This week Kraft Heinz tabled a bid of around £115bn for Unilever, which was politely rejected. Since then, talks have ended and both companies have decided to pull the plug on the high profile takeover.
This is the best outcome for Unilever. The two companies couldn’t have more contrasting ideologies of how best to run their businesses. Aligning their overarching vision and goals would have been an impossible task. The proposed takeover was destined for failure and here’s why.
Paul Polman, chief executive at Unilever, has since taken a swipe at Kraft Heinz by stating, “[Cutting costs] might work if you’re OK with having no sales growth and making Mac and Cheese - but Unilever has brands like Magnum and Dove. You have to invest behind those brands.”
There would have been cuts across the board and a culture praised for driving innovation and sustainability would have been lost. Ultimately, Unilever is worth more, both financially and socially, than Kraft Heinz can offer.
Unilever have always deployed a purpose-driven ethos that cemented their role as a key player of brand strategy, famously with the "Dirt is good" positioning for Persil.
Kraft Heinz is a very different organization – most notably, they are not purpose-driven. Formed by a series of mergers, acquisitions and demergers, and while still ethical, operate in a more practical and functional manor.
Kraft’s reputation took a hit, particularly in the UK, when they acquired Cadbury and then infamously scrapped their partnership with fair-trade, which angered many Cadbury loyalists.
But Kraft has never been out to win any fans – they are all about efficiency. It’s an organization where practicality is valued as highly as creativity, whereas Unilever values flair, intelligence and creativity as fundamental success factors.
We believe in pride over profit as the best ideology to deliver long-term brand equity, sales growth, value on the bottom line and a coherent culture. After all, brand building creates a shorthand for choice delivering returns that account for 30% of the stock market value of companies in the S&P 500 index.
Here’s what businesses that believe in a purpose-driven culture should do.
- Develop a strong internal engagement program with a coherent brand culture
- Define clear insight into consumer and customer needs
- Ensure commitment to marketing at board level
- Consider zero budgeting with an entrepreneurial culture
- Create a fun and rewarding collaborating working environment