Unilever's Volume-Led Resurgence: Best Quarter in 15 Years Signals Strategy Payoff
The Best Quarterly Volume in 15 Years
Unilever delivered its strongest quarterly volume growth since 2010 in Q2, with underlying sales growth of 5.8% and volume up 5.5%. CEO Fernando Fernandez called it “the best quarterly volume performance since 2010” — Fernando Fernandez, CEO · 2026-07-28 — a clear sign that the company's aggressive focus on volume-led growth is working. This isn't a one-off: the company has now averaged ~3% underlying volume growth over the last four quarters, with ~2.7% over the past ten quarters. The growth was broad-based, with HPC businesses (Beauty & Wellbeing, Personal Care, Home Care) all accelerating in Q2. Volume growth is the company's primary KPI, and the market is noticing.
The company's power brands, now 78% of turnover, grew 6.9% in Q2 with 6.8% from volume. Brands like Dove, Vaseline, and Comfort are driving this via premium innovation and cultural relevance. Management's mantra of "desire at scale" is translating into tangible brand equity gains. Brand awareness is rising, evidenced by the company being the most-awarded advertiser at Cannes.
FIFA World Cup: More Than a Sponsorship
The company activated the FIFA World Cup on an unprecedented scale — 35 campaigns across 120+ markets, 50,000+ creators, and 180 limited-edition products. This wasn't a conventional sponsorship; it was a test of the company's new "frontline sales machine." CFO Srinivas Phatak noted that the activation delivered “strong volume growth and helped us build new capabilities in creative-led content, AI-enabled asset creation and stronger perfect store execution” — Srinivas Phatak, CFO · 2026-07-28. While the company is cautious about quantifying the direct impact, the residual benefits are expected to strengthen brand equity over the long term. World Cup is a perfect example of how Unilever is turning cultural moments into demand generation.
Pricing, Inflation, and Margin Discipline
Despite a 70bp gross margin decline year-on-year (due to commodity inflation from the Middle East conflict), the company expanded underlying operating margin by 10bp to 20.3%. Management expects H2 gross margins to remain at similar absolute levels as H1, with pricing finally landing after a deliberate low-price strategy in Q1. Srini Phatak explained: “we have gross margins at similar levels of first half, which is we will take the 46.8% levels” — Srinivas Phatak, CFO · 2026-07-28. The company continues to invest 16.1% of turnover in brand & marketing investment, focusing on power brands. This discipline is a core pillar of the "desire at scale" operating system.
In emerging markets, growth was led by India (10% USG), while Brazil returned to volume-led growth after pricing corrections. The company also upgraded full-year guidance to USG of 4-6% with ~3% volume, and expects H2 growth of 4-5% led by pricing. Volume growth is expected to normalize as pricing accelerates, but the company remains confident in the resilience of its portfolio.
Portfolio Transformation on Track
The combination of Foods with McCormick is progressing well, with the secondary listing planned in the UK. The recent acquisition of Gruns adds to the premium health & wellbeing portfolio. These moves are part of a broader strategy to shift toward higher-growth, premium categories. The company also expects EUR 6 billion of share buybacks between 2026-2029, funded by operational performance and transaction proceeds.
Fernando Fernandez summarized the first half in his closing remarks:
We have delivered a strong volume-led first half and an accelerating one with the best volume quarter at Unilever in over 15 years... As we move into the second half, price growth will accelerate. We will keep managing the business with discipline, protecting the competitiveness of both our pricing and our brand investment.