Unilever planning pounds 7bn campaign to catch arch-rivals

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The Independent Online
Anglo-Dutch consumer goods company Unilever is planning to sell or close down businesses accounting for up to pounds 7bn in sales in an attempt to put it back into contention with arch-rival Procter & Gamble, the US company it lost out to in the "soap wars".

The moves being overseen by Niall Fitzgerald, who has this week taken over as chairman of the British arm of the company, will focus on streamlining a brands portfolio that is about 1,000-strong and includes such household names as Persil washing powder, Dove soap, Jif and Domestos household cleaners, Magnum and Popsicle icecreams, Lipton and Brooke Bond PG Tips teas, Flora and Blue Band margarine, Batchelors soups, OXO and Birds Eye frozen foods. By contrast, P&G has about 300 brands.

Mr Fitzgerald, who has been briefing managers on his plans in the months leading up to taking on his new role, is expected to publicly announce the biggest shake-up at the company for 30 years at a fund managers' conference in Boston, Massachusetts next week. However, analysts predict that there will be few specific details then. Instead, the programme, aimed at boosting profitability by abandoning brands that account for about a fifth of the company's annual sales, will become clear over the coming months and years. Mr Fitzgerald has set 1997-98 as the time by which the company has "at least put the plan in place".

His aim is to concentrate resources on products that are capable of being either number one or two in their markets and so improve returns in the mature markets and free funds for investment in developing countries.

"We will be disappointed if, early in the next century, these markets are not about half our business, because the growth rates are so enormous," Mr Fitzgerald said at the weekend.

Weaker brands set to be dropped span all the company's operations - from food, through cosmetics to detergents. But foods are felt to be under particular pressure, with the John West canned-fish business thought to be a candidate because the company has already considered selling it.

"The key criterion is whether we have brand leadership or a realistic possibility of it. If not, we will look carefully at whether we continue with that product," he added.

The streamlining plan follows a management restructuring initiated by Mr Fitzgerald following his appointment as the next chairman despite being in charge of the detergents business at the time of the Persil Power fiasco.

Both moves are part of an overall programme designed to repair the damage caused by that episode.

Though observers say it will take the company two to three years to achieve the plans, a spokesman pointed out that the process aimed at "sharpening up Unilever's focus" was already under way.

It had recently disposed of the loss-making Mattessons Wall's meat-products business, acquired the profitable Colman's of Norwich mustard company and become the second-largest producer of industrial cleaning products by acquiring Diversey from the Molson Companies of Canada, while in the cosmetics field it had acquired shampoo producer Helene Curtis and sold lipsticks supplier Rimmel.

The company last month reported first-half profits of pounds 1.12bn on sales of pounds 16.5bn.