July 24 (Bloomberg) -- The pecking order behind Unilever Chief Executive Officer Paul Polman just got clearer.
This week’s announcement of Dave Lewis’s departure to Tesco Plc leaves 29-year company veteran Alan Jope as Polman’s most obvious successor, according to analysts and management experts.
Jope was appointed by Unilever this week to replace Lewis as head of Unilever’s personal-care business, its biggest and most profitable unit. The bald, 50-year-old Scotsman currently runs operations in Russia, Africa and the Middle East, having previously headed Unilever’s business in China, giving him experience in the critical developing regions that account for about 57 percent of the British-Dutch company’s sales.
“While not a certainty, provided he competently navigates the next few years, Alan will likely be the lead internal candidate,” said Jeff Stent, an analyst at Exane BNP Paribas in London. Unilever spokesman Adam Fisher declined to comment on the company’s succession plans.
Jope’s knowledge of both developed and emerging markets, plus his long tenure and recent elevation, mean he’s got the inside track to take over when Polman, 58, departs a post he’s occupied since the start of 2009. Most analysts don’t expect the vacancy to arise for at least another three years.
The CEO needs to accelerate growth in mature markets and make a “major” acquisition in the personal-care arena before he can consider handing over the reins, according to Chris Wickham, an analyst at Oriel Securities in London.
Under Jope, Unilever’s business in China “has gone extremely well,” Polman said at a December investor conference. “We’ve grown shares everywhere there.”
In China, Jope played catch-up against local competitors in addition to Procter & Gamble Co. and L’Oreal SA. He did so by convincing shoppers to switch to new products like Clear anti-dandruff shampoo and by spending at least one day a month visiting Chinese consumers in their homes, quizzing them about their purchasing habits, personal hygiene and brand loyalties.
That groundwork, which Jope also conducted during earlier assignments in the U.S. and Britain, helped boost Unilever’s Chinese sales by more than 10 percent a year. Still, P&G’s more than $7 billion in sales there dwarfs Unilever’s revenue, and the latter’s profit margins in China are narrower than they are in other emerging markets like Brazil and Indonesia.
Jope moved to the role that included Africa late last year in order to invest more in a region that had been “too low a priority,” Polman said at the December conference. “We could grow so much faster.” Africa is home to seven of the 10 fastest-growing economies in the world, he has said.
“Alan Jope is a good pick,” to succeed Lewis as head of the personal-care unit, said Christian Stadler, an associate professor of strategic management at the U.K.’s Warwick Business School. “He is a Unilever lifer.”
Unilever, whose shares have risen 10 percent this year, outpacing the STOXX Europe 600 Index’s 4.5 percent gain, is scheduled to report second-quarter results today.
Jope isn’t Polman’s only potential successor. Dutchman Kees Kruythoff, 45, president for North America, and 51-year-old Nitin Paranjpe, the head of Unilever’s home-care business and former CEO of its Indian unit, have both worked at the company for more than 20 years, making them possible candidates, along with Keith Weed, 53, the company’s chief marketing officer.
Still, less than a year since his last promotion, Jope was the one chosen to take command of a personal-care business that generates 18 billion euros ($24 billion) in sales from brands including Dove, Pond’s and Lynx, and more than 60 percent of that in emerging markets.
Lewis increased the division’s sales by at least 10 percent in both 2011 and 2012 by developing new deodorants and skin creams and taking brands like TRESemme shampoo into new markets. Yet the unit’s growth in the first quarter of this year was the slowest since 2009 as emerging markets cooled and competition from Procter & Gamble in categories such as U.S. hair care is becoming more intense, Lewis said in a July 7 interview.
“It’s warfare in the trenches,” Lewis said.
If Jope wants to run Unilever one day, he still has many more battles to win.
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