The Rise of Consumer Goods Giant Unilever

Summary

This video explores the complex history and responsibilities of companies, using Unilever as a case study. It delves into the company's diverse product range, stemming from its 1929 merger of a Dutch margarine producer and a British soapmaker. The video discusses Unilever's dominance in markets like ice cream and its history of controversies, including price fixing and environmental impact. However, it also highlights CEO Paul Polman's efforts towards sustainability and the company's ongoing challenges in achieving it. The narrative questions whether a company of Unilever's size can truly be sustainable and if its actions are genuine or merely PR. It concludes by emphasizing consumer power in driving ethical business practices.

Takeaways

• 🏭 Unilever is one of the world's most diverse companies, with products ranging from personal care to home care.
• 🧼 The company was formed in 1929 from the merger of a Dutch margarine producer and a British soapmaker, both reliant on animal fat.
• 🌳 Unilever operates as a joint venture between two entities, Unilever NL and Unilever PLC, to avoid tax issues.
• 🍦 By the 1970s, Unilever controlled over 30% of Western Europe's ice cream market and now sells almost a quarter of the world's ice cream.
• 🛒 Unilever's products are prevalent in supermarkets, with an estimated 75% of products in the US coming from just 10 companies.
• 💸 The company has faced controversy, including price-fixing cases and ecological impacts related to palm oil production.
• 🛑 In 2016, Unilever settled allegations of poisoning Indian workers with mercury, highlighting a history of unethical behavior.
• 🌿 Under CEO Paul Polman, Unilever has made significant strides towards sustainability, aiming to halve its environmental impact by 2020.
• 🌐 Despite progress, the sheer scale of Unilever's product range makes achieving complete sustainability a monumental task.
• 💼 There is skepticism about whether Unilever's sustainability efforts are genuine or merely a PR exercise to improve its image.
• 🛍️ Consumer choices and ethical considerations play a crucial role in supporting or rejecting companies like Unilever.

Q & A

What is the main responsibility of a company according to the video script?

The script raises the question of whether a company's main responsibility is solely to make as much money as possible or if it extends to broader social and environmental responsibilities.

What is the history of Unilever and how did it come to be?

Unilever was formed through the 1929 merger of a Dutch margarine producer, Margarine Unie, and a British soapmaker, Lever Brothers. The merger was primarily to help with the supply of fat, a key ingredient in both margarine and soap.

How diverse is Unilever's product range?

Unilever is one of the most diverse companies, with products spanning personal care, food, refreshment, and home care. A person could potentially use only Unilever products throughout an entire day.

Why were Unilever and other companies fined over €300 million in 2002?

Unilever, along with P&G and Henkel, were fined over €300 million for agreeing to fix prices on detergents for three years, which is an unethical business practice.

What controversy is Unilever involved in related to palm oil production?

Unilever has been implicated in the environmental impact caused by palm oil production, which is a major cause of deforestation in Indonesia, affecting the company's suppliers.

What health controversy did Unilever face in India in 2016?

In 2016, Unilever had to settle allegations that they had poisoned hundreds of Indian workers with mercury, highlighting health and safety issues in their operations.

Who is Paul Polman and what changes did he promise to enact at Unilever?

Paul Polman is the former CEO of Unilever who joined from Procter and Gamble and Nestle. He promised to cut the company's environmental impact in half by 2020, improve the health of a billion people, and double sales.

What progress has Unilever made under Paul Polman's leadership towards sustainability?

Under Paul Polman, Unilever has made significant progress towards sustainability, reducing emissions, decreasing waste going to landfills by 85%, and actively pushing for stricter environmental controls.

How does the video script address the issue of a company's size and its ability to achieve true sustainability?

The script questions whether a company as large as Unilever can truly achieve sustainability given the vast range of products and ingredients involved, suggesting that tackling every single ingredient would be a monumental task.

What was the takeover attempt on Unilever and how was it related to Paul Polman's sustainability plan?

In February 2017, Kraft Heinz made a $143 billion takeover attempt on Unilever, which was rejected. It is believed that the rejection was due to Polman valuing his sustainability plan above a potential takeover.

How does the script suggest consumers can influence a company's ethical behavior?

The script implies that consumers can influence a company's ethical behavior by voting with their wallets, showing their ethics through their purchasing decisions.

