monies owed to you. I first wantyou to know that by no means do I dispute my debt and I intend toreimburse you as soon as possible.
However, I bring to your attention that I have many more creditors,quite as honourable as you, and whom I wish to reimburse too. That iswhy, each month, I throw all the names of my creditors into a hat anddraw one randomly whom I hasten to refund immediately. I hope that yourswill come out shortly.
Sincerely Yours,
Tim
PS: I have great regret in informing you that given the unceremonioustone of your last letter, you will not be taking part in thenext three draws
But consumers have retained a sense of humour..
38
Changing Consumer Behaviours..
(Private Label value share change)
Dressings
Savoury
Spreads
Ice Cream
Total Foods
Skin Cleansing
Hair
Deodorants
Fabric Cond.
Total HPC
0-30bps 30-60bps >60bps
39
Discounters are growing faster than the market
Europanel - Year on Year change – Discounters (Big 6) - * Italy MAT Mar 08 vs. MAT Mar 07
FMCG - Year on Year growth (MAT Jun 08)
4.9%
2.8%
3.0%
2.7%
5.0%
5.4%
5.7%
9.5%
6.8%
5.5%
9.6%
12.8%
Netherlands
Italy
France
Germany
Spain
Great Britain
DISCOUNTERS
TOTAL MARKET
*
40
..and our performance with Discounters is strong..
* Top 10 customers
** Top 10 discounters
Western Europe Growth
Growth with key discounters**
17.0%
Growth with key customers*
1.5%
1.3%
41
It is not business as usual
Leading the on-line grocery market
42
Getting back to competitive growth
� Markets, consumers, customers
� 6 P’s toolbox
� Operational excellence
� Winning Mindset
43
“Consumers don’t stop buying during a recession, they just buy more cleverly”
An unknown consumer marketer
Consumer and Shopper
44
Recession impact category segmentation
Recession impact on category
Source: Nielsen; CMI Europe; McKinsey analysis
• Recession impact on overall volume
Positive
Neutral
Negative
• Positive • Neutral • Negative
– Sauces– Hand &
Body
• “Trade up/ Thrive”
• “Hold”
– Oral Care– Skin
Cleansing
– CCA
– Deodorants– Shampoo– Conditioner– Leaf Tea
• “Trade down”
• “Consume less”
• Recession impact on category mix
– Fabric Cleaning
– HHC– Dressings– Fabric
Conditioner
1 3
2
4
– Ice Cream
– Meals and Dishes– Margarine
– Soups
45
Recession impact category segmentation
Category response- 6Ps
Proposition
Promotion
Product Place
Pack
Price
Economic Downturn10 commandments for SCC
Savoury Response Plan
10 recipes for success
Managing Ice Cream in the “Tough
Times”
Underline Value and Quality
Protect Advertising Investment and Spend More Wisely
Do not Cut Product Quality Catch the moving Shopper
Small Packs ,Big Packs
Range-up, Range-down
Better Products are still worth paying for…
46
Proposition
6P’s activities to win in challenging times
Video: Dove
47
Proposition
6P’s activities to win in challenging times
48
Propositionand
Product
6P’s activities to win in challenging times
Defend quality
49
Format differentiation for cheap bulk pack or lower face value.
Bulk packLower face value
8units24units
12+3 units
30units
6P’s activities to win in challenging times
Pack
50
6P’s activities to win in challenging times
Pack
Full pack size ranging in each country
250ml 500ml 750ml400ml
51
6P’s activities to win in challenging times
Pack
Strategy for the Normal Trade: target bulk trips via multi-packs at a lower price/litre value advantage
52
6P’s activities to win in challenging times
Pack
500 g250 gHH Pro-active Tubs
2x
100 g
1000 g
1000 g
1000 g
1000 g
1000 g
1000 g
600 g500 g250 gHeart Health (HH) Tubs
600 g500 g250 gFG Light tubs
600 g500 g250 gFamily Goodness (FG) tubs
600 g500 g250 gFG Light Wrapper
600 g500 g250 gHH Light Tubs
600 g500 g250 gLattaTubs
500 g250 gFG Wrapper
53
Promotions
Aggresively increasing promotional activity
Brand activation with crisis related gifts
6P’s activities to win in challenging times
54
Promotions
“Take the restaurant home: cooking in crisis time”
6P’s activities to win in challenging times
Communication Products
55
Promotions
6P’s activities to win in challenging times
Value and sustainability Cross category promotions
56
Place
European Discount shopping basket
6P’s activities to win in challenging times
57
6P’s activities to win in challenging times
Price
Playing the portfolio price piano
Build Super Premium
Renovate the premium
core
Re-enter mass/
economy
58
SCCSCC……Essential for lifeEssential for life
Winning in Economic Downturn.
10 commandments for SCC.
All categories/countries covered and ready to go
Winning in the downturn
Savoury Response Plan
10 recipes for successManaging Ice Cream in the “Tough Times”
59
Getting back to competitive growth
� Markets, consumers, customers
� 6 P’s toolbox
� Operational excellence
� Winning Mindset
60
Win with Customers
UK/IRE MCO
O SOP
Optimising Promotional Sell-out
61
Our response- Operational Excellence “Brilliant Basics”
� Good progress but still much to do
� Customer and Shopper at forefront of all we want to do
� Focus on massive simplification – few simple KPIs
� Brilliant basics to drive winning at the point of purchase
62
Operational Excellence “Brilliant Basics”
To do our job so well that the consumer at the point of purchase has to make a conscious decision
not to buy our brand
63
Getting back to competitive growth
� Markets, consumers, customers
� 6 P’s toolbox
� Operational excellence
� Winning Mindset
64
“I thought about it and decided not to take part”
Sam Walton (WalMart) on the recession
Mindset
65
Our response- winning mindset
66
Unilever in Western Europe - Summary
• Western Europe important to Unilever – its role is to deliver competitive profitable growth
• Massive transformation underway, nearly complete. Key task in 2009 is to finish the job
• New organisation starting to deliver and end state will be competitive
• Well placed to weather 2009/2010 market conditions - excited about opportunities