Speaking of Unilever, it is known to everyone. Every day, more than 2 billion people use Unilever products worldwide. With sales exceeding $50 billion, it is one of the most profitable companies in the world. As an FMCG giant, how does Unilever achieve "ubiquity"?

The "Ubiquitous" Unilever Under the concept of "home," an Anglo-Dutch joint venture that started by making soap has now become deeply rooted in people's hearts, with products spread across every corner of daily life. Brands like Knorr, Lipton, Omo, Lux, Dove, Rexona, and Wall's all come from it. "Where there's a home, there's Unilever" is no longer a simple slogan. Initially, Unilever was composed of two companies. One was "Margarine Unie," formed by two Dutch families, Jurgens and Van den Bergh, producing margarine. By the 1920s, this margarine company had almost monopolized all oil and fat-related industries in Europe. During the same period, a soap company named Lever Brothers was rising in the UK. This young force, which expanded rapidly with Sunlight soap, soon became a leader in the daily necessities market. In 1900, Lever's Sunlight soap flakes were officially renamed Lux. Given the living standards at the time, consumers using "Lux" became symbols of openness and fashion. It played a crucial role in alleviating the rampant hygiene problems of the Victorian era in Britain. The year 1929 was destined to be extraordinary; the United States was experiencing the most severe financial crisis in history, affecting the entire capitalist world. Under the crisis, Lever Brothers in the UK and the Dutch margarine union could not remain unaffected. To protect their interests, the two parties signed an agreement and established Unilever. During World War II, geographical division cut off Unilever's operations in Germany and Japan, making its structure more locally independent and more focused on the needs of the current market. Therefore, it continued its expansion in the food market, acquired new businesses in different product types, and invested heavily in innovation and R&D. By the 1960s, through a series of creations and acquisitions, Unilever diversified its business, laying the foundation for internationalization. Among the many acquisitions, the most typical case was the acquisition of Lipton International in 1970, making it one of the largest tea companies in the world. In the 1980s, Unilever joined the ranks of the top 30 global companies, with products including plastic products, packaging, food, household, and personal skincare. Frequent acquisitions left Unilever stretched thin, with increasingly unclear core businesses, leading to a temporary growth bottleneck. Starting in the 1990s, Unilever began adjusting its strategic layout, gradually cutting some businesses and focusing on core brands, reducing its original 50-plus brands to 13. The 21st century is called the starting point of Unilever's "growth path." The first major move was the $24.3 billion acquisition of Bestfoods, which made Unilever's food business the second largest in the global food industry. The second move was to significantly reduce its brand portfolio, cutting brands from 1,600 to 900, strengthening its brand mix.

▲ Unilever's net profit attributable to shareholders

After more than 90 years of development, Unilever has established a daily consumer goods empire. It has over 400 companies globally, with business spread across more than 100 countries, and more than 2 billion people choose Unilever products worldwide every day. Its annual sales exceed $50 billion, making it one of the most profitable companies in the world. These figures all indicate Unilever's success. So, how did Unilever stand out in the long river of history?

Flexible Localization Strategy In unfamiliar market environments, local systems, culture, economy, regulations, and other factors can pose various threats and challenges to a company's development. A frequently cited statistic: 48% of foreign companies fail and exit the Chinese market within two years of starting operations. The most famous "failed" multinational companies in China include Mattel, eBay, and Google. For a multinational company, how to adapt flexibly in an unfamiliar environment to survive? Unilever has a broad international market and solves this problem through its flexible localization strategy. The localization strategy has also become one of Unilever's greatest weapons in conquering the global market.

1. Talent Localization Unilever states: "Only local talents understand local culture, and only local talents know how to operate a company locally. Moreover, Unilever's products are mostly personal care items, skincare products, food, and ice cream; only local people know which products suit local tastes and characteristics." Unilever has approximately 2.47 million employees globally, with about 90% recruited locally by each company. For example, in China, Unilever has over 4,000 employees, with 90% of manager-level employees recruited and trained locally. In today's corporate competition, it ultimately comes down to talent competition, and talent "localization" is the way to achieve the ultimate goals of survival, development, expansion, and profitability by recruiting and cultivating talent.

2. Product Localization Based on an understanding of local consumer culture, consumption needs, and living habits, and to get closer to local consumers, Unilever produces products with local characteristics through extensive research. Take Indian women as an example: India accounts for 16% of the world's population, but Indians' hair accounts for 28% of the world's total. In Indian culture, hair care is the only luxury for many women. This means local women will not miss any opportunity to care for their hair. After extensive research, Unilever learned that more than half of consumers in India, especially low-income consumers, wash their hair and body with soap every day. Driven by this demand, Unilever's product researchers spent a whole year in the lab developing the Breeze soap. Breeze is targeted at small cities and rural areas, showcasing the idea of a cheap soap that can be used for both hair and body washing. This is a typical example of product sales personnel analyzing, summarizing, and innovating.

