Powerbranding game

Unilever’s decision to reduce the number of its brands from 1600 to 400 over the next five years may lead to greater opportunities for fewer design consultancies, say designers who have worked for the company.

Tin Horse director John Lamb and Coleman Planet creative director Bill Wallsgrove have both worked on some of Unilever’s major brands and feel the restructing plans will benefit consultancies which also have experience of the international group.

The Anglo-Dutch consumer goods giant is to ditch all brands that are not in the top two sellers in their respective markets, in the hope that the remaining 400 “powerbrands” will grow at a rate of 6 to 8 per cent annually. Unilever also hopes that the move will reduce complexity, increase cost effectiveness and enhance productivity.

No announcement has yet been made on which brands will be maintained or discarded. Flora, Persil, PG Tips, Sure, Lynx and Vaseline are among the group’s better-known products.

London consultancy Tin Horse has worked on several leading Unilever brands, including Vaseline and Impulse. It has previously worked on Lynx shower gels and is currently working on two other products within the range. Lamb expects the brand to be one of the 400 maintained by Unilever.

“Lynx is a worldwide brand and can’t be challenged in terms of male toiletries. The volume of sales is immense and Unilever is very keen to keep up with the competition,” says Lamb, who believes design consultancies that are working on the major brands will benefit from Unilever’s restructuring.

“Potentially, there is more work for design groups as Unilever invests more time in designing high volume products. Smaller brands are not worth putting money into,” he explains.

This view is supported by Coleman Planet’s Wallsgrove. The packaging specialist has worked on many of Unilever’s household goods for several years, recently revamping the entire Persil range. The consultancy has also developed structural packaging for Jif and Domestos products.

Wallsgrove says: “There will be more focus on improving and stretching a reduced portfolio. This will probably result in more work for fewer groups as those consultancies that already worked on particular brands will therefore have specialist knowledge of those products.

“As there is no official roster for household goods, it means all the work we do needs to be truly effective,” he says.

But Lynx brand director Patrick Cairns dismisses suggestions that design groups working on powerbrands will have greater opportunities in the future. Lynx does not have an official design roster, though several groups are used regularly.

“The focus on fewer brands will mean the pressure to get it right from the design aspect will be even more important. But I don’t think there will be any difference at all in the amount of design work,” says Cairns, who uses three or four design consultancies on a consistent basis.

Branding specialist Design Bridge is another of the many groups to work on Unilever’s products, creating packaging for personal products such as Dove and Lux as well as Colemans, Chicken Tonight, Oxo and Bachelors in the food sectors.

Design Bridge client services director Jill Marshall says: “We have not been told that any of the brands that we work on are going, but neither have we been informed if they are staying.

“Manufacturers want to leverage equities and investments in brands, so there won’t be a proliferation of new brands. It is always a balancing act,” Marshall adds.

Reflecting on the past five years Unilever chairman Niall FitzGerald says the company has “greatly changed. It is leaner, fitter and faster. I am confident about our ability to deliver further margin expansion, greater capital efficiency and stronger top line growth.

“By focusing on fewer leading powerbrands, we will progressively drive up overall rates of growth over the next three to five years. We would expect to be able to improve operating margins by a half per cent each year.”

Food analyst David Lang from stockbroker Investec Henderson Crosthwaite is not totally surprised about Unilever’s decision. “It’s the most dramatic thing they have done yet, but it’s very little more than a continuation of past trends,” he says.

Consumer Goods UK editor Nicholas Wall agrees. “Quite a few companies have been looking at rationalising their brands and simplifying their portfolios. Unilever is not able to put enough promotional muscle behind its leading brands.”

Swiss-based food giant Nestlé has over 8000 brands, but a spokesman says the group will not be following Unilever’s lead. “We reshuffled our brands several years ago and it has been an ongoing process since the early 1990s.”

A three-tier structure was created which has “proved to be a workable solution. The hierarchy has eight worldwide brands at the top – Nescafé, Majji, Buitoni, Perrier, Friskies, Nestea, Libbys and Nestlé, which covers milk produce, chocolate, ice cream and yoghurts.

“There are 16 strategic brands in the middle and several thousand local brands at the bottom. As a result there is no need for a further reshuffle. But it is not cast in stone as the hierarchy is constantly reviewed.”

Initial plans from Unilever indicate that the group intends to place the 400 remaining powerbrands on an equal footing. But with Nestle’s success since its own “reshuffle”, only time will tell whether Unilever’s brand cutting exercise is as productive for both the company and the design consultancies involved.