Nigerians will no longer have the iconic products Omo and Lux in the market. Unilever Nigeria, the century-old consumer goods manufacturer, announced last week it is discontinuing the production of the two household brands, alongside Sunlight.
It is a big but troubling move by the firm that has struggled in recent years with losses, economic problems and intense competition.
Unilever first announced the decision in a March 17 regulatory notice, saying it was exiting its homecare and skin cleansing categories, without giving specific details about the affected brands.
In subsequent notes, the company said Omo, Lux and Sunlight will be affected, saying they were “margin dilutive”. Unilever will continue with Vaseline, Rexona, Knorr, Royco, Close-up and Pepsodent.
“All companies need to adapt to changing market circumstances and now is the right time for us to reposition Unilever Nigeria Plc. to better meet the needs of our consumers, shareholders, and employees,” MD Carl Cruz said.
“We are a truly Nigerian business and the oldest serving manufacturer in the country. By making these changes, we will unleash the sustained and profitable growth we need to be here for the next 100 years as well.”
– Lengthy service
Unilever is about Nigeria’s oldest serving consumer goods manufacturer, having been in operation for 100 years following its founding in 1923.
The company started as Lever Brothers engaged in trading of soap. It expanded into the production of food products and opened a soap factory in Aba in 1958.
Omo detergent was in 1960, hitting an instant star status.
Unilever listed on the Nigerian Stock Exchange in 1972 and started Royco and Blue Band in 1982. It acquired Lipton Nigeria in 1985 and merged with Vaseline maker, Chesebrough Products Industries, in 1988.
One of the most known companies in Nigeria, Unilever has struggled in the last few years against two factors: debilitating economic conditions that have pushed business costs skywards and competition that has limited sales.
In 2017, the company sold off its spread business that had Blue Band, Becel, Flora, Country Crock, and ProActiv for €6.825 billion.
It recorded losses in 2019 and 2020 in Nigeria. In 2021, the firm sold its tea business (including Lipton) for N2.2 billion, a gain that lifted its profit to N3.4 billion.
Last year, it recorded N4.5 billion profit and a revenue of N88.6 billion, more than half from its home and personal care segments.
– Slow turnover
But that does not tell the whole story of its struggles. Unilever said it took the latest decision so it could focus on “business continuity measures that reduce exposure to devaluation (of the naira) and currency liquidity in our business model.”
Like other businesses, the firm has been hit by naira’s repeated devaluation, high rate of exchange for the US dollar, and a cash crunch that lasted months.
Unilever said to import manufacturing material, it had to buy dollars at up to 9% above market rates last year.
The company’s products have also faced increased competition from rivals such as P&G-made Ariel and Aspira-made Viva and a host of soap options.
A Pluboard analysis of the ability of five listed consumer goods company to sell their products in 2022 placed Unilever at fourth position.
The analysis compared inventory turnover rates and average sale time. Unilever took on average 99.5 days to sell off its inventory, compared to 92 days by Nestle, 76.8 days for Cadbury and 35 days for BUA Foods. The slowest was PZ Cusson which took 133 days.
The more the number of days, the less sales a company makes.
– Jobs and more
Unilever’s decision to cut back is bound to impact the company’s work force, compounding Nigeria’s unemployment problem.
The company employed 786 people in 2022 up from 755 the previous year.
Job losses are likely to touch and direct and indirect workers, such as those in the supply chains.
A Unilever spokesperson did not immediately respond to questions seeking details on lay-offs.
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