Friday May 09 2008 on p34 of the Financial section.
(Unilever is actually a major manufacturer of food, home care, and personal products including margarine, tea, and Dove soap. Concept of diversification: This helps to lower risks and minimize potential losses of Unilever as different industries react differently to changes in market conditions. If the sales of one of its products fail, it can then be compensated by the high sales revenue of another product.)
Unilever is pondering the future of the Bertolli olive oil businesses as it continues to spin off famous brands in a cost-cutting drive.
The food and detergents group yesterday confirmed it was looking at the "best way to extract the best value" out of the world's leading olive oil brand, adding that any move would involve a licensing deal so Unilever could still use the Bertolli name. The group made the comments as it published upbeat results that bucked the trend of food companies squeezed by the rising cost of ingredients.
Plans for a spin-off of Bertolli follow Unilever's recent sale of the Boursin cheese brand under a cost-cutting and disposal programme that has slashed the workforce and sold off previously untouchable jewels among its brands.
The Bertolli business, which has annual sales of about €300m (£236m), was started by an Italian husband-and-wife team, Francesco and Caterina Bertolli, from a small shop beneath their home in Tuscany in 1865. It now produces several varieties of olive oil as well as pasta sauces, frozen meals and olive-based spreads.
The brand's possible departure from the Unilever stable follows the announcement last August that the group wanted to make widespread disposals that would wipe about €2bn, or 5%, off turnover. Part of that will be its traditionally core US laundry detergents and softeners business, which has faced stiff competition from Procter & Gamble.
In a quarterly update yesterday, Unilever said it was "progressing" with that disposal process and had received interest from a "number of parties". Overall, the latest results show underlying sales grew 7.2% as it increased volumes and raised prices almost 5% to offset the rising cost of ingredients such as oil and milk.
Unilever's shares jumped 5.4% to £17.52 after Patrick Cescau, the chief executive, said the group, with its family of everyday products and broad geographical footprint, now expected 2008 underlying sales growth to beat a previous 3-5% target range despite "challenging conditions". It singled out UK sales as particularly strong and flagged up double-digit sales growth in emerging markets in Asia and Africa.
Although the group has raised prices for consumers in the same way as rivals such as Premier Foods, maker of Mr Kipling and Hovis, it said it was also looking at changing recipes and production methods to ease the effects of pricier ingredients.
For example, Unilever said developing lower fat spreads and dressings, such as Hellmann's new "free range egg" extra light mayonnaise, tapped into rising demand for healthier foods but brought an added bonus of "reducing our dependence on costly vegetable oils".
(They are investing in Research and development for product differentiation, so as to make their demand more price inelastic. Furthermore, people nowadays are generally more health conscious, thus by developing lower fat spreads and dressings, it can actually create more demands for the products.
Moreover, research can also enable the firm to find cheaper techniques of production, thereby lowering their costs of production and increasing its profits.)
A spokesman said lower fat products meant less vegetable oil was used and that Unilever was also looking at swapping some ingredients for alternatives where it did not affect taste.
"One key element we look at to try and mitigate some of the commodity costs is reformulation, new technologies. But you only have a degree of flexibility. The base arbitrator is taste - if it doesn't taste the same you can't do it."
posted by yi shuen @ 4:49 AM
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home