Outlines

00:00

🏭 The Origins and Ethical Challenges of Unilever

This paragraph delves into the history and ethical challenges faced by Unilever, one of the world's most diverse companies. It starts by questioning the primary responsibility of a company, whether it's solely to maximize profits or to contribute to societal causes. The script then explores Unilever's beginnings as a merger between a Dutch margarine producer and a British soapmaker, both reliant on animal fat. The company's diverse product range, from personal care to home care, is highlighted, along with its significant market share, particularly in ice cream. The paragraph also discusses Unilever's controversial practices, including price fixing, monopoly issues, and environmental impact due to palm oil production. It mentions legal issues and fines, as well as allegations of worker poisoning, painting a complex picture of a company with a troubled past.

05:04

🌿 Unilever's Sustainability Efforts and the Role of Paul Polman

The second paragraph focuses on Unilever's sustainability efforts under the leadership of Paul Polman, who joined the company with a mission to enact radical changes. It outlines Polman's ambitious goals to reduce Unilever's environmental impact, improve public health, and double sales by 2020. The script acknowledges the progress made by Unilever under Polman, such as reduced emissions and waste, and his advocacy for stricter environmental controls. However, it also raises the question of whether true sustainability is achievable for a company of Unilever's size and scope, given the complexity of managing a vast array of products and ingredients sourced globally. The paragraph touches on the skepticism surrounding big businesses and their motives, the challenges of balancing shareholder value with ethical practices, and the influence of consumer choices on the company's direction. It concludes with a mention of a takeover attempt by Kraft Heinz, which was rejected, possibly due to Polman's commitment to sustainability, and ends with a call to action for consumers to support companies that align with their values.

Keywords

💡Corporate Responsibility

Corporate responsibility refers to the ethical obligations a company has towards society, the environment, and its stakeholders beyond just making profits. In the video, it's questioned whether companies genuinely care about causes like the environment or fair wages, or if these are merely PR exercises. The discussion around Unilever's practices and initiatives under Paul Polman's leadership provides an example of how a company can balance profit with social and environmental responsibilities.

💡Unilever

Unilever is a multinational consumer goods company with a diverse range of products including food, beverages, cleaning agents, and personal care products. The video's main theme revolves around Unilever's history, its diverse product range, and the controversies and initiatives related to its corporate social responsibility. Unilever's story exemplifies the complex nature of corporate responsibility and the challenges of ethical business practices in a global market.

💡Margarine Unie

Margarine Unie was a Dutch margarine producer that merged with the British soapmaker Lever Brothers to form Unilever in 1929. The merger was primarily to secure the supply of animal fat, a key ingredient in both margarine and soap at the time. The script mentions Margarine Unie as part of Unilever's origin story, highlighting the historical context of the company's formation.

💡Lever Brothers

Lever Brothers was a British soapmaking company that merged with Margarine Unie to create Unilever. Known for its Sunlight brand, which was the world's first packaged, branded laundry soap, Lever Brothers played a significant role in the development of Unilever's product range. The video script uses Lever Brothers as an example of the historical roots of Unilever's diverse product offerings.

💡Price Fixing

Price fixing is an illegal practice where companies collude to set prices for goods or services, often to the detriment of consumers. The script mentions Unilever's involvement in price fixing cases, including a €300 million fine for colluding with P&G and Henkel on detergent prices. This example illustrates the unethical business practices that can occur in the pursuit of profit.

💡Monopoly Law

Monopoly law refers to legislation designed to prevent companies from dominating a market to the extent that they can control prices and exclude competition. The video discusses how Unilever faced legal issues for renting freezer cabinets to retailers on the condition that they only stock Unilever products, which was seen as an illegal blocking of competition.

💡Palm Oil

Palm oil is a type of vegetable oil that has been linked to environmental destruction, particularly deforestation in countries like Indonesia. The script points out Unilever's involvement in the palm oil industry and its impact on the environment, raising questions about the company's ecological footprint and sustainability efforts.

💡Paul Polman

Paul Polman is the former CEO of Unilever who is highlighted in the video for his commitment to sustainability and social responsibility. Under his leadership, Unilever made significant strides in reducing its environmental impact and improving social conditions. The video uses Polman as an example of a corporate leader who has attempted to redefine the role of a company beyond profit maximization.

