Unilever 2010 Investor Seminar Singapore Winning with Brands and Innovation Michael Polk / Geneviève Berger Agenda
• Progress
• Sharpening the choices
• Bigger, better, faster innovation
• R&D Strongest volume in 25 years
categories MCO’s top brands
11/11 19/22 12/13
6% volume growth year-to-date Tremendous leverage in our brands
11 >€1bn
17 >€0.5bn
34 >€250mn Fit to compete in battlegrounds
fabric cleaning fabric cleaning fabric cleaning India Turkey Thailand
18% >100 >100 >100 bps bps bps 5% 7% Ability to price where necessary
spreads dressings deodorants UK US Indonesia
170 40 700 bps bps bps 5% 4% 2% Growth: bigger, faster innovation
+€50m innovation roll-out +30 markets turnover year 1 in 6 months
Bigger Faster Growth: better products
€100m investment in 40% reduction in product quality consumer complaints
quality incidents complaints
-40% -50%
Design Delivered Growth: more sustainable products
three big targets across the total value chain
RAW MATERIALS MANUFACTURE CONSUMER USE DISPOSALTRANSPORT
HELP SOURCE 1 BILLION HALVE 100% ENVIRONMENTAL PEOPLE IMPROVE OF AGRICULTURAL FOOTPRINT OF THEIR HEALTH RAW MATERIALS OUR PRODUCTS & WELLBEING SUSTAINABLY Growth: brand deployment
Japan/Bangladesh Indonesia Equador
ChinaLatin America Indonesia Growth: repeatable models
Oral Care Market Development Model
France Indonesia Nigeria Growth: effective marketing
>100mm views 4,617,493 46mm unique visitors heart ages tested Growth: effective advertising
% of ads falling into Green/ Amber/ Red boxes on the Communication Effective Matrix Growth: strengthening portfolio
Ice Cream Greece Hair Global Tomatoes Brazil Disposal
Ice Cream Denmark Hair Global Frozen Italy Disposal Making Sharper Choices for Growth
turnover €bn
€40 bn
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Categories report against 4 platforms
Fabrics & Personal Ice Cream & Surface Foods Care Beverages Care
Fabric Cleaning Deos Ice Cream Spreads Fabric Conditioning Skin Tea Dressings Household Care Hair Soy Beverage Savoury Oral Care Different contribution to turnover
% of Unilever global turnover
18% 30% 19% 33%
Fabrics & Personal Ice Cream & Surface Foods care Beverages care Balanced contribution to growth
% of Unilever global turnover
18% 30% 19% 33%
Fabrics & Personal Ice Cream & Surface Foods care Beverages care
26% 33% 18% 23%
% of 2008-2009 underlying sales growth With different business dynamics
Fabrics & Personal Ice Cream & Surface Foods care Beverages care
big global markets markets start early in income spectrum more common ‘global’ habits disruptive innovation creates advantage toughest competition strong D&E Unilever market share With different business dynamics
Fabrics & Personal Ice Cream & Surface Foods care Beverages care
big global markets at home and out-of-home impulse purchase technology can create advantage unique business system (frozen, RTD) strong global market shares With different business dynamics
Fabrics & Personal Ice Cream & Surface Foods care Beverages care
mature, smaller categories developed world dominated products not as transferable technology less disruptive market development key strong brands matter Leverage scale where it matters
Fabrics & Personal Ice Cream & Surface Foods care Beverages care
One Unilever go-to-market
Technology Investment
Dynamic resource allocation Leverage the differences as well
Fabrics & Personal Ice Cream & Foods Surface care Care Beverages
24% 31% 42% 41% 58% 59% 76% 69%
D&E Developed Foods is developed world led
14 key cells > 40% of businessGeographic footprint
Sauces & others US, Germany 31% D&E Soups Germany,France, NL
Meals & sides N America, Germany 69% Developed Frozenmeals USA
Spreads N America, Germany, UK
Dressings N America, France, Brazil Habits govern expansion potential
Spreads & Breads Markets Correlate Win Where We Are
20000 m D&E vs D % of Sales € e z 15000 i s t e k r 10000 a m d a
e 5000 r B
0 0 1000 2000 3000
Spreads market size €m Focus on core of our portfolio
less productive innovation yield win on the fundamentals h t w
o More productive r brands G
s e l a
S product quality
g n i y l
r advertising e d
n Less productive U
0 market development
1 Foods 0 2
2010 total development cost Balance scale and local opportunity
scale global platforms leverage local opportunities Fabrics and surface care is D&E led
geographic footprint major market development opportunity
in BRIC alone, by 2020
washing machines D&E fridge 76% kitchen +230% freezers sinks +115% +190%
inside microwave toilets ovens 24% Developed +100% +130%
Source: CMI Foundation for emerging markets
portfolio composition (% total turnover) 100%
75%
50%
25%
0% Cote D'Ivoire Morocco Vietnam Romania Sri Lanka Bangladesh
Fabrics & Surface Care Rest of portfolio Opportunity to reach more than we do
penetration opportunity portfolio deployment opportunity
Population Reach Country DIG Skip Surf FabCon Romania
Small surface cleaners powder UK 6 bn $350 Finland Bar soap Norway
Toothpaste & Toothbrushes Austria Sweden Shampoo 3.9bn Belgium Pakistan Fabric solution wash South Africa Ice Cream OOH ANZ
Malaysia Personal wash liquid Algeria
Morocco Deodorants 2.4bn Tunisia Machine dishwash 1.8bn Turkey French R. Africai Super premium Ice Cream 0.9bn Ghana
Gulf ii 0 5000 10000 15000 20000 25000 China
GDP / capita $ Philippines Brazil Ice Cream & Beverages global & big
massive, global markets leading positions
