Unilever’s lawsuit against a food startup and its mayonnaise substitute has pulled the consumer-products giant into a public-relations quagmire.
The issue highlights CEO Paul Polman's vulnerability to nimbler rivals as his business sputters around the globe.
Unilever accused Hampton Creek, backed by Microsoft co-founder Bill Gates, of misleading consumers because its Just Mayo implies the product is mayonnaise, even though it doesn’t contain eggs. The ensuing debate created a backlash for the company after Unilever edited consumer comments about mayonnaise on its website.
The public fight with a far smaller competitor illustrates Unilever’s struggle to win over a new breed of consumers with its own $16.8 billion stable of classic brands like Knorr soups.
The business has failed to grow as shoppers increasingly favour food perceived as healthy and less processed. Hampton Creek CEO Josh Tetrick told Bloomberg in an e-mail that his company “is on the right side of the law and where our world is going.”
The spat comes on top of an emerging-market slowdown and amid a worsening situation in Europe. Polman is now forecast to deliver underlying sales growth in 2014 of 3.1 per cent, according to Sanford C. Bernstein estimates, less than half the pace he delivered two years ago despite shedding a half-dozen underperforming brands since.
For the first time in his six-year tenure, there are more analysts telling clients to sell Unilever shares than those recommending a buy.
“Management and Polman need to be challenged to do better,” said Bernstein analyst Andrew Wood. “Unilever is not pushing itself enough.”
Bloomberg News, edited by ESM
