NEW YORK Peter ter-Kulve has spent the bulk of his nearly 20 years at Unilever working on ice cream, be it in Shanghai, Prague or Rome, where he has been based since May 2005.
In his current global role as senior vice president for ice-cream products, ter-Kulve oversees a portfolio of brands that includes Magnum, Cornetto, Breyers, Ben & Jerry's, Wall's, Carte D'Or, Klondike and Good Humor. Collectively, those brands represent total global media spending of nearly $300 million a year.
Magnum was the focus of a global review that ended in January and resulted in ice-cream business shifting from Interpublic Group's McCann Erickson and Campbell Mithun and independent Nitro to IPG's Lowe (which won Magnum and other impulse brands sold by street vendors and delicatessens) and Omnicom Group's DDB (which landed "take-home" brands like Breyers that are sold in supermarkets and typically eaten at home.)
The 42-year-old executive, a Dutch native, recently spoke with Adweek senior reporter Andrew McMains about why Lowe and DDB prevailed, what he has learned from working in emerging markets, why television keeps him awake at night and how Unilever is addressing concerns about childhood obesity. The following are highlights from that conversation.
How important is it to Unilever executives to strike a balance among the business they have at the various holding companies that they work with, be it Interpublic, Omnicom or WPP?
In every relationship, you want to be a significant part of each other's life. We have a nice roster of agencies and I think we want to have big, important clients in all of them.
What's the secret to getting great work out of an agency?
Giving very clear and tight briefs and then giving a lot of flexibility within the framework. As a client, when you don't know exactly where you want to go with a brand, it's very difficult to get really good work from an agency. When we, as a client, are clear about the space and what to occupy with a brand and help them and devise a clear brand communication idea, the creativity flows out relatively easily.
How did McCann get stuck on Magnum?
It was like a marriage where you both could not get the best out of each other anymore. And the marriage had become extremely rational. We were probably too rational and too proscriptive in what we wanted, and they were probably too rational in their output. After working for a long time, and we had re-briefed for at least an 18-month period, we just could not make it work anymore. And it's sad because they are a really good agency.
Can you give me a flavor of what Lowe put forth and what made their pitch compelling?
They came in with a mind-blowing proposal for Magnum, which they worked out not only in multimedia, but they showed us how it would work in China, in Turkey as well as in the U.K. So, they really approached it with very strong creative content. . . . [The pitch] was highly impactful and very well suited to an impulse character. A large part of our business is out of home and impulse oriented and it sort of fit the impulse character of a large part of our business.
What stood out about DDB's pitch?
DDB made an unbelievable rigorous analysis of the communication challenges that we face and how we can address those by leveraging the totality of our portfolio in a very global way. That was the core of DDB, and then [worldwide chief creative officer] Bob Scarpelli brought some fantastic creativity in his usual style to the game as well. Both Bob and [Lowe's worldwide cd on Unilever] Fernando [Vega Olmos] made a great impression and will be fantastic partners.
Was there something about DDB's presentation that forced you to look at the entire portfolio?
They very strongly came in with a proposal to us that said, "You actually can't isolate it. Your issues are broader than just Magnum." And they made a very compelling case on what we should be doing with our global Heart brands.
What are the marketing challenges you face these days?
We are the global market leader in ice cream, with a 17 percent share. Selling a whopping 70 million pieces a day. We're the market leader in most territories, almost all territories. We have two big challenges. The first is building consumption in emerging markets. The future of the global ice cream business is clearly in the Indias, the Chinas, the Indonesias of this world, where we currently have very low per capita consumption: 1 to 2 liters per head versus 8 to 20 something in the developed world. So how do you build consumption in emerging markets? That is the big challenge, No. 1. Challenge No. 2 is that in markets like Europe and the U.S., where we already have a very deep penetration for the category and our brands, how do you grow consumption and expenditure of ice cream further?
How does multi-channel communications enter into the two challenges?
When you would have asked me the question three years ago -- and I worked in China for almost six years -- I would have told you, "The world is actually simple." You need very sophisticated, multi-channeled communication in the U.S. and Europe and you do the old-fashioned 60s [and] 30-second commercials in India and the Chinas. It's basically not true anymore because the markets and essentially the communication markets in the Chinas have developed so rapidly that were you to be successful, you need to have very sophisticated, multi-channel communication approaches. For example, our biggest mobile phone, blogging, Internet campaign will actually run in the Brazils and Chinas. We have a huge spend on blogging . . . this year in China. We aren't even there yet in Europe.
