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Company History:

Lever Brothers Company is one of the largest manufacturers of soaps and detergents in theUnited States. It is well known for such famous brands as Sunlight dish detergents; Wisk, Surf,and "all" laundry detergents; and Caress, Dove, Lifebuoy, and Lever 2000 soaps. Lever Brothers

is a subsidiary of the Anglo-Dutch Unilever group, which includes more than 500 companies andhas sales of more than $43 billion annually.

Lever Brothers Company has its roots with William Hesketh Lever, an English grocer.Beginning in 1874, Lever's wholesale grocery business had been marketing a soap madespecially for them called Lever's Pure Honey. By the 1880s, Lever had concluded that he hadexpanded the grocery business as much as he could, and he looked for another enterprise. Hedecided to market soap. As a child, his first job in his father's grocery store had been to cut andwrap soap. He knew the importance of a brand name that he could register for exclusive use andchose the name "Sunlight." At first he contracted with various soapmakers to manufacture"Sunlight," which he then packaged and marketed. In the mid-1880s, raw materials were cheap

and workers plentiful, and Lever decided to set up his own soapmaking plant.

Arranging a loan to start the factory as a branch of his family's wholesale grocery business,William and his brother James began production. By January 1886, the plant was producingtwenty tons of soap a week using the "recipe" for Sunlight soap (made from oils rather thantallow) that the Lever Brothers had perfected. Two years later, the plant had a capacity of 450tons a week. Glycerine was a lucrative byproduct of the soapmaking process, and by the end of1886, Lever Brothers also had a glycerine factory. At first Lever was selling locally, then itsmarket branched out to include Scotland, Holland, Belgium, South Africa, and Canada. In 1888,with the success of Sunlight, William Lever went looking for a new site for his company, whichhad been operating from leased facilities. He bought land on the banks of the Mersey River

where he built Port Sunlight. Over a period of years, he bought almost 330 acres.

At first Lever manufactured only Sunlight soap. In 1894, though, he introduced Lifebuoy soap, ahousehold soap with carbolic acid as a disinfectant. The new product also used up the residualoils left over from production of Sunlight. In 1899, Lever's company also began producing "Lux"soap flakes.

Lever opened a small office in New York in 1895 to handle U.S. sales of Sunlight and Lifebuoysoaps. In 1898, Lever acquired a small soap factory in Cambridge, Massachusetts, the company'sfirst manufacturing operations in the United States. A few years later, the company acquired afactory in Philadelphia. The Cambridge plant did business throughout New England, and thePhiladelphia plant distributed to the rest of the country. During the early years in America,neither Lifebuoy nor Sunlight sold well. Americans preferred large bars of soap because theyseemed like a better value than the small tablets of Sunlight. Lever was more successful with itssales of "Welcome" soap, which satisfied Americans with its larger size. Sales of Lifebuoy soapand Lux finally started to take off, but Sunlight never did catch on in the United States.

Sales of Lever products in America were growing largely due to the management of Francis A.Countway, who headed U.S. operations for Lever Brothers. Beginning in 1912, he guided Lever

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Brothers American business for more than 25 years. He understood American marketing andAmericans' peculiar preferences, and gradually he persuaded the British owners that selling soapto Americans was very different than selling to Europeans.

In 1919, Countway reorganized the company. Recognizing that the markets outside of New

England needed to be tapped, he divided the United States into ten sales territories. He gave upon Sunlight ever being a success in the United States and successfully promoted Lux, Rinso, andLifebuoy as the mainstays of the company until 1925, when Countway launched Lux toilet soap.Lever had not been very successful selling directly to retailers, so Countway also brought thewholesaler or jobber into the marketing process.

Between 1920 and 1925, sales rose from 21,000 tons to more than 40,000 tons. Lever's Americanconcern was finally becoming a success. By 1929, it had become the third-largest soap andglycerine manufacturer in the United States. Competition was strong among the top three soapmanufacturers: Procter & Gamble, Colgate-Palmolive-Peet, and Lever Brothers. Lever Brothershad given up on Sunlight, but Lifebuoy and Welcome were selling well due to heavy promotions

which included gifts, special displays, demonstrations, and even door-to-door visits. But it wasLux that became its greatest success.

