Unilever is to target shoppers directly with more of its premium products as it fights off the threat from cost-cutting supermarkets.
The company behind Marmite and Dove soap said it wanted more of its businesses to adopt the tactics of Dollar Shave Club, which uses a subscription model to sell grooming products online.
These include its gourmet tea company T2 and a growing stable of so-called prestige beauty brands.
Web plan: Unilever said it wanted more of its businesses to adopt the tactics of Dollar Shave Club, which uses a subscription model to sell grooming products online
At the moment, direct-to-consumer sales account for 5pc of Unilever’s revenues, but chief executive Paul Polman said there was no reason why that figure could not be doubled.
His comments come as supermarkets such as Tesco and Sainsbury’s are turning the screws on Unilever, striking mega-deals to merge or forge partnerships that massively increase their buying power with the consumer goods giant.
But Polman said online sales, allowing it to bypass supermarkets, were rapidly increasing. He added: ‘Every shopping journey now has a digital component.
We’ve learnt a lot from Dollar Shave Club. We’ve been able to take that knowledge and expand it to other parts of the business, like our premium tea business T2.
Anger at Dutch move
Unilever bosses have insisted there is broad support for their plan to shift their HQ out of the UK to the Netherlands, despite a growing rebellion by investors.
The move came after it fought off a £115bn hostile takeover bid from US rival Kraft Heinz last year. Dutch laws offer more protection against such bids than the UK, but the move has prompted anger from many UK shareholders because it is likely the company will lose its prized place on the FTSE 100.
Chief executive Paul Polman said: ‘We have been listening to our investors. We think [the proposals] have been broadly well received.’ A shareholder vote on the HQ move has been scheduled for October.
‘We are now also seeing our online business taking off… and with our prestige businesses we see more opportunities to go direct to consumers.’
The model used with Dollar Shave Club is subscription-based. Customers pay a monthly fee for shaving razors, foams and gels which are posted to them.
Polman said more of Unilever’s prestige beauty products could deploy this type of service.
The firm has snapped up a number of companies selling premium and eco-friendly products in recent years, to attract younger shoppers.
These have included T2 teas, vegan mayonnaise and ketchup maker Sir Kensington’s, and organic tea firm Pukka.
On Tuesday it revealed a takeover of ethical beauty business Space NK, adding to a cosmetics arsenal that also includes Hourglass and Carver Korea.
In its second-quarter update, Unilever said it expected revenues to pick up in the latter half of the year as it pushes through price rises.
Sales in the quarter rose just 1.9 per cent, compared to 2.3 per cent expected by analysts. For the first half, sales excluding its spreads business rose 2.7 per cent, below estimates of 3 per cent.
The bulk of growth came from selling more products rather than getting higher prices for them.
Unilever warned last month that a truckers strike in Brazil would hit second-quarter results.
Polman said: ‘Our first-half results show solid volume-driven growth across all three divisions, which was achieved despite the effects of an extended truckers’ strike in Brazil, one of our biggest markets.’ He said the firm expected sales to rise by 3 per cent to 5 per cent for the full year.
Despite it missing expectations, Unilever’s shares rose 3 per cent, or 127.5p, to 4330.5p yesterday.
Fine tea brewing up bigger profits
Gourmet tea producer T2 was snapped up by Unilever five years ago for about £46million.
The business was founded by Australian entrepreneur Maryanne Shearer, who opened her first tea boutique in Melbourne in 1996. Since the takeover it has expanded across the globe.
Its stores, which can usually be found in fashionable areas, such as Soho and Shoreditch in London, sell 200 types of tea in a rainbow-coloured selection of pots and cups.
It now has more than 100 stores worldwide.
It is one of several businesses Unilever has bought in recent years in a bid to attract younger shoppers.
On Tuesday it also announced a takeover of ethical beauty business Space NK.
Other recent acquisitions include vegan mayonnaise and ketchup maker Sir Kensington’s and organic tea business Pukka.
Unilever sees these ‘prestige brands’ as key to its strategy for the future, as consumers seek out premium products.