started on Monday. “Poverty is returning to Europe,” said Jan
Zijderveld, head of Unilever’s European operations, in
British–Dutch consumer products company, third largest in the
world, was adjusting its commercial strategy to this new reality, he
said, by redeploying to Europe what worked in poor countries of the
the stars of the industry are affirming it. “The logic of
pauperization,” L’Oréal CEO Jean-Paul
it on Wednesday.
Spaniards are down to spending on average €17 per shopping trip, I
can’t sell him detergent for half of his budget,” Zijderveld
explained. “In Indonesia we sell individual packages of shampoo for
2 to 3 cents and still earn a fair amount.”
this strategy was widespread in Asia I found out in Vietnam in 1996.
I cut my finger at a table at a café in Hué as we were getting up.
So, walking down the dirt street, I licked my finger to keep the
blood from dripping on my clothes. The girl I was with, shocked by my
barbaric behavior, took me to a street stall and bought me one
singled Band-Aid, which cost as close to nothing as you could get.
[My overland solo adventure from the Mekong Delta across Asia and
Europe is the topic of a forthcoming book. The first in the
Like: Cascade into an Odyssey—a
“funny as hell non-fiction book about wanderlust and traveling
abroad,” a reader tweeted—is available
looking at Europe, particularly Southern Europe, as a market with the
characteristics of developing countries, Unilever has transitioned
from seeing the debt crisis as a temporary event to seeing it as a
trend to which it had to adjust its strategies. So now in Spain, it
sells its “Surf” detergent in packages that are good for five
loads. In Greece, it sells mashed potatoes and mayonnaise in small
packages. And in Great Britain (!), it’s implementing the same
strategy. Because people are running out of money. And it’s been
successful. Since they started this in 2011, sales have stopped
falling; and in the first half of the year, they edged up 1.1%. But
higher input prices have exerted pressures on margins and profits.
agree, there is a movement of very sharp pauperization in Southern
Europe,” Michel-Edouard Leclerc said on
Wednesday—they’re now all coming out. He’s the CEO of
E.Leclerc, the number
one retailer in
France with a market share of 18% and 556 semi-independent
hypermarkets, supermarkets, and specialty stores. It also has
numerous stores in Italy, Spain, Portugal, and other countries. And
the company is adjusting to the new reality. In Italy, for example,
where the stores used to sell yogurt only in multi-packs, they’ve
started to sell them as single items.
Agon, CEO of L’Oréal, the world’s largest cosmetics and beauty
products company, countered with
a mixed message. No, the company wouldn’t adjust its products
around the growing poverty in Europe, he said.
race to the lowest price was “not our strategy.” Unlike the
others, his company wouldn’t follow “the logic of pauperization
and commoditization of products.” Rather he wanted to build on
“innovation and added value,” which would allow the company to
raise prices over time, “but reasonably.”
makes sense in light of L’Oréal’s earnings announcement
Wednesday morning, a debacle which caused its stock to plummet 4.4%,
the second worst performer of the CAC40—due to disappointing
margins! Instead of smaller packages, it had tried heavy discounting,
Agon admitted, “to adjust our strategy to the environment”—namely
the pauperization of Europe. Even L’Oréal.
Europe, governments and banks are like “a couple of drunks standing
on the street corner holding each other up,” said Doug Casey,
chairman of Casey Research. It’s “highly regulated, highly taxed,
and much more socially unstable,” and it’s going to be “the
epicenter of the coming storm.” For the amazing interview,
Casey Predicts Day Of Economic Reckoning Is Near.