Driving volume growth at a big CPG is sort of like crafting the perfect concert setlist: You have to strike the right balance between new material and the classic hits—and perform them both with gusto—to really please the crowd.
The strategy of looking to the future without ignoring the core products on which the company was built is one reason why Unilever has notched four consecutive quarters of volume growth, while many CPGs are flat or declining, Herrish Patel, president of Unilever USA and CEO of personal care North America, told Retail Brew.
In Q3, the company’s sales rose 4.5%, with volume up 3.6%. Sales for its personal care segment—which includes brands like Dove, Degree, and Axe—grew 4.4% and volume increased 3.1%, as Dove secured double-digit growth with help from new innovations. Earlier this year, the company introduced Dove whole body deodorants and serum-infused body wash—products with slightly elevated price points that are part of its premiumization strategy. But there’s still room to grow and improve the products Unilever is known for, especially in the rapidly changing personal care space, so Patel shared how the company is working to strike that balance.
Skin in the game: When thinking about innovation, the company identifies “pockets of trends that are niche today” that have the potential to become larger, Patel said. Dove has been a major player in personal care for the past 20 years, and the company has a roadmap for the next 20, too, Patel said, zeroing in on several emerging segments as personal care evolves. These include clean, free-from products; therapeutics, with science-backed solutions for consumers’ specific issues, like Degree Clinical addressing heavy sweat; and “skinification,” focused on the microbiome, seen across its new body wash line featuring ingredients like salicylic acid for acne and hyaluronic acid for hydration. There’s also mood engineering, with products that reduce stress or support sleep like “sensorial” shower oils and scrubs, which Patel said will be seen in Unilever products over the next year.
“The categories in three to four years will look dramatically different from where they are today,” he said.
As Unilever has introduced new product ranges and price points for its Dove brand, it’s become divided into three tiers—essentials (its core products with the largest household penetration), sensorials (priced similarly with essentials), and benefit-led (new products like the serum-infused body washes). The reception to its new premium products—the innovations have driven strong volume growth for the brand, the company noted both in Q2 and Q3—“shows that the brand has so much equity to stretch, but also continue to serve all of America,” Patel said.
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While Patel didn’t indicate that the new premium Dove products would open opportunities for distribution in more specialty retailers, he noted the company is looking to enter “super premium demand spaces” with new brands. Unilever’s Big Innovation Group is a “small and mighty team” testing new concepts over an 18-month period to determine which ideas could be scalable nationally through new brands, he said.
But as it’s looking ahead to new brands and innovations, the company doesn’t want to damage brand equity, nor does it want to rely solely on new products to drive volume growth, so it’s also making sure to “spend and invest and continue to renovate our core,” Patel noted.
That includes constantly improving formulation of its products to be “better than the competition”; evolving and relaunching its packaging to be “contemporary and modern” (its Dove body wash bottles got a makeover last year); and establishing strong presence in retail (Patel said the company hasn’t faced any major setbacks with the recent closures in the drug channel).
Mixing business: As the mass and premium segments merge, Patel said Unilever is seeing premium trends within beauty and skin care entering and influencing personal care categories, whether that’s been through more attractive packaging or the introduction of sensorial fragrances. It’s also seeing the categories within personal care influence each other: The rise of products like whole body deodorant popularized by Lumē, for example, has unlocked a new opportunity within the body care space that essentially blurs the lines between deodorant and skin cleansing to create a new skin health and wellbeing space, he noted.
“The opportunities where two categories start to converge is where the magic is happening on innovation,” Patel said.
These shifts are happening rapidly, and that “speed of change” within CPG has proven to be a notable challenge. But Unilever’s use of AI to test concepts quickly—which it’s implemented across both its beauty and personal care and food portfolios—has helped it keep up.
“You need to predict the future a lot faster than you’ve ever done,” he said.