Alan Jope, 59, may soon be joining a company other than Unilever for the first time in his life. The Scot took 35 years to climb from marketing trainee to the highest boss and made Monday announced his departure. He did this remarkably early: he wants to stop at the end of 2023 when his term ends. His successor is still being sought.
Under Jope’s leadership, Unilever, with roots in Rotterdam, became fully British. He succeeded Dutchman Paul Polman in 2019, who led the company (with a range of brands such as Magnum ice cream and Ax deodorant) for ten years. Jope had previously commanded the Russia, Africa, and Middle East regions and led the personal care division.
Investors did not foresee that Jope wanted to make the largest acquisition ever
He took over the company in turbulent times. Two years earlier, American ketchup maker Kraft Heinz had made an unexpected takeover bid of $143 billion. The takeover attempt of a company that was twice as profitable shook Unilever awake. Polman then promised shareholders higher profit margins and more growth.
Where Polman was often on stage – usually to talk about the company’s sustainable ambitions – Jope, as CEO, has so far been more of a man from behind the scenes. In addition to being a fiery orator, Polman was known for being curt when asked critical questions. Jope, on the other hand, was known as humorous and easy-going.
Takeover attempt of 60 billion
Yet a lack of good communication is what he is accused of by shareholders. Investors were particularly shocked by a wild attempt to take over GSK’s consumer business. At the beginning of this year, it was leaked that Unilever had wanted to deposit no less than 60 billion euros for this division, which sells drugstore medicines such as Advil, and the toothpastes Aquafresh and Sensodyne. Investors did not anticipate that Unilever was planning to make this largest acquisition ever.
The takeover attempt may have been intended to please investors, as Unilever’s share price lagged well behind competitors such as Nestlé and Procter & Gamble. But the exact opposite happened: a storm of criticism followed. Investors and analysts called it a downright bad plan. The share price fell by 8 percent in one day. Fundsmith founder Terry Smith called the hunt for GSK “a near-death experience,” the statement said Financial Times. GSK itself also did not like the takeover.
The offer was all the more striking, because Unilever has little experience with medicines that you can buy at the drugstore. And the price was also surprising: Unilever was willing to pay more than its total annual turnover.
After all the criticism, Jope quickly switched strategies. Unilever was reorganized (1,500 management jobs were cut) and it would put more emphasis on the faster growing categories of health, beauty and personal care.
The turbulent takeover attempt caught the attention of a famous activist shareholder, who took a stake in Unilever. This Nelson Peltz (who had previously invested in Procter & Gamble) was given a seat on the board.
The months that followed remained unsettled for Unilever, mainly due to the rapid price increases of raw materials and packaging materials. That translated into more expensive products. The company allowed its prices to rise by no less than 11 percent in the second quarter of 2022. In addition, Unilever is trying to absorb some of the inflation itself by cutting back, sacrificing margins and investing extra in advertising.
Reorganization as an achievement
“In the end, Jope did not bring so much news to Unilever,” says Fernand de Boer, analyst at the Belgian investment bank Degroof Petercam. “He has continued on the sustainability course and reorganized the organization by cutting management jobs and restructuring the company into five divisions. That reorganization will probably be his greatest achievement. In the coming years we will see whether it takes Unilever to a higher level.”
For years, Unilever has been calling for more focus. The company is really still a conglomerate. 150,000 employees work on more than 400 brands sold in 190 countries. That varies from Ben & Jerry’s ice cream, cleaning agent Cif, cosmetics line Dove, detergent Omo and the Vegetarian Butcher. Critics lack coherence and have been asking for radical choices for years.
Although Jope sold the tea branch of the company (with brands such as Lipton and Pukka) for 4.5 billion euros, Jope has not dared to sell any really large parts. Yet that does not surprise analyst De Boer. “It is often underestimated how complex Unilever is. It operates in personal care, beauty and food in many different markets. In the Netherlands you mainly buy Dove when it is on sale, while in other regions it is seen as a premium Brand. It is not easy to give up a region or a product group.”
Successor wanted
Is it striking that Jope is already announcing his departure, more than a year in advance? “In any case, it is now clear to everyone,” says De Boer, “It could be that he will resign his position a little earlier in practice if there is a successor. We will see.”
Investors reacted positively to the news of the Scot’s departure on Monday: the share climbed by just under one and a half percent. The stock is now worth about as much as it was when Jope started in 2019.