Unilever CEO Paul Polman may have seen off Kraft Heinz’s £112bn takeover bid (disguised as a merger) but he may still be a little grumpy as analysts and others are suggesting this should be a “wake-up call” for the consumer goods giant although there’s not much evidence that the company is doing much wrong. Apart from cutting costs as ruthlessly as Kraft of course, under the iron-clad direction of its owners Warren Buffet and Brazil’s 3G Capital.
Meanwhile Nelson Peltz’s Trian Fund Management has emerged as a big shareholder in Unilever’s long-time rival Procter & Gamble (below) with a $3.5bn stake. And Pelz, unlike Buffet and 3G, doesn’t believe in putting things together, he believes in breaking them up. Trian was instrumental in Kraft spinning off Mondelez in 2011. P&G recently sold 100 or so brands, mainly beauty products to Bart Becht’s go-go Coty.
P&G CEO David Taylor may have felt he’d done enough to silence the firm’s critics – P&G is growing organically once again – but Peltz and some others evidently feel it could move faster. If it got smaller, of course, it might find itself on the shopping list of someone like – Kraft.
For decades P&G and Unilever have been the aristocrats of what we used to call FMCG, playing a crucial role in (among other things) creating the landscape in which the big agency groups operate. For a while you were either a P&G or Unilever agency although the lines have blurred somewhat as the marcoms companies got bigger. WPP used to be a Unilever agency group but that changed when it bought Grey and held onto Grey”s P&G business. Publicis Groupe is more or less in the P&G camp and BBH lost Unilever’s Axe/Lynx when Publicis bought all the shares a few years back.
But that model – giant consumer goods companies with their handmaiden agencies – is under threat as never before and not just from Kraft’s zero-based budgeting (now adopted by Unilever too). The giants of the commercial world now are tech companies and they’re far less loyal to their agencies – or even the notion of using an agency consistently over time. Apple has its in-house resources as does Google. US giant Verizon, trying to transform itself from a telephone operator to a tech company, is also building its in-house agency team, poaching Andrew McKechnie from Apple as its first CCO.