Lux had been touted as a soap suitable for washing woolen fabrics. But newer, more delicatefabrics were becoming available at low prices by 1913, and Countway began advertising Lux asa high quality soap that was suitable for even the most delicate fabrics. By 1919, Lever wasselling a million and a half cases of Lux; its 1913 sales had been 3,000 cases. The introduction ofRinso soap powder was also successful, with sales rising from 64,000 cases in 1919 to 800,000cases four years later. Lifebuoy sales had soared from 84,000 cases in 1913 to 550,000 cases in1923.

Meanwhile, the parent company in England was in the midst of negotiations that would soonmake Lever Brothers of America a subsidiary of a newly formed partnership. In 1929, after yearsof talks, Lever Brothers Ltd. and Holland's Margarine Unie finalized a deal to become Unilever.They remained two companies with two sets of shareholders and two headquarters but one boardof directors. Unilever Public Limited Company (PLC) was based in London and Unilever NV(Naamloze Vennootschap, meaning limited-liability company) was based in Rotterdam.Although legally distinct, they operated as one company.

Lever Brothers Company in the United States continued to fight for market share. While sales ofLux had surged in the 1920s, its growth had slowed down in the 1930s. But Lifebuoy was goingstrong, and Rinso powder sales rose from two million cases in 1929 to more than six million adecade later because of its suitability for use in the new electric washers that were being installedin many American homes.

Procter & Gamble was enjoying great success with its Crisco shortening; that product brought innearly half of the company's profits in the early 1930s. Countway thought Lever Brothers couldtake advantage of the lard substitute market as well. Delaying direct sales to consumers,Countway entered the market with artificial lard sold to bakeries. When the Depression broughtlow prices for lard and butter, the market for lard substitutes dropped. It was not until 1936,

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when the country was in the midst of a serious shortage of real lard, that Lever Brothers broughtout its Spry shortening in the United States. By 1939, after a massive cross-country campaign todemonstrate uses of Spry, the new product had reached sales of 50,000 tons. In three years, Sprysales had reached about 75 percent of the sales of Crisco, which had been on the market since1910.

Lever Brothers sales increased between 1929 and 1934, despite the Depression. This may havebeen due to Americans' high regard for cleanliness, making soap a necessity rather than a luxury.Between 1929 and 1939, U.S. sales for Lever Brothers increased from $39 million to more than$91 million, and profits more than doubled, from $3 million to more than $7 million. During the1940s, the company diversified further than soaps and lard substitutes. In 1944, Lever enteredthe oral hygiene market when it acquired the large Pepsodent Company, manufacturer oftoothbrushes and tooth-cleaning products. In 1948, it acquired the John F. Jelke Company, amanufacturer of margarine.

Synthetic detergents were gradually taking over markets for soap products in almost all but the

toilet soap segment, where it was difficult to develop a synthetic that did not leave a ring aroundthe bathtub. Lever's Dove, a synthetic toilet soap, finally met with success when it wasintroduced in the 1950s, but it was a costly product. Synthetic soaps caused an environmentalproblem because they formed huge collections of foam in rivers and sewer systems. LeverBrothers, like other soap manufacturers, worked to overcome this problem, finally developingmore biodegradable detergents.

In 1957, Lever Brothers acquired the Monsanto Chemical Company's line of "all" detergents,which included Concentrated "all," Liquid "all" and Dishwasher "all." This transaction resultedin an anti-trust suit by the U.S. Department of Justice which charged Lever Brothers withrestricting competition by acquiring that piece of Monsanto which manufactured low-suds

synthetic detergent, a product similar to one that Lever already made. Lever Brothers won thesuit, arguing that rather than restricting competition, it was protecting it since both Lever's andMonsanto's products were losing money due to competition with "larger rivals" like Procter &Gamble. Lever Brothers Company successfully argued that if the businesses remained separate,eventually the larger rival would wipe both of them out, and that the acquisition of Monsanto'sdetergents was actually helping to preserve a competitive marketplace.

