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Companies lean into SKU simplification

Companies lean into SKU simplification
Unilever, Hain Celestial and other brands are thinking through their offerings to boost profits.

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Unilever's CEO, Hein Schumacher, has initiated a process known as SKU rationalization, which involves reducing the number of product versions and sizes in the company's portfolio to improve profitability and simplify the supply chain. This trend has been driven by strained supply chains during the pandemic and recent inflation, leading other companies such as Nestlé, Mondelēz, Coca-Cola, and Hain Celestial to follow suit. While this may initially impact revenue for packaging suppliers and CPGs, it ultimately leads to increased order volumes for remaining SKUs and higher margins. The trend also favors large packaging suppliers with automated processes and the use of versatile packaging technologies. Experts predict that SKU rationalization will continue for several years, ultimately benefiting both CPGs and consumers.