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Unilever remains 'fully committed' to Israel despite Ben & Jerry's withdrawal plan

Unilever remains 'fully committed' to Israel despite Ben & Jerry's withdrawal plan

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Unilever CEO Alan Jope said during a recent investor conference call that it remains fully committed to its business in Israel. This came shortly after its subsidiary Ben & Jerry's announced on 19 July that its ice cream will no longer be sold in the Occupied Palestinian Territory. The ice cream brand said doing so would be "inconsistent with [its] values" for the ice cream.

"This was a decision that was taken by Ben & Jerry's and its independent board in line with an acquisition agreement that we signed 20 years ago," Jope said during the call. He added that Unilever has always recognised the importance of that agreement.

"I can assure you, it is not our intent to regularly visit matters of this level of sensitivity. It's been a long-standing issue for Ben & Jerry's and we were aware of this decision by the brand and its independent board. But certainly, not our intention that every quarter, we'll have one quite as fiery as this one," Jope explained during the conference call.

During the conference call, Jope said Unilever has invested about US$305 million of capital into Israel over the last 10 years and it is very active on the start-up community and with social programmes in Israel. It also has four factories in the country, including a recent US$41 million investment in a new razor factory for Dollar Shave Club. The FMCG giant also has 2,000 employees in its head office and distribution centres and in the factories. 

On 19 July, Ben & Jerry's said it will not renew its partnership with its licensee, which manufactures Ben & Jerry's ice cream in Israel and distributes it in the region when it expires at the end of 2022. However, it plans to remain in Israel through a different arrangement which will be announced as soon as Ben & Jerry's is ready. 

In response, Israel’s Prime Minister Naftali Bennett promised to "act aggressively" against Ben & Jerry's decision, CNBC reported. Its ambassador to the US also pushed "dozens of state governors" to punish the company under anti-boycott laws, CNBC said. According to Bennett, he spoke with Jope and brought up concerns about what he described as a "clearly anti-Israel step", adding that such an act would have "serious consequences, legal and otherwise", CNBC added.

Ben & Jerry's is not the first brand to be entangled in this controversy of businesses running in Occupied Palestine Territory. Three years ago, multiple media outlets including NBC News reported that Airbnb withdrew its listings from Israel after Human Rights Watch launched a campaign calling for property rental services to stop listing places in settlements in West Bank. Airbnb, however, later made a u-turn on its decision after being slapped with a lawsuit claiming that it "discriminated against the Jewish", NBC News added.

Amidst the recent chatter surrounding Ben & Jerry's Unilever, posted an underlying sales growth of 5.4% for the first half of 2021. Jope said its eCommerce business grew 50% and the channel now represents 11% of sales. In China, normalisation has continued, but market growth is still below pre-COVID-19 levels. While markets in Latin America are growing, Unilever said market conditions in Southeast Asia remain challenging. According to Jope, brand and marketing costs were up 80 basis points as it invested about US$771 million more in the business. 

CFO Graeme Pitkethly explained during the call that while its brand and marketing investment spend has been consistent at around 14% for the last few years, there is "a lot happening within that and quite a lot of change in mix". For example, 40% of its media spend is on digital and this also differs by market. China, for example, will be much higher while India much lower, Pitkethly added. 

Within that step up in brand and marketing investment, the lion's share has gone in media, not advertising production. So, we're showing more of our wonderful creative to consumers, which is what really matters at the end of the day.

Unilever is in the midst of a global media review and Jope said that while the company thinks it buys "very competitively", these reviews, which are done every three years or so, test that assertion by putting a competitive element into its media buying operation.

Photo courtesy: 123RF

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