Unilever sales fall as shoppers shun new margarine

The group was forced to perform a U-turn on its new recipe for Flora margarine last month after shoppers complained about the texture, taste and smell following the £29m relaunch in January 2012.

Industry figures suggest that sales of Flora spreads fell by 12.4 per cent in the year to May.

Unilever insisted the sales drop across its spreads business – which also includes brands such as Bertolli, I Can’t Believe It’s Not Butter and Becel – came as rivals launched cut price deals and amid general weak conditions in the market.

It said there had been some progress in the second quarter, although spread sales remained in the red.

The group was also hit after a slow start to the ice cream season and tough trading in southern Europe in particular, which combined to send European sales 1.9 per cent lower to E6.7bn (£5.8bn).

The Magnum and Cornetto owner said the poor weather earlier this year knocked ice cream sales across Europe, but sales grew worldwide.

It added that recent launches such as Magnum Pink and Black, and the new 5 kisses range were “doing well”.

The group, which also owns household brands including Domestos, Dove and Knorr, credited a raft of product innovations with helping overall pre-tax profits rise 18 per cent to E3.7bn (£3.2bn) on a constant currency basis in the first six months of 2013.

It has launched new compressed deodorants, Vaseline Spray & Go moisturiser, as well as bringing out new twists on existing products.

But Unilever warned that its developed markets remained “sluggish, with little sign of any recovery in North America or Europe”, adding that growth in the better performing emerging market regions was also slowing.

Emerging markets have been helping offset tough European conditions, with underlying sales in the region growing by 9.2 per cent in the first half.

Paul Polman, chief executive of Unilever, admitted there was “no room for complacency”.

He said: “The tougher economic environment and reinvigorated competition require us to set the bar higher on innovation and to increase investment behind our brands.”