Unilever Takes a Digital Turn in Elevating Insider to CEO
(Bloomberg) -- Unilever turned to an insider with digital savvy as its next chief executive officer, seeking to connect with millennials and fix the consumer giant’s biggest challenge -- a lack of new customers.
The Anglo-Dutch company named personal-care head Alan Jope to succeed Paul Polman, opting for a safe pair of hands rather than an outside change agent after a shareholder revolt torpedoed the departing boss’s plan to consolidate Unilever’s headquarters in the Netherlands.
Jope’s appointment signals subtle changes rather than a radical shift. The CEO-designate runs the company’s largest division and brings a cyber sensibility to the top job, having pushed the use of new marketing tools to bring brands like Ben & Jerry’s ice cream and Dove soap to younger buyers. He previously oversaw its business in the fast-growing Chinese market.
“He’s a real Unilever guy,” said Robert Jan Vos, an analyst at ABN Amro Bank. “Everyone at the top of Unilever that arrives there via the internal route has seen a lot of regions, including emerging markets.”
The move comes as Unilever, Nestle SA and other consumer-goods giants confront slow growth for many of their mainstream brands, which is squeezing profitability. They’re snapping up niche labels in areas like vegan and organic food, while shedding stagnant businesses like Unilever’s spreads unit, which the company sold earlier this year.
The transition isn’t happening fast enough for activist investors and predators like Kraft Heinz Co., which approached Unilever with an unwanted takeover bid last year. Polman fended that off, but his plan for combining Unilever’s headquarters collapsed amid shareholder opposition -- and may have hastened his exit after nearly a decade at the helm. The departing chief’s emphasis on sustainable capitalism also rubbed some investors the wrong way, even though it produced solid returns.
The shares were down as much as 1.3 percent Thursday in Amsterdam.
In Jope’s current division, change is already under way. Under his watch, the personal-care business has added Dollar Shave Club, which delivers razors and male-grooming kits to homes on a subscription basis. He has sought to boost profitability by assembling a division called Prestige with high-end skin-care brands such as Ren and Dermalogica.
Jope also founded a tech hub in New York’s Tribeca neighborhood last year that focuses on online communications for brands such as Dove and Axe shower gel. Insights gleaned from that team were also used to support new labels such as Love Beauty and Planet, an environmentally friendly personal-care line. At an investor meeting last year, Jope also presented Skinsei, a subscription-based skin-care regimen that’s linked to a mobile app tracking diet, air quality, sleep and exercise.
The executive’s previous experience running the company’s North Asia division will also help Unilever bridge the gap between that region’s reliance on internet purchases and the West’s brick-and-mortar retailing model. Last year’s takeover of Carver Korea Co. was a bet on the boom in so-called K-beauty products.
In a further bet on Asia, Unilever is in talks to acquire GlaxoSmithKline Plc’s $4 billion Indian consumer-health unit, according to people with knowledge of the matter. The business, which includes malted-milk brand Horlicks, has also been eyed by Nestle.
The personal-care division had sales of 20.7 billion euros ($23.6 billion) last year, almost double the food business and just under half the company’s total revenue. The unit has become a breeding ground for British CEOs, with previous leader Dave Lewis named head of Tesco Plc in 2014.
Jope, 54, also has experience in the company’s food arm, giving him knowledge of both of its key business areas. His appointment was finalized Wednesday at a board meeting at Unilever’s North American headquarters in New Jersey. Polman, 62, will support the transition in the first half of 2019, the company said.
Market speculation had also focused on other internal candidates such as Chief Financial Officer Graeme Pitkethly and food and refreshments chief Nitin Paranjpe, as well as external choices who might have led the company in a new direction.
The choice contrasts with the more radical break that rival Nestle embraced when it named an outsider, Mark Schneider, as its CEO about two years ago. The new boss, facing pressure from hedge-fund investor Dan Loeb, has shaken up the Swiss giant with moves like the sale of its U.S. confectionery business.
He isn’t “an external ‘rock star’ appointment, which might come as a disappointment to some,” RBC analyst James Edwardes Jones said in a note. ING Bank analyst Reg Watson said that while Jope’s credentials are “impeccable,” investors aren’t as familiar with him as with other former candidates, such as Pitkethly.
©2018 Bloomberg L.P.