Paul Polman says money is freed up from big-ticket spending; dismisses competition from organized retail
Mumbai: Paul Polman is unlikely to ever forget his first visit to India as group chief executive officer of Unilever Plc. About four months ago, on 26/11, Polman and the top brass of Unilever and Hindustan Unilever Ltd (HUL) were at the Taj Mahal hotel in Mumbai, when their dinner meeting was rudely interrupted by terrorists.
Unfinished business: Unilever Group chief executive officer Paul Polman. Abhijit Bhatlekar / Mint
Back for a second visit, Polman told reporters on Friday at Lever House, the headquarters of the consumer goods firm’s Indian subsidiary, that his primary reason to revisit the city was to “finish a meal”.
“It was absolutely important to meet the heroes at the Taj Mahal and express our gratitude,” he said more seriously.
Polman’s two-day visit packed a schedule that included visits to a cancer hospital, a few shopping malls and meeting consumers from “different economic classes”. Polman addressed the media, flanked by Harish Manwani, president (Asia Africa) and a member of the Unilever board, and Nitin Paranjpe, CEO of HUL. The press briefing was followed by a town hall meeting with HUL employees.
Polman said the recession could help firms such as Unilever. “Consumers postpone buying cars, televisions and that frees up a lot of money to spend on everyday needs. We don’t see personal care or food markets go down substantially,” said Polman, the only lateral hire for the top job in Unilever in many years. Before joining Unilever, Polman spent 26 years at arch rival Procter and Gamble (P&G) and two years in Nestle SA.
“We are fortunate, that India, Indonesia and South Africa are growing at 5-6%,” he said, adding that when he set a target on how HUL could double its turnover, the company’s executives had appeared unfazed. “Obviously the population helps,” he quipped. “We are in an industry that drives the economy. We put a little bit of powder in a box and a little bit of liquid in a bottle and we sell it to improve the lives of people a little bit more.”
Unilever is also getting nimbler as it launches products simultaneously in several markets. For instance, its deodorant Axe Chocolate was launched in 52 countries simultaneously.
But the company’s foods business has been a laggard in India. It accounts for roughly half of Unilever’s worldwide business, but in India, it remains a small part of HUL’s overall business. Paranjpe admitted that there is work to be done. “Food as a packaged food category is less than 5% of the total market.”
Paranjpe said the food category would be a tactical play in the short-term, and that the company was focused on getting its brands to “win the end game”.
Polman is unfazed by the recent trend of organized retailers promoting private labels to compete against the mega brands of consumer product firms. “They don’t exist as a value proposition,” said Polman, adding that while companies such as Unilever keep innovating their products, private labels are not very innovative.
Polman implied that a company such as Unilever is more focused than retailers: Unilever, he said, is present in 11 product categories unlike retailers such as Wal-Mart that dabble in at least 100,000 categories. In response to a mischievous question on whether he would borrow best practices from Unilever’s arch rival P&G, Polman, with his tongue firmly in cheek, said customer practices of Japanese car maker Toyota and supply chain principles of Fedex, the global logistics firm, may be a better choice.
Like all major corporations, Unilever, said Polman, is now focusing on cash flows. The company has also stopped issuing earnings guidance to investors and analysts. It has also appointed global procurement officers to buy inputs at the best rates from any part of the world. “We’ll save on costs and invest that money in our brands,” said Polman.
satish.j@livemint.com
10:38 PM
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12:44 PM
Cola major may spendup to $2 bn in wellness products;
looking at buys that would add to earnings within a year.
PepsiCo Inc. may make two or more acquisitions outside North America this year to add snacks or drinks it doesn’t already make or enter new regions, chief executive officer Indra Nooyi has said.
The company may spend $5 million (about Rs20 crore) to $2 billion to buy products that would help its offerings more closely mirror the “food pyramid” created by the US agriculture department Nooyi said.
The guidelines promote consumption of grains, proteins, fruits and vegetables, and suggest limiting the salty and sugary foods that make up much of PepsiCo’s sales.
PepsiCo, the maker of Fritos chips and Mountain Dew soda, is looking for purchases that would add to earnings within a year, Nooyi said in a telephone interview on Tuesday.
The company is seeking to expand and gain market share abroad, she said. “We’ve been generally more active internationally than in North America because there are more properties available,” PepsiCo’s chief executive officer said. The company wants to fill the gaps in its product line-up, she said.
