Unilever Finally Finds Its Volume Button

Unilever Finally Finds Its Volume Button

Mark Nichols

Tue, July 28, 2026 at 6:55 PM GMT+3 4 min read

• UL -1.30%

THE GIST

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Turns out people will actually buy more deodorant, not just pay more for the same bottle. Unilever just proved it, and Wall Street liked the smell of that a lot more than the profit margin underneath it.

WHAT HAPPENED

Unilever reported first-half revenue of €25.6 billion, powered by underlying sales growth of 4.8%, ahead of expectations and driven mostly by volume rather than price. Volumes rose 4.2% in the first half, with price increases filling in the rest.

The second quarter ran even hotter. Underlying sales grew 5.8%, beating analyst forecasts, while volumes jumped 5.5%, Unilever's strongest quarterly volume performance since 2010. Management upgraded full-year guidance to 4% to 6% underlying sales growth, up from the low end of that range, alongside roughly 3% volume growth expected for the year.

Beauty and wellbeing, personal care, and home care carried the quarter, with Dove, Vaseline, Rexona, Lynx, Cif, and Axe all benefiting from heavier marketing spend and a major World Cup push. Food was the weak link, volumes slipping slightly, which is exactly the division Unilever is already peeling off into a standalone business through its deal with McCormick.

Profit told a less flattering story. Underlying operating profit rose just 0.9% to €5.2 billion, currency moves and commodity inflation quietly eating the gains from stronger sales and efficiency work. Free cash flow, at least, jumped 42.9% to €1.5 billion, and net debt fell to €26 billion.

WHY IT MATTERS

Unilever has spent years trying to convince investors it can grow without simply raising prices every quarter. This update actually helps that argument.

During the inflation shock, consumer goods companies leaned hard on pricing to protect revenue, and shoppers responded by trading down, private-label brands gained ground, and the big branded names started looking expensive by comparison. Volume growth is the antidote to that story. It proves people aren't just paying more for the same products. They're buying more of them, full stop.

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That's why the 5.5% volume jump matters so much. It's a real signal the business is regaining momentum, especially in categories where brand strength actually counts. CEO Fernando Fernandez has been sharpening Unilever's focus toward higher-growth categories like beauty, wellbeing, personal care, and home care, and this quarter gives that strategy some real credibility: those divisions grew strongly while food lagged behind, which makes the McCormick separation a lot easier to understand. Famous food brands like Marmite and Hellmann's are good businesses, but fame isn't growth, and they don't fit neatly inside a company trying to look more like a beauty and wellness machine.

Investors also like marketing that visibly works. Unilever spent years getting criticized for underinvesting in its own brands, and the World Cup push around deodorants and personal care shows real willingness to spend behind its "power brands" at scale.

The risk is that marketing spend has to deliver more than one good quarter. Consumer sentiment is still fragile, Europe was outright weak, sales down and volumes slightly negative, and commodity inflation and supply chain costs haven't gone anywhere. The profit line is the tell: Unilever can sell more, but if currencies, raw materials, and marketing costs keep eating the upside, investors will eventually start asking where the actual margin expansion is.

That's why the share reaction was strong without settling the debate. Volume recovery is step one. Turning that into better earnings quality is step two, and there's still real execution risk in getting the food separation done cleanly by mid-2027, a structure some investors like and others still see as necessary medicine after years of strategic drift.

For now, Unilever has the one thing it needed most: evidence. Consumers are still buying its brands. Emerging markets like India, Indonesia, and Latin America are delivering. Beauty and personal care are doing the heavy lifting. Cash flow is improving, the dividend is up, and buybacks continue. None of that makes Unilever exciting in the tech-stock sense, but for a consumer staples company, excitement is overrated. What actually matters is repeat purchases, pricing power, brand heat, and cash generation, and this quarter had more of all four than investors expected.

WHAT'S NEXT

Watch whether volume growth holds up in the second half, especially since Unilever is expecting more pricing to carry sales from here. The real tests: margin improvement, European demand, commodity costs, and progress on the food separation.

Unilever has finally gotten consumers buying more. Now it needs the profit line to smell as good as the deodorant ads.