View from City Road: Unilever may win - by default

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The Independent Online
While opening an ice cream factory in Peking, Morris Tabaksblat, co-chairman of Unilever, donned the hair shirt by confessing that the revolutionary detergent Unilever launched this spring was indeed defective, as long claimed by rivals. This hardly seemed necessary. The company in effect admitted as much when it abandoned its legal action against Procter & Gamble in June. Far from washing whiter, new improved Persil does indeed rot knickers, it seems. Mr Tabaksblat's confirmation of the error looks suspiciously like an attempt to draw a line under the whole sorry episode.

Financially, that should be relatively easy to achieve. The damage to its reputation for product innovation and marketing may take rather longer to repair. The pounds 250m-odd invested in developing and launching the product looks to have been wasted, given that it has failed to boost Unilever's share of the all-important concentrates market in Britain, and has actually harmed it in the Netherlands. Promotions to boost sales - like the free pack deal being launched in the Netherlands today - will continue to cost money. Unilever's business is so large, however, that the impact on earnings will be almost imperceptible.

Unilever's credibility has undoubtedly suffered, however. Last year, P&G scuppered Unilever's launch of a concentrated liquid detergent in the US by the simple expedient of slashing the price of its own product, making Unilever's small packet look absurdly expensive by comparison. For a company that makes its living from marketing, that is two defeats too many: it will be desperate to win the next round.

Not all is yet lost. P&G has chosen to launch its new improved Ariel in Germany - the one country where Unilever has virtually no detergents interest. Could it be that P&G is tiring of the fight?

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