Unilever’s restructuring to generate 600 million euros of cost-saving, says management

Under the new structure, Unilever will move away from its current matrix structure and will be organised around five distinct business groups – beauty and wellbeing, personal care, home care, nutrition, and ice cream.

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26 Aug, 2025 12:21

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FMCG major Unilever’s restructuring exercise, which will bring about a significant change in how the organisation has been run for the past two decades, will result in a cost-saving of 600 million euros, the company’s management said while addressing post-earning investor call on February 10.

“We expect our new organisation to be fully operational from the middle of the year. The new structure will be achieved within existing restructuring investment plans of 2 billion euros between 2021 and 2022. Restructuring investment for 2022 is therefore expected to be around 1.4 billion euros, returning to pre-2017 levels of around 1 percent of turnover thereafter. The new organisation is expected to generate around 600 million euros of cost savings over two years.

Unilever, in a significant move last month had announced a restructuring of the organisation. The proposed new organisation model will result in a reduction of 15 percent in senior management roles while the junior management roles will be trimmed by 5 percent, equivalent to around 1,500 roles globally, the company had informed in a press statement.

Unilever’s move to changes its structure and leadership team follows a significant stake acquisition by Trian Partners, Nelson Peltz's activist hedge fund, as reported by Reuters last month. According to reports, the hedge fund, known for pushing big firms such as General Electric, Mondelez, and Procter & Gamble to improve and simplify their operations, has been pressuring Unilever as well. Trian Partners had called for changes in another consumer goods firm Procter & Gamble in 2018 and won the battle.

The company, under its new structure, will move away from its current matrix structure and will be organised around five distinct business groups – beauty and wellbeing, personal care, home care, nutrition, and ice cream.

“Increasing differences are emerging between what we are calling those business groups,” the company’s CEO Alan Jope in an answer to a query.

In particular, he added, in channel footprint, if you look at the beauty, health, and well-being, it's very strongly dominated by the drugstores, health and beauty independents; and online is a particularly important part of that business. “By contrast, personal care, which in our case, we've populated with deodorants, skin cleansing, and oral care is a business that's much more dominated by more mass channels,” he said.

According to the company’s management, differences are emerging between these business groups in the channel landscape, as well as concerning competition and consumer cohorts that they target.

“And that's why we've chosen to focus them in five different areas,” he said.

Jope also emphasised that “matrix structure” had served its purpose for the company and wasn’t working anymore. “It slows down the decision-making and diffuses accountability,” he added.

The company, hence, will appoint five business leaders for each of these business groups, reporting to the top management. As part of its restructuring exercise, Unilever, said Jope, is also optimising its profit and loss statement (P&L) across categories at the country-level.

“We will now optimise the P&L within a category across countries so that we retain the strategic integrity of the agenda of each of those categories,” he added.

The impact of the restructuring exercise on the Unilever Indian unit Hindustan Unilever remains unclear. Unilever while announcing the development last month had said that Sanjiv Mehta, Chairman, and Managing Director, Hindustan Unilever, and President, Unilever South Asia will retain executive leadership of Hindustan Unilever.

Moneycontrol had sent a query to HUL last month to understand how the restructuring would impact the Indian unit but the company’s response did not bring any clarity.

“Unilever has been focused on accelerating growth within its existing business. The new organisation structure announced today by Unilever is intended to enhance business performance. This operating model will drive greater agility, improve category focus and strengthen accountability. India has been and continues to be one of the three top priority markets for Unilever. We will continue to have executive leadership of Sanjiv Mehta, chairman, and managing director under the supervision and guidance of the HUL Board," said an HUL spokesperson.

"We have a mutually beneficial and interdependent relationship with Unilever Group, bringing the best of trends, innovations, and capabilities to the Indian market. We will continue to leverage this organisation structure to serve our consumers and customers even better. Changes, if any, will be announced in due course,” the spokesperson further said.