Tuesday, December 8, 2015

Unilever Sales Rise on Ice-Cream, Emerging-Markets Demand

Unilever Sales Rise on Ice-Cream, Emerging-Markets Demand

Ashley O'Hara

Unilever, the maker of Magnum Ice Creams and personal care product lines such as Dove, reported Q3 revenue "increased sharply as the sales of ice cream jumped and the company logged strong growth in emerging markets." Growth was 2.1% YOY. 

There were three main causes for this which I found very interesting. The first was due to last year’s overestimation of demand in China's markets. The company endured a large hit in Q3 2014 when they over-supplied to large Chinese retailers. The second was due to conditions in the U.S. marketplace. Unilever cited better weather conditions (i.e. hotter) and Bluebell's listeria outbreak and subsequent recall and stop of production driving a greater demand for their ice cream. Lastly, growth of personal care products in emerging markets due to advanced purchases before price increases were announced.

Even though the increase in revenue was seen as a positive, the recent economic slowdown in some of their largest international markets (Russia, China and Brazil) "kept a lid on growth." I found it interesting to learn that Unilever is "pushing deeper into personal-care products such as shampoo and deodorants with appeal across different markets." They are shying away from food brands because there is significantly slower growth than the personal-care products. Although food brand growth is slow, tea and ice-cream sales are rising. So much so, late in Q3, Unilever acquired Grom, an Italian artisan ice-cream maker.

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