Unilever is to revamp products and cut prices to appeal to cash-strapped consumers after suffering its weakest sales growth in almost five years.
The Anglo-Dutch consumer products firm said the number of items sold rose 0.3% in the third quarter of this year – a sharp slowdown from 1.9% growth in each of the previous two quarters.
The stagnant eurozone economy and a slowdown in China and other emerging markets have suppressed sales for the maker of brands including Dove soap, Vienetta ice cream and Lynx deodorant.
Paul Polman, Unilever’s chief executive, said: “Market growth slowed in emerging countries and particularly in China where we also experienced substantial trade de-stocking.
“Europe saw price deflation and poor summer weather compared with last year but conditions in north America started to improve. We expect markets to remain tough for at least the remainder of the year.”
Sales growth in the three months to the end of September was Unilever’s weakest since late 2009 when the global economy was emerging from the worst downturn since the Great Depression.
Well-off UK shoppers have been buying Unilever’s £10 Regenerate toothpaste and Maille mustard with wine and truffles, costing £29. But, globally, most consumers across Unilever’s markets are cutting spending, forcing it to respond.
Unilever has launched smaller Cornetto cones costing €1 (80p) in Spain and Italy and 1 lira (30p) in Turkey and is also adjusting sizes and prices to suit discount retailers in the UK.
“We’ve learned from the previous economic crises the importance of having such value brands in the portfolio that can capture some of the downtrading that inevitably happens when disposable income levels fall,” Unilever’s finance director, Jean-Marc Huët, said.
Unilever’s shares fell 3.7% to a seven-month low of £24.40. They have dropped 10% since early September as fears have mounted about the prospects for global growth.
Huët said the company would clamp down harder on costs after cutting 1,400 jobs this year. The firm made no indication that annual profits would fail to meet expectations.
The company makes more than half its sales in emerging markets such as China, India and Brazil.
A slowdown in developing countries helped prompt Unilever’s first profit warning in years last October and many of those markets are going through a tough time again as Chinese growth slows.