3. Brand Localization Unilever's path to globalization is not just about promoting its own brands; it is good at acquiring local brands and elevating them to international brands. Currently, most of Unilever's 400-plus brands worldwide were acquired and promoted globally. For example, Pond's was originally an American brand; Unilever bought it and developed it into a skincare brand, promoting it in China. "Hazeline" was originally a British brand promoted in Southeast Asia; Unilever also introduced it to China. In China, Unilever has consistently adhered to the strategy of acquiring local brands. The most typical example is bringing "Zhonghua" (China), the number one toothpaste brand in China, under its wing. After acquiring Zhonghua toothpaste, Unilever continued to use the "Zhonghua" trademark, and its packaging still features the red sun, the Huabiao, and Tiananmen to this day.

4. Supply Chain Localization The vast international market and diverse competitive environment also bring some problems to Unilever, including reduced economies of scale and increased supply costs. With over 400 branches globally, each has its own product production and transportation routes, making the supply chain lengthy and inefficient. At this point, supply chain localization is necessary to improve efficiency and save costs. For example, Unilever's local procurement in China has reached 90%, and it is very familiar with traditional Chinese medicine and natural plant practices. In addition to the above four types of localization, Unilever has also achieved localization in capital operations, image, and R&D. Unilever's localization strategy is like giving it a pair of sharp eyes, allowing it to survive and develop even in narrow gaps.

Centralization Strategy: "Slimming Down" the Enterprise As early as the end of the last century, Unilever operated in 150 countries with over 1,600 brands. The main reason for having so many brands is that during rapid expansion, companies tend to extend product lines, expand balance sheets, and increase brand numbers to seize more opportunities. But when there are too many brands, it becomes difficult to maintain focus. With a huge business volume and bloated personnel and institutions, Unilever's sales and profit growth were slowing down. At this point, Unilever knew it had to slim down its brands and streamline and integrate them according to new positioning and new customer groups. To address issues like declining sales and profits, starting in 1999, Unilever began implementing a divestiture strategy globally. Through internal audits, Unilever found that more than 90% of profits were generated by 400 of its brands, while the remaining brands were either loss-making or barely profitable. Therefore, Unilever adopted a brand centralization strategy. The centralization strategy, also known as the focus strategy or target concentration strategy, refers to a strategy where a company's business activities focus on a specific procurement unit, a department of a production line, or a regional market, providing better and more efficient products to small market consumers than other companies to gain a competitive advantage. Unilever achieved brand centralization mainly through the following four measures.

First, Enterprise Centralization In 1999, Unilever merged 14 independent joint ventures into 4 companies controlled by Unilever. This move reduced Unilever's operating costs by 20% and reduced foreign managers by three-quarters.

Second, Product Centralization Unilever decisively exited non-core businesses and focused on three major advantageous series: home and personal care products, food and beverages, and ice cream, achieving significant success. By the end of 2003, the centralization strategy began to show results, with operating profit rising from 11% to 15.7%. At the same time, it successfully acquired Bestfoods, sold 140 businesses, and quickly reintegrated its product lines, making sales of major brands account for 93% of total sales.

Third, Brand Centralization To focus more on core brands rather than loss-making or low-profit brands, Unilever slimmed down its brand portfolio, ultimately selecting and retaining 400 core brands from 1,600. After a period, the retained 400 brands all had strong competitiveness in the market. Although it had over 1,600 brands, it promoted fewer than 20 in China, all first-tier brands, covering daily chemicals and food, including international brands like Lux, Dove, Hazeline, Pond's, Omo, Signal, Vaseline, Comfort, Lipton, and Wall's.

Fourth, Factory Location Centralization From May to August 2005, through integration and mergers, Unilever reduced the planned 55 factories, significantly cutting operating costs, reducing 3 production sites, and saving 30% of operating expenses.

The centralization strategy ultimately solves the product mix problem. When a company makes product mix decisions, it involves three levels of issues: first, whether to add, modify, or eliminate product items; second, whether to extend, fill, or delete product lines; and finally, which product lines need to be added, strengthened, simplified, or eliminated to determine the best product mix. Decisions at these three levels should follow the basic principle of being conducive to promoting sales and increasing total profits. While implementing the centralization strategy, Unilever also began to pay attention to environmental issues and established a sustainable development strategy.

