Unilever is a global player across the Food, Refreshment, Personal Care, and Home Care product categories. The company owns over 400 brands, of which it primarily focuses on 14 (Axe/Lynx, Dove, Omo, Becel/Flora, Heartbrand ice creams, Hellmann's, Knorr, Lipton, Lux, Magnum, Rama, Rexona, Sunsilk, and Surf).
According to the World Health Organization, by 2015, it is estimated that over 1.5 billion people will be overweight1. If recent trends continue, projections forecast that by 2030, 2.16 billion people will be overweight and 1.12 billion will be considered obese2.
Unilever has set targets to reduce levels of salt, saturated fat, sugar and calories, to remove trans fats, to improve heart health, and to provide healthy eating information. By 2012, 100% of the company’s portfolio by volume did not contain trans fats originating from partially hydrogenated vegetable oil.
Consumers and regulators are putting greater pressure on food and beverage companies to eliminate or reduce controversial ingredients in final products.
Half of Unilever’s raw materials come from farms or forests and the company has committed to source all agricultural raw materials sustainably, as defined by the company’s Sustainable Agriculture Codes, by 2020. Unilever has already achieved 48%. Additionally, Unilever is one of the world’s largest buyers of palm oil. Noting this, the company has committed to source 100% of its palm oil from certified, traceable sources by 2020. The company reports that all of the palm oil purchased will be from traceable sources by the end of 2014.
Packaging plays an important role in the environmental impact of food and beverage products. Packaging that contains recyclable or post-consumer recycled content, or minimizes the use of materials, gives companies the opportunity to reduce their environmental footprint by reducing their waste output. Companies that introduce eco-friendly packaging in their products will be at an advantage in mitigating their environmental impact.
Unliever has numerous packaging initiatives in place. For example, in 2013, the company launched smaller “compressed” deodorant sprays across three of its well-known brands. These sprays use half the propellant, approximately 25% less aluminum packaging, and about one-third less road transport. Overall, Unilever expects the newly packaged products’ carbon footprint to decrease 25%.
The use of ingredients from genetically modified organisms (GMOs) in food is not supported by consumers in many countries. Some consumers hold concerns over the risks that GMOs pose to human and environmental health. Currently 64 countries around the world require labeling of GMOs in food and the demand for increased transparency is growing. Unilever states that it “fundamentally supports the principle of transparency and the provision of information to consumers who want to know about the use of ingredients produced from GM crops.” In markets where there is a labeling requirement, Unilever provides labeling information in full compliance with the relevant legislation. In markets where there is no regulatory framework for mandatory labeling, Unilever works with industry stakeholders to support the voluntary provision of information via websites or consumer care lines to disclose the use of ingredients produced from GM crops in food products. Portfolio 21 encourages the company to systematically increase the transparency of the use of GM ingredients independent of labeling requirements.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 8/31/14 and may not reflect current opinions or subsequent events.