Unilever has been on a soul-searching mission for more than a year as it realigns its business to focus on its powerful brands, cut jobs and spin off units.
To further trim the fat, the London-listed consumer giant, which makes Magnum ice cream and Dove soap, plans to sell off food brands worth a billion euros in total annual sales. The food division generated 13.2 billion euros in turnover last year.
Unilever CEO Hein Schumacher wants to be more deliberate with the company’s “quite eclectic portfolio of food brands” and focus on sauces, condiments and more, he told a Dutch newspaper Het Financieele Dagblad in an interview published on Monday.
This could include Dutch brands such as Unox and Conimex, Reuters reportedbut Schumacher declined to confirm which brands were being reconsidered.
While Unilever is conducting a strategic review, that doesn’t mean every small brand will face the axe.
“We are not having a fire sale. There will always be brands that are not perfectly strategically aligned but will remain part of Unilever,” Schumacher said.
The boss, who took up his role last July, signaled last month that he envisioned “smaller, bigger, better” brands.
Unilever declined further comment when contacted Wealth.
The FTSE100 company, home to more than 400 brands, announced a major turnaround plan last October to wrest market share from rivals and boost its business after slumping during the pandemic. It planned to double its top 30 brands, which account for roughly three-quarters of its revenue, while eliminating or shrinking other parts of its business.
Earlier this year, Unilever said it would cut 7,500 jobs globally and spin off the entire distribution of ice creamincluding Magnum and Ben & Jerry’s, citing a “very different operating model.” Ultimately, the strategy aims to improve the group’s performance amid pressure from shareholders.
Unilever was considering a separate listing for the profitable unit along with it other avenues. It will not be the first rodeo for the group with the sale of certain parts of the business, as it did with the spread and tea segments.
The company’s turnaround efforts so far appear to have worked. It beat analysts’ expectations quarterly earnings this year, some of whom came from price increases while others came from volumes. After initial hesitation, investors warmed to Schumacher growth plan.
Unilever shares are up 23% year-to-date.
Unilever has outperformed rival Nestlé in recent years as the latter struggles to shake off the influence of underdogs consumer demand.
Last month, the Swiss giant said it would focus on its “billionaire brands” much like Unilever focused on its most successful brands, as part of a new strategy emphasizing the “less is more” approach under CEO Laurent Freixe.
Because Unilever chose to maintain a laser-sharp focus on its premium brands, it was able to accelerate growth volume expansion more than price increases. Nestlé will now face a similar challenge as it rethinks its business.