The company bought the biggest potato chip makers in both Egypt and Saudi Arabia in 2001, which “doubled our scale” in those markets by adding local brands such as Chipsy and Tasali, she said.
PepsiCo, based in Purchase, New York, gets 63% of its sales in North America. Coca-Cola Co. gets 70% of its sales from overseas. That gives PepsiCo room to expand internationally, said Manny Goldman, who covered PepsiCo during almost 30 years as an analyst at securities firms, including UBS Painewebber Inc. and ING Barings.
Big, big world
“It’s a big, big world out there, and Pepsi’s still primarily a North American company,” said Goldman, now a beverage-industry consultant in Hillsborough, California. “If you’re the chairman of Pepsi, where do you want to be in the next 20 or 30 years? As much overseas as you can be.”
PepsiCo may make “slightly more than two” purchases before the end of 2007, depending on the pace of negotiations and the time it takes to study companies’ financial statements, Nooyi said.
Buying more overseas snack and drink brands would duplicate the company’s acquisition strategy in the US, where it snapped up products including Stacy’s Pita Chip Co. in November 2005 and Naked Juice Co.—giving it protein smoothies and juices to compete with Coca-Cola’s Odwalla brand—in January this year.
Place to be
“They know that wellness is the place to be,” said Mariann Montagne, an analyst with Minneapolis-based Thrivent Asset Management. “Pepsi takes pride in the amount of thought that goes into the decision-making.” Thrivent manages $70 billion in assets, including PepsiCo shares.
PepsiCo bought New Zealand’s Bluebird Foods Ltd, which makes potato chips and granola bars, in January for $168 million.
In June, it joined with a bottler to acquire a controlling stake in Ukrainian juice-maker Sandora Llc. for $542 million to expand the juices to other parts of Eastern Europe.
Two years ago, PepsiCo paid $152 million for Sara Lee Corp.’s European nuts division. It bought Poland’s Star Foods SA last year to add pretzels and corn chips.
PepsiCo may also buy businesses in North America, said Nooyi, who has been with the company for 13 years and took over as CEO in October.
“If an interesting acquisition came up in North America that filled up part of the food pyramid that we’re not significant in, we might do that,” Nooyi said.
In addition to purchases, Nooyi said PepsiCo will develop products at a faster rate. The company on Tuesday said it plans to add a new low-calorie Gatorade sports drink, in addition to new flavours or packaging for Propel and SoBe Lifewater.
Overseas, PepsiCo has added regional flavours of snacks, such as white mushroom Lay’s potato chips in Russia and lentil snacks in India.
“They could buy more products with a strong local following, or distinct regional flavours,” said Bill Schultz, chief investment officer at McQueen Ball & Associates in Bethlehem, Pennsylvania, which holds PepsiCo shares.
“They really have tried to focus on keeping their acquisitions in line with what they’ve done domestically, only overseas.”
PepsiCo has made at least 10 acquisitions of smaller companies since the beginning of 2004, which have helped its sales growth outpace that of Coca-Cola.
Sales of PepsiCo have increased an average of 8.4% over the past five years, compared with 6.5% of Atlanta- based Coca-Cola.
Shares of PepsiCo fell 33 cents to $66.26 Tuesday in New York Stock Exchange composite trading. They have increased 5.9% this year, compared with 10% for Coca-Cola, the world’s largest soft-drink maker.
PepsiCo on Tuesday reported second-quarter profit rose more than analysts estimated on overseas gains.
Net income increased 13% to $1.56 billion, or 94 cents a share, exceeding estimates by 5 cents.
Sales advanced 10% to $9.61 billion, on higher shipments of Lay’s potato chips in Russia and Gamesa snacks in Mexico and beverage sales in China and Europe.
looking at buys that would add to earnings within a year.
PepsiCo Inc. may make two or more acquisitions outside North America this year to add snacks or drinks it doesn’t already make or enter new regions, chief executive officer Indra Nooyi has said.
The company may spend $5 million (about Rs20 crore) to $2 billion to buy products that would help its offerings more closely mirror the “food pyramid” created by the US agriculture department Nooyi said.
The guidelines promote consumption of grains, proteins, fruits and vegetables, and suggest limiting the salty and sugary foods that make up much of PepsiCo’s sales.
PepsiCo, the maker of Fritos chips and Mountain Dew soda, is looking for purchases that would add to earnings within a year, Nooyi said in a telephone interview on Tuesday.
