Taking a hardline on soft soap

Taking a hard line on soft soap

By Michael Skapinker

Published: July 7 2008 03:00

In 2003, Patrick Cescau sat down with fellow Unilever directors to hear a presentation from the Dove soap and cleansing products team. The Dove people had an idea for an advertising campaign that would feature women of all shapes and sizes rather than svelte models.

They showed the directors a film of girls talking about the pressure to look perfect, and how disappointed they were when they didn't. The girls in the film were the directors' daughters.

Mr Cescau says watching his own teenager talk about her worries greatly affected him. He had no idea the Dove team had interviewed her, although his wife knew.

"It suddenly becomes personal," he says. "You realise your own children are impacted by the beauty industry, how stressed they are by this image of unattainable beauty which is imposed on them every day - and the loss of selfesteem and other trouble going with it, anorexia and all of that."

The Dove campaign, which won two Grand Prix Cannes Advertising Awards, is touted by Unilever as an example of its philosophy of "doing well by doing good" - improving women's self-image while still selling plenty of soap and cleanser.

When he became chief executive of Unilever two years later, Mr Cescau was determined to take the responsible business philosophy even further. Not everyone approv-ed. He recalls the time of his first annual meeting in the role. "The company was not doing well. There was an article - I don't think it was in the FT - saying that I was draping myself in a flag of corporate social responsibility to excuse poor performance. I was so angry with that."

We are talking in 59-year-old Mr Cescau's office in Unilever House, the food and consumer goods group's newly refurbished London headquarters. Although Unilever's roots go back to Victorian times, Mr Cescau is its first sole chief ex-ec-utive. The group previously had two - one based in the UK and one in the Netherlands.

While Mr Cescau, in open-necked pink shirt and dark blue jacket with elegant red check, is distinctly French, he is a Unilever lifer. After joining Unilever France 35 years ago, his career has taken him to Germany, the Netherlands, Indonesia, Portugal and the US. His multinational executive team has no British or Dutch nationals.

Yet his view of what he wishes to achieve harks back to Unilever's past. "I want to be remembered as the first CEO, the one that transformed Unilever and brought it back to its former glory," he says. What had Unilever lost before he took over?

"We had forgotten some of our values, who we are, what makes us a different company. Our commitment to sustainability, to vitality, was always there but we were not recognising it as a source of strength and source of difference the way we do it today," he says.

Unilever has been known for its community involvement since William Hesketh Lever, founder of Lever Brothers, began building a garden village for his workers at Port Sunlight on the River Mersey in 1888. When Lever Brothers mer-ged with Margarine Unie of the Netherlands to form Unilever in 1930, that philanthropic tradition continued.

In keeping with the modern trend, "sustainability" is the word Mr Cescau uses rather than philanthropy or even corporate social responsibility. "The point is sustainability cannot be simply about being nice. It has to be about business logic," he says.

First, Unilever cannot thrive in a degraded natural environment. "As I used to say: 'No fish, no fish finger. No water, no detergent powder.' " The "used to say" is because the fish business was sold in 2006.

Unilever's concentrated detergent powder is a good example of both helping the environment and improving profitability. "Yes, the margins are better for us. However, along the value chain of this product we use less water, less space, less plastic, less chemicals and packaging."

Second, the past few years have seen the rise of the "conscience consumer", someone who wants to know goods have been produced in ways that do not damage the environment or use child labour. Consumers, Mr Cescau says, are increasingly looking behind the brand.

"Our children are becoming much more discerning in the way they use the internet, so they have a point of view on the company. Building reputational capital in this area is critical."

In pursuit of the conscience consumer, Unilever wants all the tea it buys to be certified as sustainable by the Rainforest Alliance. About half the tea it sells in the UK is now Rainforest Alliance-certified.

Third, Unilever expects much of its growth to come from developing-world consumers. The company has been influenced by CK Prahalad, the Indian-born, US-based business academic who has encouraged companies to look for the "fortune at the bottom of the pyramid".

Unilever has long sold sachets rather than whole, unaffordable containers of detergent in Indian villages, where it has helped distributors set up in business. Prof Prahalad recently joined Mr Cescau as a non-executive director of Pearson, owner of the Financial Times.

Not everyone accepts Unilever's good faith. Greenpeace activists occupied Unilever House and other company sites in April in protest against the group's alleged damage to the Indonesian rainforests in pursuit of palm oil. "We have been working very seriously for the past couple of years to align industry behind palm oil sustainability. So being hit by the Greenpeace people was painful," Mr Cescau says.

Unilever has worked with non-governmental organisations before. It asked Oxfam to assess its impact on the Indonesian economy, for ex-ample, and Mr Cescau hopes Greenpeace will become the company's partner on sustainable palm oil.

"We are going to see now whether they are going to work with us on this, because it is easier to be outside and criticise than to be inside and make choices and compromise to get results."

Will rising prices see the conscience consumers melt away? "It's a very good question, because at the same time as we see the conscience consumer rising, we equally see some finding difficulty paying a higher price." What will that do to Rainforest Alliance tea, which is presumably more expensive?

"We're doing this for the long term," Mr Cescau insists.
And what about the doing well part? Isn't Unilever often seen as being in the shadow of Procter & Gamble? After comfortably talking about sustainability, Mr Cescau does not much like this corporate turn in the conversation. "I knew the FT would be back," he smiles grimly. "As a matter of fact, over the past three years our total shareholder return performance has been better than Procter's."

Unilever places its bets on the power of emerging economies
With so many of Unilever's hopes for growth focused on the developing world, chief executive Patrick Cescau insists economies such as India and China are in better shape than many people realise. "Their macro-economic policies have been very stable, there is huge domestic demand, a middle class and a considerable increase in investment. There also has been a change in the flow and pattern of exports."

Emerging economies trade far more with each other, he says. "The story [of trade] between Brazil and China, for example, is just unbelievable. And because commodity prices have remained very high, there has continued to be money to invest into that trade. So while clearly there is going to be an impact, I think the idea that emerging markets are weak is a bit exaggerated."

However, rising energy prices are affecting Unilever. "It impacts the input cost of our product substantially - fuel directly, and indirectly the petrochemicals that we use in the active ingredients for our shampoos and our detergents. Packaging is affected, fertilisers. And then, of course, all of our suppliers experience these cost increases themselves and see their margins being reduced, and hence look at the opportunity themselves to recover costs."

Copyright The Financial Times Limited 2008