Experts: Unilever Right to Make a Clean Break From Laundry

Unilever’s decision to sell its North American laundry care business and focus instead on growing its core brands is a smart one, experts say.

The Anglo-Dutch consumer packaged goods giant this week announced that it has sold its All, Snuggle, Wisk, Surf and Sunlight brands to global private equity firm Vestar Capital Partners for $1.08 billion in cash.

Unilever rep Anita Larsen said that while the decision was a tough one, the move was necessary to allow the company to concentrate on expanding its key brands. “We simply did not have the scale here in the North American laundry business to allow us to continue to grow,” she conceded.

Dean Hillier, a partner with A.T. Kearney’s consumer retail practice, said the acquisition marks a significant step in the company’s overall plan to divest itself of “nonstrategic” brands. Unilever’s laundry care unit resulted in $1 billion in turnover for the company last year.

On the flip side, some of Unilever’s most successful brands include frozen treats like Breyers, which was second only to a private label with $615.2 million in sales last year, per Brandweek’s Superbrands 2008 report. Other top performers include Unilever’s Dove brand, which grew from a soap-only line to a product category that now ranges from shower gels to deodorants to haircare products. In the shampoo category, for instance, Dove bested P&G’s Clairol Herbal Essences with $29.8 million in 2007 sales, per Superbrands.

“If anything, this will help [Unilever] focus [its] attention on where they’re more powerful,” Hillier said. “The laundry segment in North America is tough. It’s loaded with private label and it’s become harder for branded folks to really differentiate their products, compete and make money.”

Unilever is not the only company to take such measures. In recent years