Sustainable Development Strategy Environmental issues are among the most concerned globally, and consumers strongly support environmental protection. Unilever's purpose is to "make sustainable living commonplace." To practice this purpose, it measures the sales of sustainable living products against ordinary products. It found that sustainable living products grew profits by 69%, much faster than other businesses. The benefits of the sustainable plan are also reflected in many aspects, such as reducing product packaging, which directly reduces plastic usage and thus reduces energy costs in production. As Unilever CEO Paul Polman said: "Business growth does not have to be at the expense of increasing environmental impact." In 2010, Unilever simultaneously announced the implementation of its global "Sustainable Living Plan" in London, Rotterdam, Delhi, and New York. The overall goals include: halving the environmental impact of its products by 2020; helping more than 1 billion people improve their health and well-being; and achieving 100% sustainable sourcing of agricultural raw materials.

1. Reshaping the Supply Chain Many companies worldwide have their own sustainability projects, but most pollution and waste do not come from the companies themselves but from their supply chains. In the supply chain, Unilever not only secured the support of food giant Cargill but also the support of smallholder farmers in India. Farmers of palm oil, soy, tea, cocoa, and tomatoes need sustainable certification to supply Unilever, or they will lose orders. In 2010, 14% of Unilever's agricultural supplies came from sustainable sources; by 2015, this figure exceeded 55%. Innovations for suppliers also include: Unilever set up a €1 million fund (Knorr Sustainable Partnership Fund) to invest in drip irrigation technology for tomato farms in Spain and California to increase yields and save water. It signed a framework agreement with the Rainforest Alliance, an African NGO, to improve cocoa and tea cultivation techniques and complete training for more than half of Kenya's tea farmers. Later, consumer giants like Coca-Cola and Walmart joined this agreement. These practices not only increase the income of grassroots farmers but also ensure agricultural supply by reducing threats from environmental issues like water scarcity.

2. Cultivating Emerging Markets The "Sustainable Living Plan" faces a huge challenge: how to change consumer habits? Three years ago, the company measured the carbon footprint of its 2,000 products and found that, on average, 68% of greenhouse gas emissions occur after products reach consumers. Changing consumer behavior is the most difficult thing; markets need cultivation, especially emerging markets, which account for nearly 60% of sales. Unilever's soap brand Lifebuoy, when promoted in rural India and other developing countries, chose to offer handwashing classes in primary schools. ▲ Image source: Internet. Nearly 2 million children die each year from diarrhea and pneumonia, which can be avoided by changing hygiene habits. Lifebuoy's main teaching location is in Madhya Pradesh, the area with the highest diarrhea mortality in India. The company hopes to achieve a trickle effect through a 21-day curriculum: children learn hygiene knowledge in class and then teach their families at home. Results show that this training can reduce diarrhea incidence by 25%. In promoting its washing and care products, Unilever also focuses on how to save water during hair washing and bathing. At the same time, the company continuously develops products that consume fewer resources, such as the "dry shampoo" launched in 2013 and Comfort One Rinse, launched in Asian markets to reduce laundry water usage. These innovative products quickly became popular. By 2020, Unilever's sustainable development path had been walked for ten years, achieving remarkable results, such as: reducing waste per consumer use by 32% and achieving zero waste to landfill in all factories; reducing greenhouse gas emissions from production by 50% and achieving 100% renewable electricity in its major markets; helping 2.34 million women participate in projects to improve their safety, develop skills, or expand career opportunities. Its CEO Alan Jope summarized: "The Unilever Sustainable Living Plan is coming to an end after 10 years, but the mission to make sustainable living commonplace is not over. In fact, as the world changes rapidly, our employees, consumers, customers, suppliers, and partners have higher expectations of us. We know we can continue to lead, but we need to do better, bolder, and faster." According to a Deloitte survey, both business leaders and Generation Z are most likely to support companies that share their corporate values. Most domestic and international entrepreneurs regard "social impact" as the most important criterion for measuring success. According to the Edelman Trust Barometer survey of 38,000 people in 28 global markets, people believe that companies are the most competitive institutions for solving global problems, even more competitive than non-profit organizations or government agencies. It is evident that the world is turning to social enterprises, and the world is looking to businesses for solutions—these are two global trends. If a company's purpose is committed to making the world better, then its development trend will be even better. This is also one of the reasons Unilever has become a model of a good global company.

Source: Consumption Circle (ID: xiaofeijie316) Nico References: [1] "Brief Analysis of Unilever's Three Major Competitive Advantages and Their Effects," Li Pingxiang, Li Keyin [2] "Unilever's Rural Strategy" [3] Revealing Unilever's Human Resource Management: A "Localization" Strategic Layout, Salary and Tax Specialist [4] The Development Path of Washing and Care Giant Unilever, 100,000 Brand Stories

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