So I’ve got a question for you today: what is a company’s main responsibility?
Is it just to make as much money as possible or is it more than that?
In recent years, a lot of brands try to appear as if they care about causes like saving the
environment or offering fair wages, but is that all just a PR exercise?
Today we’ll try to answer that question by looking at how Dutch margarine and British
soap spread their way across the world, bringing an incredible range of products, a bucket
load of ice cream, and some major controversy.
This is the history of Unilever.
When you walk into a supermarket, especially in the US, it’s estimated that over 75%
of the products on sale actually come from just 10 companies.
It might seem like an endless sea of brands but if you follow the money up high enough,
it often ends up with one of these very, very big fish.
Unilever might not be the largest, that honor goes to Nestle, but they are probably the
most diverse.
You could wake up, brush your teeth, shower, make breakfast, clean the house, make lunch,
have dessert and you know what?
You could easily have used only Unilever products for the entire day.
Unilever have four internal categories for their products:
Personal Care, like shampoo and toothpaste.
Food, like, the stuff you put in your mouth.
Refreshment, that’s ice cream and tea mainly, and finally, Home Care; laundry detergent
and soap, for example.
So, while it makes sense for a supermarket to sell all of these products, why are they
all made by Unilever?
Well, the simple answer is; fat.
Over the years, the chemistry of most of their products has changed dramatically, but Unilever
came about thanks to the 1929 merger of a Dutch margarine producer, Margarine Unie,
and a British soapmaker, the Lever Brothers.
Back then, the key ingredient in both their products was animal fat.
Margarine Unie was itself a merger of two different margarine makers who’d started
out in the 1870s and 1880s.
Lever Brothers began in 1885 and was fueled by its main brand Sunlight, the world's first
packaged, branded laundry soap.
Their merger was really just to help both with the supply of fat.
To this day, Unilever is actually a joint venture between the two parts, rather than
a legal merger.
This was to avoid all the tax levies that would be due by setting up entirely in London
or entirely in Rotterdam.
So, there is Unilever NL and Unilever PLC, one floated on the stock exchange in Amsterdam
and the other on the one in London.
They do give their shares equivalent value and have the same board of directors, so it
technically operates like one economic entity.
In the first few decades, they launched or acquired some of their most enduring brands,
which are now each worth over $1 billion.
By the 1970s, for example, they controlled over 30% of Western Europe’s ice cream market.
They’ve gone on to sell almost a quarter of all the ice cream in the world today.
They mostly use the Heartbrand logo and keep the original name of the product they’ve
taken over, like Frisko in Denmark or Tio Rico in Venezuela.
Naturally, their strategy is to focus on impulse purchases, like those freezer stands in the
park or by the counter in convenience stores.
But they hit problems with monopoly law and in 2000, the UK government decided that Unilever
were illegally blocking competition by renting freezer cabinets to retailers on the condition
that they only stocked Unilever products.
You might think that this is pretty much standard practice for businesses and you’d be right,
but the sheer volume and variety of unethical behavior Unilever has exhibited is incredible.
First up, there’s price fixing cases.
In January 2002, Unilever, P&G and the German company Henkel agreed to fix prices on detergents
for 3 years.
Unilever and P&G were fined over €300 million, while Henkle got off for ratting them out.
Did Unilever learn their lesson, though?
Not really, no.
They’re on trial again, this time in South Africa for price fixing with a big Malaysian
conglomerate.
The watchdog tackling the case wants 10% of their local turnover as a fine.
On an ecological level, Unilever have played a part in the devastating impact that palm
oil has had on the environment.
Indonesia is losing 2% of its rainforest every year, with palm oil production being the biggest
cause for that, which coincidentally involves many of Unilever’s suppliers.
In 2016, they had to settle a long running allegation that they had poisoned hundreds
of Indian workers with Mercury and the list of controversies goes on and on.
However, here is where a new character enters our story.
Paul Polman originally wanted to become a priest in his native Netherlands, but instead
he chose the slightly less holy path by joining Procter and Gamble and then Nestle.
Finally, he became CEO of Unilever and promised to enact radical changes.
He wanted to cut the company’s environmental impact in half by 2020, to improve the health
of a billion people, and to still double sales despite that.
The interesting thing though is that he’s actually making some serious progress.
Emissions are way down, there’s 85% less waste going to landfills and Polman is out
there actively pushing for stricter environmental controls.
That’s not to say there aren’t still plenty of issues but, here’s the real problem:
is it possible for a company of this size to achieve true sustainability?
Unilever have such an enormous range of products that tackling every single ingredient will
likely take lifetimes of effort.
If it’s not palm oil in Indonesia, it’s soybeans in the US or vanilla from Madagascar.
We have become very cynical about big business, and for good reason, so it’s hard to have
complete faith that Unilever actually wants to help, rather than just trying to improve
its image.
But maybe Polman is simply doing the most he can, accepting that some improvement is
better than none.
Today Unilever is growing, but it’s less than expected and this led to a takeover attempt
by Kraft Heinz, for $143 billion in February 2017.
That offer was rejected, and many people believe this is because Polman values his sustainability
plan above everything else.
Some shareholders are calling for his head, saying his responsibility is to them first
and only, but then again, those people aren’t working for minimum wage on a farm in Pakistan.
Of course, the bottom line is that consumers always vote with their wallets, showing their
ethics through their purchases.
Hopefully, Unilever will take the right steps in the future so that people actually feel
proud of what they buy.
Now, there’s actually a surprising amount of science and math that go into the creation
of Unilever’s products.
Learning all of that on your own might be difficult, but with Brilliant.org you can
dive deep into the world of physics, math and technology in the easiest way possible.
By solving fun puzzles, you will build up your technical knowledge and problem solving
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Visit brilliant.org/businesscasual and you’ll be able to sign up for a free account and
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Lastly, I’d like to say thank you to my patrons for supporting me and to you for watching.
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