💡Sustainability

Sustainability in a business context refers to practices that meet the needs of the present without compromising the ability of future generations to meet their own needs. The video discusses Unilever's efforts towards sustainability under Paul Polman, including reducing emissions and waste, and the challenges of achieving true sustainability given the company's vast product range.

💡Consumer Ethics

Consumer ethics involve the moral principles that guide consumers in making purchasing decisions, often based on a company's ethical practices or social responsibility. The script suggests that consumers can influence companies like Unilever by voting with their wallets, implying that ethical consumption can drive corporate behavior towards more responsible practices.

💡Takeover Attempt

A takeover attempt refers to an effort by one company to acquire control of another. The video mentions a $143 billion takeover attempt of Unilever by Kraft Heinz in 2017, which was rejected. This event is used to illustrate the potential conflict between short-term shareholder value and long-term sustainability goals, as represented by Paul Polman's leadership.

Highlights

Unilever's main responsibility is questioned, with debate over whether it is solely to maximize profits or to encompass more.

Many brands are scrutinized for possibly using environmental and social causes as mere PR stunts.

Unilever's history is explored, showing its diverse range of products and global reach.

Over 75% of products in US supermarkets come from just 10 companies, with Unilever being one of the most diverse.

Unilever's product categories include Personal Care, Food, Refreshment, and Home Care.

The company originated from the merger of a Dutch margarine producer and a British soapmaker due to shared reliance on animal fat.

Unilever operates as a joint venture to avoid tax levies, with Unilever NL and Unilever PLC listed on different stock exchanges.

In the 1970s, Unilever controlled over 30% of Western Europe’s ice cream market and continues to dominate the industry.

Unilever has faced legal issues, including accusations of price fixing and monopoly practices.

The company has been implicated in environmental damage, particularly related to palm oil production.

Unilever has had to address allegations of worker poisoning and other controversies.

Paul Polman, Unilever's CEO, has made significant strides in reducing the company's environmental impact and improving sustainability.

Despite progress, questions remain about the feasibility of true sustainability for a company of Unilever's size and scope.

Unilever's growth is slower than expected, leading to a rejected takeover attempt by Kraft Heinz.

There is tension between shareholder value and sustainability, with some calling for Polman's removal.

Consumers are encouraged to vote with their wallets, supporting companies that align with their ethical beliefs.

The video concludes with a promotion for Brilliant.org, suggesting its use for learning about the science behind products.

A call to action for viewers to follow on social media and to stay informed.

Transcripts

So I’ve got a question for you today: what is a company’s main responsibility?

Is it just to make as much money as possible or is it more than that?

In recent years, a lot of brands try to appear as if they care about causes like saving the

environment or offering fair wages, but is that all just a PR exercise?

Today we’ll try to answer that question by looking at how Dutch margarine and British

soap spread their way across the world, bringing an incredible range of products, a bucket

load of ice cream, and some major controversy.

This is the history of Unilever.

When you walk into a supermarket, especially in the US, it’s estimated that over 75%

of the products on sale actually come from just 10 companies.

It might seem like an endless sea of brands but if you follow the money up high enough,

it often ends up with one of these very, very big fish.

Unilever might not be the largest, that honor goes to Nestle, but they are probably the

most diverse.

You could wake up, brush your teeth, shower, make breakfast, clean the house, make lunch,

have dessert and you know what?

You could easily have used only Unilever products for the entire day.

Unilever have four internal categories for their products:

Personal Care, like shampoo and toothpaste.

Food, like, the stuff you put in your mouth.

Refreshment, that’s ice cream and tea mainly, and finally, Home Care; laundry detergent

and soap, for example.

So, while it makes sense for a supermarket to sell all of these products, why are they

all made by Unilever?

Well, the simple answer is; fat.

Over the years, the chemistry of most of their products has changed dramatically, but Unilever

came about thanks to the 1929 merger of a Dutch margarine producer, Margarine Unie,

and a British soapmaker, the Lever Brothers.

Back then, the key ingredient in both their products was animal fat.

Margarine Unie was itself a merger of two different margarine makers who’d started

out in the 1870s and 1880s.

Lever Brothers began in 1885 and was fueled by its main brand Sunlight, the world's first

packaged, branded laundry soap.

