Unilever is readying to make a big change in its business, which raises the question for investors and industry watchers: Is one of the world’s biggest names in food and beverage preparing to completely exit?
The sale of Unilever’s tea business last year shows that anything is possible. Lipton is one of the world’s best known tea brands, and its sale demonstrated that the CPG company was interested in treading a new path. Unilever also may have showed that it was ready to make some big business moves when it completely unified its structure — historically split between the U.K. and Netherlands — in late 2020. The move makes divestitures easier, Bloomberg pointed out.
On a global scale, Unilever’s Foods & Refreshment division represented about a third of its total operating profit and about 19.1 billion euros ($21.7 billion) in sales, according to its most recent annual report, which was published last March, prior to the tea divestment. Foods & Refreshment represented 36% of its U.S. business, according to a report focusing on the United States, and four of the company’s top 10 brands here — Ben & Jerry’s, Breyers, Hellmann’s and Knorr — are in the segment.
More recently, the Foods & Refreshment division has had slower growth. According to Unilever’s most recent trading update from late October, the segment’s sales had grown 3%, though it was mostly through price increases of about 3.8%; volume was down 0.8%.
Investors and analysts seem to be in agreement that Unilever’s proposed pivot to health, beauty and hygiene is not the best move for the company. Unilever’s stock fell sharply after the company made the announcement, with share prices down more than 10%. Some analysts felt that the move to the more-heavily regulated category would be difficult for Unilever to find growth. But a report from Berenberg quoted by CNN said that the Foods & Refreshments division “actually offers some of Unilever’s most attractive categories.”
It remains to be seen how Unilever will move forward. The company has recently worked to put itself at the center of new and trendy areas of food and ingredients. In 2018, it acquired European plant-based giant The Vegetarian Butcher, which has not expanded to the United States. Unilever has entered into several ingredient partnerships, including with microalgae startup Algenuity to develop applications for ingredients made from the single-celled organism; European food tech company Enough to use its fermented mycoprotein Abunda in products; and biotech company Holobiome to identify ingredients that benefit the gut-brain axis, which was announced this month. The R&D investment and potential in this space is great — though this may all represent an area that a refocused Unilever may want to hold onto.
Follow Megan Poinski on Twitter
Get the free daily newsletter read by industry experts
Topics covered: manufacturing, packaging, new products, R&D, and much more.
In 2020, the number of court cases from consumers claiming that food and drink companies deceived them hit an all-time high, according to statistics compiled by law firm Perkins Coie.
Litigation can be long and expensive and relief can be hard to come by, as consumers find themselves with small rewards and brands struggle with keeping their reputations intact.
Subscribe to Food Dive for top news, trends & analysis
Topics covered: manufacturing, packaging, new products, R&D, and much more.
Get the free daily newsletter read by industry experts
Topics covered: manufacturing, packaging, new products, R&D, and much more.
In 2020, the number of court cases from consumers claiming that food and drink companies deceived them hit an all-time high, according to statistics compiled by law firm Perkins Coie.
Litigation can be long and expensive and relief can be hard to come by, as consumers find themselves with small rewards and brands struggle with keeping their reputations intact.
The free newsletter covering the top industry headlines
Topics covered: manufacturing, packaging, new products, R&D, and much more.
