31 January 2023

4 minute read

By: Global Ag Media

Incoming Unilever CEO Hein Schumacher gets seasick, according to his former boss at food group Heinz, but that never stopped him joining executive sailing trips and sticking them out, reported Reuters. 

"Every year, I'd bring nine of our most promising executives to Florida - just me and them, not their bosses. One year, we were on a catamaran on Naples Bay and Hein started turning green," ex-Heinz chief Bill Johnson told Reuters in an interview. "The water was only four feet deep and 30 feet away from the shore and he was hung over the side of the boat."

"But even though he knew he was going to be miserable he got on. He was willing to go anywhere and work any hours. Just the most adaptable person who has ever worked for me."

Schumacher, 51, is likely to need all his determination - as well as the experience he gained in food at Heinz and in retailing at Dutch grocer Ahold - when he takes the helm at Unilever from Alan Jope in July.

The Dove soap to Hellmann's mayonnaise giant needs to revive its underperforming food business, while also managing tricky price negotiations with retailers feeling the squeeze from inflationary pressures and a cost of living crisis.

Encouragingly for Schumacher, who worked as a finance manager at Unilever more than 20 years ago before heading to Ahold, he was warmly welcomed by activist investor and Unilever board member Nelson Peltz - who has a long track record of shaking up consumer goods companies, including Heinz.

"I first met Hein when I served as a director at the H.J. Heinz Company from 2006 to 2013 and was impressed by his leadership skills and business acumen," Peltz said.

"I was delighted to learn that he was among the top candidates to become the next CEO of Unilever."

Johnson told Reuters that Peltz and Schumacher "get along pretty well" and that Peltz reached out to Johnson last year, around the time Schumacher joined Unilever's board.

"Hein gets to the heart of issues very quickly - which is like Nelson. They'll get along really well, I have no doubt. Nelson respects capability, honesty, objectivity and results," Johnson said.

British businessman Allan Leighton, who also worked with Schumacher, described him as "very calm, certain, clear and a great listener."

"He's ideal for Unilever," said Leighton, a former CEO of British grocer Asda who has served on the boards of several retailers and consumer companies.

FOOD SPIN-OFF?

One of the biggest consumer companies in the world with more than 400 brands ranging from detergent to ice cream, Unilever has been trying to win back investor confidence after its stock has underperformed rivals for years, and after a failed attempt to buy GSK's consumer health business a year ago.

Analysts said Schumacher's appointment signalled Unilever was, for now, unlikely to spin off its food business, which makes Colman's condiments and Knorr stock cubes, given his experience at Heinz as well as dairy firm FrieslandCampina.

"Why hire a food exec if you are planning to sell the food business?" Bernstein's Bruno Monteyne said. "Selling the food business will always be on the cards, but I doubt that it is top priority in the short term."

The food business, worth 20 billion euros ($22 billion) according to Unilever's most recent annual report, has for years grown at a slower pace than other divisions and has lower margins than beauty and personal care.

In 2021, the food unit's operating profit margin was 14.7% versus 20.4% in beauty and personal care. Historically, food sales have grown at 1-3% versus 3-5% at personal care, said Tineke Frikee, a fund manager at Waverton Asset Management.

"Unilever's valuation multiples would rise if food was sold," Frikee said.

Schumacher's experience at Ahold - now Ahold Delhaize - and more than a decade at Heinz - now Kraft Heinz - could also help Unilever in price negotiations with grocers such as Walmart, Tesco and Ahold itself.

"He's been given a very tough assignment but I have every confidence that if anyone could get Unilever moving in right direction, it's Hein," Johnson said.

($1 = 0.9183 euros)