Unilever has come under fire from investors, perturbed by an apparent fixation on climate and social justice considerations at the expense of profit.
Terry Smith, who controls the £28.9bn Fundsmith Equity Fund, said that the consumer goods conglomerate has lost touch with its core operations as a result of being “... obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.”
The public show of dissatisfaction was delivered in an annual letter to investors and serves as a shot across the bows of the multinational, which owns many popular household brands from Wall’s ice cream to Domestos bleach and Dove soap.
Strong words from its top shareholders will likely give Unilever pause after bringing up the rear among Fundsmith Equity’s lowest five performers for 2021.
Smith wrote: “Unilever seems to be laboring under the weight of a management which is obsessed with publicly displaying sustainability credentials at the expense of focusing on the fundamentals of the business.”
Citing several recent examples that have raised hackles, Smith pointed to efforts to reposition the venerable Hellmann’s mayonnaise as a bulwark against food waste as an example of Unilever taking its eye off the ball. He said: “A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot. The Hellmann’s brand has existed since 1913 so we would guess that by now consumers have figured out its purpose (spoiler alert – salads and sandwiches).”
Unilever has made headlines in its balance of commerce and purpose, sometimes unintentionally as with a high-profile refusal to supply Ben & Jerry’s ice cream to occupied territories in the West Bank.
Smith’s intervention dovetails with an intense debate among marketers around recent research from Peter Field and the Institute of Practitioners in Advertising around the supposed effectiveness of brand purpose advertising campaigns.