The company is seeking to expand and gain market share abroad, she said. “We’ve been generally more active internationally than in North America because there are more properties available,” PepsiCo’s chief executive officer said. The company wants to fill the gaps in its product line-up, she said.
The company bought the biggest potato chip makers in both Egypt and Saudi Arabia in 2001, which “doubled our scale” in those markets by adding local brands such as Chipsy and Tasali, she said.
PepsiCo, based in Purchase, New York, gets 63% of its sales in North America. Coca-Cola Co. gets 70% of its sales from overseas. That gives PepsiCo room to expand internationally, said Manny Goldman, who covered PepsiCo during almost 30 years as an analyst at securities firms, including UBS Painewebber Inc. and ING Barings.
Big, big world
“It’s a big, big world out there, and Pepsi’s still primarily a North American company,” said Goldman, now a beverage-industry consultant in Hillsborough, California. “If you’re the chairman of Pepsi, where do you want to be in the next 20 or 30 years? As much overseas as you can be.”
PepsiCo may make “slightly more than two” purchases before the end of 2007, depending on the pace of negotiations and the time it takes to study companies’ financial statements, Nooyi said.
Buying more overseas snack and drink brands would duplicate the company’s acquisition strategy in the US, where it snapped up products including Stacy’s Pita Chip Co. in November 2005 and Naked Juice Co.—giving it protein smoothies and juices to compete with Coca-Cola’s Odwalla brand—in January this year.
Place to be
“They know that wellness is the place to be,” said Mariann Montagne, an analyst with Minneapolis-based Thrivent Asset Management. “Pepsi takes pride in the amount of thought that goes into the decision-making.” Thrivent manages $70 billion in assets, including PepsiCo shares.
PepsiCo bought New Zealand’s Bluebird Foods Ltd, which makes potato chips and granola bars, in January for $168 million.
In June, it joined with a bottler to acquire a controlling stake in Ukrainian juice-maker Sandora Llc. for $542 million to expand the juices to other parts of Eastern Europe.
Two years ago, PepsiCo paid $152 million for Sara Lee Corp.’s European nuts division. It bought Poland’s Star Foods SA last year to add pretzels and corn chips.
PepsiCo may also buy businesses in North America, said Nooyi, who has been with the company for 13 years and took over as CEO in October.
“If an interesting acquisition came up in North America that filled up part of the food pyramid that we’re not significant in, we might do that,” Nooyi said.
In addition to purchases, Nooyi said PepsiCo will develop products at a faster rate. The company on Tuesday said it plans to add a new low-calorie Gatorade sports drink, in addition to new flavours or packaging for Propel and SoBe Lifewater.
Overseas, PepsiCo has added regional flavours of snacks, such as white mushroom Lay’s potato chips in Russia and lentil snacks in India.
“They could buy more products with a strong local following, or distinct regional flavours,” said Bill Schultz, chief investment officer at McQueen Ball & Associates in Bethlehem, Pennsylvania, which holds PepsiCo shares.
“They really have tried to focus on keeping their acquisitions in line with what they’ve done domestically, only overseas.”
PepsiCo has made at least 10 acquisitions of smaller companies since the beginning of 2004, which have helped its sales growth outpace that of Coca-Cola.
Sales of PepsiCo have increased an average of 8.4% over the past five years, compared with 6.5% of Atlanta- based Coca-Cola.
Shares of PepsiCo fell 33 cents to $66.26 Tuesday in New York Stock Exchange composite trading. They have increased 5.9% this year, compared with 10% for Coca-Cola, the world’s largest soft-drink maker.
PepsiCo on Tuesday reported second-quarter profit rose more than analysts estimated on overseas gains.
Net income increased 13% to $1.56 billion, or 94 cents a share, exceeding estimates by 5 cents.
Sales advanced 10% to $9.61 billion, on higher shipments of Lay’s potato chips in Russia and Gamesa snacks in Mexico and beverage sales in China and Europe.
12:24 PM
| Key Findings:
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| Volume growth of shampoos/conditioners on TV during 2008 | |
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Top advertisers of shampoos/conditioners on TV during 2008 | |
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Top new brands of shampoos/conditioners on TV during 2008 | |
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| Advertising of shampoos/conditioners on national and regional channels | |
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Celebrity endorsing shampoos/conditioners brand on TV | |
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| (Analysis from AdEx India - A Division of TAM Media Research) |
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