Companies in the sector typically stock thousands of variations of sizes and flavours of different products. Narrowing that range can simplify operations. The groups are trying to spend less as they struggle to pass on higher input costs to consumers.
Unilever warned Thursday that shoppers will buy fewer of its products in 2023 having suffered a 2.1% fall in volumes in 2022. Customers are cutting back spending amid an inflationary crisis in many parts of the world.
Unilever is no longer selling about 5,000 lines in its personal care unit and discontinued 50 or 60 local brands that make up less than 1% of the unit’s sales, Chief Financial Officer Graeme Pitkethly said.
It also cut its offering in dressings in North America — including premium mayonnaise Sir Kensington’s and a very large tub of Hellmann’s that will no longer be supplied to a retailer in the US.
In Europe, it’s cutting back on some ice cream tub options. In October, Danone said it would speed up “pruning” its product ranges over the coming quarters.
Companies can end up offering unwieldy combinations as they try to cater to every customer’s preference, but the variety contributes little to growth. Nestle has said it has more than 100,000 “stock keeping units” — versions of their products — and a third of them account for just 1% of sales. Cutting products in an economic downturn can seem like a “no-brainer,” Siobhan Gehin, a senior partner at consultancy Roland Berger. Still, she warned: “It may be difficult to regain associated lost space on the grocery shelf when economic conditions bounce back.”
Earlier this month, Nestle said it would wind down its frozen meals and pizza business in Canada over the next six months, ending the supply of brands Delissio, Sougger’s, Lean Cuisine and Life Cuisine.
Instead, the company says it wants to give the 11% that account for four-fifth of sales “the platinum treatment.”
“We want to nurture them and give them the best possible support,” Laurent Freixe, a Nestle executive said in November.