What lessons did you learn from working in China?
Don't take it as one country, don't take it as one consumer. It's an extremely fragmented marketplace. Only by going very granular can you make sense out of it. That is one. And the second is it is amazing how fast a population can become sophisticated in the way they deal with communication.
What about working in Prague?
I learned how to run a business. Secondly, I really learned something about how quickly countries can change. When I arrived in Prague [in 1994], it was a couple of years after the big political change. The company and the people were really down and out. There was little optimism, the country was very insular. Five years later, it had really changed, and you felt the change in the people. They were more optimistic, they were more outgoing. And it was amazing how rapidly not only a company can change but even how a whole country can change.
How do you define your core target and how does it vary from region to region?
The biggest link between ice-cream consumption is not with the weather but with income. We do quite sophisticated models [on] when consumers have enough money to enter the ice-cream category. So, ice-cream consumption is linked to discretionary income and urbanization. It starts with that.
How would you rate Unilever overall in terms of innovation?
Together with Simon Clift, our CMO, we [made] a visit to California last summer. We were at Google and we were at Facebook. And we had to rate ourselves to be in a sort of learning mode. When we spoke to these guys, they actually said, "Don't underestimate yourself because you're actually quite ahead in the pack." One of the things that definitely helped here [was] that over the last couple of years we have put a lot of effort into creating real ideas and content-based brands. The reality of course is with the new media; it helps to have real content.
How would you define Unilever's corporate culture?
Young and aggressive. That probably surprises you, but you can't imagine how quickly over the last three years the business has delayered and has become a lot younger.
Are you expecting to increase your online investment this year and if so, by how much?
What I see more and more is digital as the core integrator of our whole communication, linking up products, point of sale, print advertising, TV, promotion, and becoming the sort of center of all of our communication. And I see digital growing with more than 50 percent per year at least.
Will that money come out of traditional media?
In many markets, it's increasingly difficult to reach consumers in a meaningful way with 30-second commercials. Print generally works really [well] for us in many places. I see money flowing into print. Print, digital, outdoor nicely integrated. It becomes advertising when you have a real content-driven brand. Television advertising is almost a trailer to draw people into your digital brand space.
As a marketer, what keeps you awake at night?
The demise of television and how quickly are we able to adapt to a new media environment. There's so much in-built conservatism. We've all grown up in a world that slowly and steadily is not there anymore. So that's really a big issue to me. How do we get away from the world of interruption advertising? The second one is that more and more we need to run our brands globally because the world is becoming, also through the new media, so connected, so you can't afford to give different messages in different continents.
How do you think the U.S. recession will impact your ice-cream business?
Two views on it. There is one view that says consumers have less money and therefore they will down-trade in the portfolio. They will go from more premium properties to a cheaper part of the portfolio. On the other hand, what you also see is that people might not be able to afford the latest flat-screen [TV] anymore, but they can still afford the best ice cream. So, it is difficult to say how it nets out. Last year was a very strong year across the globe. We'll have to see. It's difficult to say, especially [given the] high raw material price increases that put upward pressure on the category.
What inspires you?
My children inspire me, for sure. I get really inspired by seeing a whole country moving out of poverty into a sort of middle class, decent life. I've recently made a big tour through Pakistan. Even with all the troubles in Pakistan, you see so rapidly the lives of people improving. And I think when we look back on this era in 100 years, we will forget about the regional wars, we will forget about the economic crisis of the moment, but we will look at this age where hundreds of millions of Asians have been taken out of poverty into a modern life. That inspires me. And it's great to be part of that.
How do deal with public concern about obesity given the product that you sell?
The nutritional profile and the choice we offered in our portfolio were actually not always right. Over the last three years, we put an enormous amount of effort on giving the consumers real choice: delicious products with very low-calorie content up to highly indulgent products. So, choice is one way. The second one is we spend a lot of money on research to give proof of the nutritional content of products. We're trying to get fat and sugars out and try to put fruit and good berry more into the product. That is two. The third one is communication to kids. Unilever has taken a very progressive step ahead of the industry that we won't market products to kids that are not good for them.