38 billion liters market of tea
Ice Cream €50bn+ market Brand leaders and innovators
power brands leaders in innovation Powerful business systems
Out of Home Ice Cream Network Unilever PepsiCo JVs Huge consumption opportunity
consumption opportunity repeatable models (€ market size/capita) Strengthen agenda with M&A
Russia USA Denmark Greece
Partnership Personal Care most global business
Pre-acquisitions Post-acquisitions
58% D&E 53% D&E
42% Developed 47% Developed Famous and powerful brands
Top 10 brands >€10bn turnover Innovation and marketing driven
Pond’s Gold Radiance Clear Relaunch
Dove Hair Relaunch Dove Men+Care Underpinned by disruptive technology
Unilever Partnerships Opportunity to deploy portfolio
% of sales from Top 6 countries
deos skin oral hair 100%
50% Opportunity to develop the market
markets can explosively grow enable access to our brands early
Latin America deodorant market Personal Wash 3,100 6 d a e H
r 4 44% e p
$
of global e z
market growth i
538 S
t 2 e k r a M
1997 today 0 0 5 10 15 20
Thousands GDPSpending Per per capita Head $ (PPP) (PPP) '000's $‘000s % of global market 10% 27% All Purpose Bars Other Personal Wash
Source: euromonitor Strengthen agenda with M&A Choices more interventionist
1 We will win everywhere (but leverage different approaches to win)
2 Deploy resources to big, fast growing, higher margin categories
3 Maximise what we have by fully deploying the portfolio
4 Leverage technology and innovation to win
5 Scale choices through absolute consistency in execution Enabled by new ways of working
Strengthened Category Capabilities intervention
New business Disciplined use models of resources Disruptive innovation key to success Bigger
Platform based
Cross-category
Technology led
Global roll-out Better
New claimable benefits
Superior products
Proprietary technology
World-Class Design Faster
Speed in development
Fast to market
Marketed aggressively
Intelligent risk taking Working together seamlessly
Consumer needs Technology Marketing R&D
Customer needs Brand concepts Customer Development Category Progress across the metrics
35 €50m markets +75%iT/o Axe iTOHair / project US / bigger country Yr 1 faster €100m 7x6x investment projects in 30+ in quality 50 10+ countries markets
better Unilever 2010 Investor Seminar Singapore Winning with Brands and Innovation Michael Polk / Geneviève Berger igr etr atrInnovation Faster Better, Bigger, Disruption osmrneed Consumer Technology countries Many categories Many Time
Big market impact What does “leveraging across categories” look like?
Blue whitening Surface Filtration Emulsion science technology modification
In market What does “disruptive technology” look like?
Visualisation and Plant/ Structuring Materials Process modelling nutrition science science science techniques science
2009 2010 2010 2010 2010 How we are building a robust innovation pipeline
Genesis New ways of innovating
Underpinning support Critical functional capabilities How we are building a robust innovation pipeline
Genesis New ways of innovating
Underpinning support Critical functional capabilities Genesis as it looks at end 2010
Fabrics & Personal Care Ice Cream & Foods Surface Care Beverages Genesis Genesis Genesis Genesis Genesis Each field Genesis with multiple Genesis deliverables Genesis across Genesis categories Genesis Genesis Genesis Genesis Genesis Genesis Genesis Genesis has become the way we work
We are lengthening and On track to deliver strengthening our innovation pipeline and are increasing the value
Dynamic process How we are building a robust innovation pipeline
Genesis New ways of innovating
Underpinning support Critical functional capabilities We are innovating in new ways
Supplier partnerships Open innovation 48% of Unilever pipeline leverages Open innovation 31% of new products in consumer staples contain external technology in 2010*
New businesses unit
* Corporate Executive Board -The Research and Technology Executive Council 2010 Budget, Spend, and Performance Survey New businesses unit We are pushing boundaries
EXAMPLE 1 New businesses unit We are pushing boundaries
EXAMPLE 2 New businesses unit We are pushing boundaries
EXAMPLE 3
An experimental light-based system to address facial rejuvenation
Before After
Courtesy Robert Weiss, M.D., Hunt Valley, Maryland New businesses unit We are pushing boundaries
EXAMPLE 4
Partnership with Ampere – Spin-off from Edison Pharmaceuticals How we are building a robust innovation pipeline
Genesis New ways of innovating
Underpinning support Critical functional capabilities Critical functional capabilities Building strong patent portfolios
Accessing global talent
Unilever Company 1
Company 2
Inventor countries 2006-09 Low High Critical functional capabilities Clinical trials to support our claims
EFSA state of play
100% Proportion of claims with Unilever positive opinion relevant
Industry average ~20% Conclusion
Strong R&D capability • working differently • strong science base
Clear strategy in place • focus, prioritisation, disruption, cross-category leverage
Strong innovation pipeline • Genesis on track • innovating in new ways Summary
1 Strengthening fundamentals and good performance in tough times
2 Confidence to sharpen choices
3 We will win everywhere (but leverage different approaches to win)
4 Leverage technology and innovation to win
5 Scale choices through absolute consistency in execution