Headline: Unilever's Market Share: Signs of a Potential Rebound
Investors are eagerly awaiting Unilever's third-quarter results on Thursday, focusing on whether the consumer goods giant has been able to reclaim market share previously lost to more competitively priced rivals. During the pandemic and the subsequent economic impact of Russia's invasion of Ukraine, Unilever, along with the broader packaged food industry, was forced to implement significant price increases to offset rising costs.
The company's prices peaked in the fourth quarter of 2022, with an average underlying price rise of 13.3%. In particular, prices in the home care and ice cream segments soared by approximately 17% and 14%, respectively. Under CEO Hein Schumacher's leadership, Unilever is undergoing a transformation that includes streamlining its product range and launching new products like Wonder Wash detergent. Analysts expect Unilever's third-quarter underlying sales growth to rise by 4.2%, driven by a 3.2% increase in sales volume and a modest 1% price hike.
In comparison, Nestle SA reported a 1.6% price increase for the same period, slightly below the average analyst estimate of 1.7%, with actual internal growth of 0.5% against an expected 0.8%. According to Nielsen data analyzed by Barclays, Unilever's food business in U.S. supermarkets gained market share each month in the third quarter, attributed to strong performances from Knorr soup base and Hellmann's mayonnaise.
The company's market share increased by 34 basis points in the four weeks to July 13, 57 basis points in the four weeks to August 10, and 28 basis points in the four weeks to September 7. However, Unilever's U.S. home and personal care product market share declined in the third quarter, and its food market share in Europe also fell at certain times.
Unilever did not comment on these findings, but Jack Martin, a portfolio manager at Oberon Investments, remarked, "The evidence will be revealed when earnings are reported, but if they are gaining U.S. market share, that's clearly a positive. If they can achieve this without eroding margins too much, that would be good news."
The market is awaiting the official earnings report to see if Unilever's strategic adjustments have indeed led to a market share recovery and how this is reflected in their financial performance.