Advertising dollars tended to spell the difference among several like products that essentiallydiffered only by scent or color. Procter & Gamble spent massive amounts of money onadvertising and promotion and controlled 45 percent to 50 percent of the household productsmarket. Competition from Lever Brothers remained weak until the 1980s. Outside the UnitedStates, however, Lever's parent organization, Unilever, was the leading manufacturer ofdetergents and margarine.

Low profitability was what had plagued Lever Brothers through the 1970s, according to MichaelAngus, then Unilever PLC's vice-chairman and head of Unilever's North American operations.He was sent to the States to turn Lever Brothers around. He told Fortune magazine in 1986 thatLever Brothers "was in a vicious cycle caused by low profitability." Low profits causedmanagers to cut costs, such as advertising, which produced lower market shares, lower volumes,

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and higher production costs. In addition, research and development resources had been reducedas management tried desperately to stay profitable.

Angus kept only the "best" corporate officers at Lever Brothers, letting many others go. Hetackled the margarine business first, which was losing vast amounts on Imperial and Promise

brands. He shut down outmoded plants and, for a time, contracted with Beatrice Co. tomanufacture margarine for Lever. With the savings from shutting down plants and warehouses,Angus was able to begin updating Lever's margarine factories and promoting other productsmore aggressively. With the acquisition of the Beatrice operations Shedd's Food ProductsCompany in 1984 and J. H. Filbert in 1986, Lever became the leading margarine company in theUnited States, ahead of Nabisco and Kraft. The acquisitions added production, food service, andprivate label operations. In 1985 Unilever spent $50 million to expand the laboratories andresearch staff at its Edgewater, New Jersey, research center.

Lever Brothers launched a string of new products in the mid-1980s. Both Sunlight automaticdishwashing detergent and Snuggle fabric softener managed to win 15 to 20 percent of U.S.

markets. Lever also expanded its marketing of Surf powder detergent to compete with Procter &Gamble's Tide. Lever Brother's revenues shot up to $2.1 billion, a 55 percent increase over threeyears.

With the company becoming more diversified in the 1980s, Unilever reorganized LeverBrothers, forming three separate divisions: Household Products Division, Foods Division, andPersonal Products Division. Following the acquisition of Chesebrough-Pond's Inc. by Unilever,Lever's Personal Products Division was transferred to this company. Lever's Foods Division wasspun off into its own operating unit, called Van den Bergh Foods, in 1989. Following thesechanges, Lever Brothers became solely a soap and detergent company.

Lever was now in a position to face Procter & Gamble more confidently in the householdproducts division. Lever already had a winner with Wisk, first in the heavy-duty liquid laundrydetergent market. Introduced in the 1950s, Wisk was largely unchallenged until Procter &Gamble marketed Liquid Tide in the mid-1980s.

In 1990 Lever Brothers introduced some innovative products, including Lever 2000--an "all-in-one" deodorant and moisturizing soap for the whole family--and Wisk Power Scoop, asuperconcentrated laundry detergent. According to company literature, an ingredient in thedetergant called lipase "unlocks the fatty matter that 'glues' dirt to fibers, making dirt linger inclothes." Lever also brought out a liquid Dove and "all" Free: Clear, which contained noperfumes or dyes.

In 1990 the company also began using recycled plastic in its packaging, publicly committing touse 25 to 35 percent post-consumer recycled resins in half the bottles it sold in the United States.It also touted its Wisk Power Scoop as a step in the right environmental direction since it usedless packaging per load than ordinary detergents. Lever announced that its new PackagingDevelopment Center in Owings Mills, Maryland, was actively pursuing packaging that supportedits environmental policy.

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Lever Brothers pulled ahead of Procter & Gamble in the toilet soap category in 1991 with Lever2000. This was the first time Lever had ever overtaken Procter & Gamble in a product category.Lever spent more than $25 million for advertising that year to make Lever 2000 the marketleader.

Lever Brothers' winning position in the toilet soap market convinced the company that it coulddominate other market segments too. But Procter & Gamble, Dial, and other soap makers beganto develop new products or reposition existing ones to capitalize on the market for "all-in-one"soaps. Soap makers collectively spent more than $183 million on advertising in 1991.