Dave Lewis, Unilever UK chairman and guest editor of The Grocer, on how the fmcg giant has been transformed. Alex Beckett reports

Q: What's your big priority for this year?
A: Looking to grow everywhere. I've done the portfolio reshaping I wanted to do. Market share is the mantra; we've got exciting plans, category by category, of how we will grow the business.

Q: Full-year volume sales fell 0.1% in Europe last year how are things looking in the UK?
A: Our volume growth has been good over the past two years. We have grown our corporate market share in the past 18 months and grown above the weighted average in the marketplace. A UK growth between 5% and 8% isn't far from the mark.

Q: Are retailers happy with you?
A: I had very frank conversations with retailers three years ago and very few of them were that complimentary. We still have our differences now, particularly when it comes to commercial trading, but if you asked the key retailers you'd get a completely different feel about how engaged Unilever is, how applied we are in terms of our thinking to their business. That's how we have won their support.

Q: And the shareholders?
A: It's working that's a UK comment. If you're a global investor, it was a 37% increase in the share price last year... only Cadbury was greater and that was with a one-off event.

Q: How does inflationary pressure from raw materials pan out with currency challenges?
A: There has been deflation in some raw materials but massive inflation in others. If I look at an index of 50 inputs and track what is happening now and what might happen in the next six or nine months, I'm seeing as many forecasts to increase as those that might get better.

Q: Is it a challenge having such a plethora of brands?
A: I don't buy that view. We grew our corporate share last year for the first time in a decade. As we've come together, we've had more broad-scale growth than at any time when we were dedicated businesses. Is there any loss of expertise? Not at all.

Q: Does this provide you with a more authoritative voice among retailers?
A: Not more authority, but our reach in terms of categories is better than anyone else in the UK and penetration is massively greater than any other fmcg player. I'm not a big fan of talking about power in the relationship, it's not about that. We live or die by how good we are by the category-specific engagement. I don't think size can ever be at the expense of expertise.

Q: You said the Sarah Lee deal confirmed you were back on the buying trail. What's in your sights?
A: Businesses and brands for sale that complement our portfolio or take us into new areas we think relevant. That might be existing categories or selectively new categories.

Q: Is your dominance of ice cream a deterrent for smaller brands to enter the market?
A: Not at all small local brands have entered and done quite well. I would argue that we're the only people that invest in the market by advertising and building the ice cream occasion that's pretty much all us.

Q: Do the heavy promotions on Ben & Jerry's affect its super-premium status?
A: It has the potential to. As we have extended the distribution out of the limited channels we built the brand in, it gets exposed to promotions in a way it wouldn't have done historically. We've chosen to invest in some of that promotional activity but our customers choose to invest in it to drive traffic as well.

Q: Will promotions be such a big feature in the future?
A: The possibility for people to start rethinking the level of investment in promotions is about now. As we start to see the prospect of deflation in the market, the amount of money available to go into the marketplace will reduce. I can see promotions reducing gradually over the next 12 to 18 months.

Q: Marmite has exploded with brand extensions. Will other brands get similar treatment?
A: Yes. We have innovation plans for the next five years that are stronger than at any time since I've been there. We changed the business around and released a lot of money to invest in brands.

Q: How did Asda's Less is More strategy to cut SKUs 30% last year tie in with Unilever's own SKU cut-back programme?
A: They were completely separate initiatives. My decision to halve the number of SKUs was about clearing out things I didn't think justified being there. It creates the space for innovation. We sold 47% less SKUs in 2009 than 2008.

Q: Will you increase that amount this year?
A: Probably. I might be able to be a bit more customised in the offering I take to different customers and bring innovations such as Dove for Men to the market. You preen to let other things grow. There was some evidence that in certain categories the simplification went too far.

Q: It's not a concern?
A: No. I don't mind if some of the things I try don't work. I don't think my customers would worry either. They only worry when I keep going and going when it doesn't work. I've a simple rule: I want to try some things, and if I don't get some things wrong I am probably not trying hard enough.

Read more
Editor's Comment: Why does the industry dwell on the 2% we disagree on? (20 March 2010)
Unilever boss Dave Lewis goes from guest editor to US president in a week (20 March 2010)
Unilever’s Lewis handed US reins (18 March 2010)