Japan experienced a "lost decade" of economic stagnation in the Nineties, and that was bad enough. But now the CEO of Unilever warns that Europe's slump may end up lasting at least that long. And that means Unilever and the rest of the CPG industry will continue having to adapt to it.
"We are in for at least 10 years of slow economic growth in Europe, and I don't see that changing" after the continent already has been slumping for a few years, Paul Polman told Bloomberg. "The key thing is to see reality in the eye."
And while Polman looks for continued difficulties in the Dutch company's close European market, which accounts for about 25 percent of its $65 billion in annual sales, he also doesn't like what he sees — and foresees — in the economy of the U.S., for which Unilever now depends for about 16 percent of sales.
There's the rise of an "emerging poor" class dependent on government benefits in America, Polman said, echoing Mitt Romney's infamous "47-percent" remark. "People scrape by until the end of the month." It's not just the western world that's hurting for Unilever; its Jakarta business just experienced its worst two-day slump in 12 years.
Unilever has had to focus on cutting costs, pushing lower-cost brands such as Suave shampoo in the US, selling goods in smaller sizes such as its Surf detergent package in Spain for as few as five washes, and expanding in emerging markets.
One place Unilever hasn't scrimped is its sustainability efforts, an area where Polman has arguedfor setting "uncomfortable targets." The company recently topped the Climate Counts scorecard fortackling climate change for the second year running, and won a prize for sustainable development from the World Environment Center. Unilever US also just launched a pilot recycling program for its deodorant brands, including Axe, Degree, Dove and Suave branded deodorants.
"Never before has it been so important for business to step up its leadership to address both the causes and the impacts of climate change," Polman stated. The same warning apparently goes for world leaders and the global economy.
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