Unilever Lathers Up

An ambitious restructuring program, marketing, and a dandruff shampoo may take the consumer-goods company all the way to the top

by Kerry Capell

In recent years, Unilever (UL), the world's second-largest consumer-products company, has been overshadowed and outmaneuvered by nimbler and more aggressive rivals, including market leader Proctor & Gamble (PG). But now the once-sleepy Anglo-Dutch maker of Lipton tea, Dove soap, Knorr soups, and Surf detergent is challenging its Cincinnati-based competitor in a category the latter practically owns: antidandruff shampoo.

Sounds a bit mundane, but the battle against flaky scalps is very big business. Analysts figure antidandruff formulas account for half of the annual $40 billion global shampoo market. And the biggest opportunity lies in emerging markets, where antidandruff shampoos are considered premium products and cost more than so-called beauty brands such as P&G's Pantene.

Head & Shoulders, also from P&G, is a $1.8 billion product line and by far the leader in the so-called BRIC countries of Brazil, Russia, India, and China, as well as elsewhere in Asia. Indeed, analysts say Unilever may be as much as 40 years behind P&G in some of these markets. Now the company is fighting back with a surprising weapon: an antidandruff shampoo called Clear that wasn't created in a Western research lab, but rather in the developing world.

Waking the Sleeping Giant

The shampoo is already gaining in share. The new, faster Unilever blasted it out to seven new markets in just six months last year, racking up sales of $367 million. In the Philippines, long considered P&G territory, Head & Shoulders was unchallenged in the antidandruff category until Clear launched in July, 2007. Five months later, Unilever's shampoo had overtaken Head & Shoulders to grab 15.6% of the market.

In China, where Unilever is a much smaller player than P&G, with total sales for all products of around $1.2 billion, Clear has gone from zero to 3.3% market share in less than a year. "P&G had a free run for a long time," says Seokhee Won, global vice-president for Clear. Now, he says, the product's rapid success has "woken up the big sleeping giant."

Perhaps the biggest surprise is that Unilever now aims to bring Clear to big Western markets in Europe and the U.S. In the world of consumer products, that would make it an anomaly—Unilever's first global brand developed and launched first in emerging markets. "We are not just exporting products from the U.S. or Europe to developing markets," says Harish Manwani, head of Unilever's Asian and African businesses.

Ambitious Restructuring Program

First formulated at Unilever research centers in Shanghai and Bangkok, Clear was introduced in 1972 in just four markets: India, Thailand, Vietnam, and Indonesia. It remained confined largely to Southeast Asia for more than three decades until Unilever decided to harness it as a potential global rival to Head & Shoulders.

It's an approach that wouldn't have been possible without the ambitious restructuring program kicked off by Unilever Chief Executive Patrick Cescau three years ago. He ditched underperforming brands, divested Unilever's frozen-foods business, and stripped out layers of bureaucracy, including half the ranks of top management, that had kept the company lagging for years behind fleeter-footed rivals.

Under Cescau's "One Unilever" plan, unnecessary complexity was removed. Brands now rely on one formulation, one packaging design, and one marketing strategy, instead of the fragmented approach of the past. Local managers no longer run the autonomous fiefdoms where they were responsible for everything from marketing and sales to running factories and back-office operations.