Their merger was really just to help both with the supply of fat.

To this day, Unilever is actually a joint venture between the two parts, rather than

a legal merger.

This was to avoid all the tax levies that would be due by setting up entirely in London

or entirely in Rotterdam.

So, there is Unilever NL and Unilever PLC, one floated on the stock exchange in Amsterdam

and the other on the one in London.

They do give their shares equivalent value and have the same board of directors, so it

technically operates like one economic entity.

In the first few decades, they launched or acquired some of their most enduring brands,

which are now each worth over $1 billion.

By the 1970s, for example, they controlled over 30% of Western Europe’s ice cream market.

They’ve gone on to sell almost a quarter of all the ice cream in the world today.

They mostly use the Heartbrand logo and keep the original name of the product they’ve

taken over, like Frisko in Denmark or Tio Rico in Venezuela.

Naturally, their strategy is to focus on impulse purchases, like those freezer stands in the

park or by the counter in convenience stores.

But they hit problems with monopoly law and in 2000, the UK government decided that Unilever

were illegally blocking competition by renting freezer cabinets to retailers on the condition

that they only stocked Unilever products.

You might think that this is pretty much standard practice for businesses and you’d be right,

but the sheer volume and variety of unethical behavior Unilever has exhibited is incredible.

First up, there’s price fixing cases.

In January 2002, Unilever, P&G and the German company Henkel agreed to fix prices on detergents

for 3 years.

Unilever and P&G were fined over €300 million, while Henkle got off for ratting them out.

Did Unilever learn their lesson, though?

Not really, no.

They’re on trial again, this time in South Africa for price fixing with a big Malaysian

conglomerate.

The watchdog tackling the case wants 10% of their local turnover as a fine.

On an ecological level, Unilever have played a part in the devastating impact that palm

oil has had on the environment.

Indonesia is losing 2% of its rainforest every year, with palm oil production being the biggest

cause for that, which coincidentally involves many of Unilever’s suppliers.

In 2016, they had to settle a long running allegation that they had poisoned hundreds

of Indian workers with Mercury and the list of controversies goes on and on.

However, here is where a new character enters our story.

Paul Polman originally wanted to become a priest in his native Netherlands, but instead

he chose the slightly less holy path by joining Procter and Gamble and then Nestle.

Finally, he became CEO of Unilever and promised to enact radical changes.

He wanted to cut the company’s environmental impact in half by 2020, to improve the health

of a billion people, and to still double sales despite that.

The interesting thing though is that he’s actually making some serious progress.

Emissions are way down, there’s 85% less waste going to landfills and Polman is out

there actively pushing for stricter environmental controls.

That’s not to say there aren’t still plenty of issues but, here’s the real problem:

is it possible for a company of this size to achieve true sustainability?

Unilever have such an enormous range of products that tackling every single ingredient will

likely take lifetimes of effort.

If it’s not palm oil in Indonesia, it’s soybeans in the US or vanilla from Madagascar.

We have become very cynical about big business, and for good reason, so it’s hard to have

complete faith that Unilever actually wants to help, rather than just trying to improve

its image.

But maybe Polman is simply doing the most he can, accepting that some improvement is

better than none.

Today Unilever is growing, but it’s less than expected and this led to a takeover attempt

by Kraft Heinz, for $143 billion in February 2017.

That offer was rejected, and many people believe this is because Polman values his sustainability

plan above everything else.

Some shareholders are calling for his head, saying his responsibility is to them first

and only, but then again, those people aren’t working for minimum wage on a farm in Pakistan.

Of course, the bottom line is that consumers always vote with their wallets, showing their

ethics through their purchases.

Hopefully, Unilever will take the right steps in the future so that people actually feel

proud of what they buy.

Now, there’s actually a surprising amount of science and math that go into the creation

of Unilever’s products.

Learning all of that on your own might be difficult, but with Brilliant.org you can

dive deep into the world of physics, math and technology in the easiest way possible.

By solving fun puzzles, you will build up your technical knowledge and problem solving

skills in no time.

Visit brilliant.org/businesscasual and you’ll be able to sign up for a free account and

to get 20% off your premium subscription.

Lastly, I’d like to say thank you to my patrons for supporting me and to you for watching.

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