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When Unilever’s new Dutch boss, Hein Schumacher, spoke to analysts last month, his frustration with the world’s largest ice cream company was clear.
Despite global warming, it’s been a bleak year for iconic brands like luxury Magnum, quirky Ben & Jerry’s and good old Wall’s. Sales value increased but volumes fell 6 percent.
There was no indication that ice cream would follow tea, margarines and spreads outside. But behind the façade of Unilever’s white art deco headquarters, overlooking the River Thames, at Blackfriars in London, a momentous decision was being made.
Ice cream had become an economic and political distraction for the company’s new leader, as the board of directors of Vermont-based Ben & Jerry’s became agitated over Palestine and Gaza.
In the past, the corporate grandeur and bureaucracy of the Anglo-Dutch giant, the fourth richest company on the London Stock Exchange, would have militated against rapid decision-making.
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But Schumacher, with corporate agitator Nelson Peltz in the boardroom, knew he could act quickly. Last Tuesday, he surprised the city by revealing plans to spin off the ice cream into a separate company whose shares would be distributed to existing shareholders. The complex transfer would be completed in 2025.
Food, or nutrition, as Unilever pretentiously calls it, is the company’s increasingly restricted secret. Ice cream accounted for more than half of the fast-moving FMCG group’s £11.3 billion food turnover last year.
Nutrition has become the poor relation of a business where its contribution is overshadowed by beauty and wellness brands such as Dove and Toni & Guy and home care offerings Domestos, Persil and Comfort. Newly acquired hipster health brands, such as SmartyPants Vitamins, are among the stars of the show, with their sales steadily doubling.
The callous decision to ditch ice cream immediately raised questions about the future of nutrition within the group. Popular trade publication JustFood noted that “bets are off on the future of Unilever’s remaining food businesses” following the decision to abandon ice cream.
What other famous names are for the chop?
The Mail on Sunday understands that apart from Hellmann’s mayonnaise and Knorr soups, all other nutrition brands could disappear, including Bovril, Marmite and student staple Pot Noodle.
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In the desire to improve its performance and better compete with its publicly listed global competitors Nestlé and Procter & Gamble, it will be essential to rely on its main strengths.
Unilever has a great competitive advantage in emerging markets such as Latin America and South Asia, where there is a hunger for Western brands that consumers trust and view as prestige, even luxury items.
Unilever’s future in these markets lies at the heart of ease of supply and distribution as well as the ability to deliver large volumes. Among the group’s dozens of remaining food brands, Hellmann’s mayonnaise and other condiments and German company Knorr, famous for its soups, are seen as vital to the future. Unlike ice cream, which poses all kinds of distribution difficulties and is a very seasonal product, we can count on Hellmann’s and Knorr.
This raises the question of which of the nutrition brands can be sold at sufficient scale in multiple global markets. There’s no shortage of outliers, like Bovril, a British roast beef favorite, and of course Marmite.
Made in Burton upon Trent, Marmite spreadable yeast comes from waste from local breweries. It is a typically British product with little global reach. His long association with Unilever, dating back to the early 20th century, would make it a difficult transfer for Schumacher even if, like his previous managers, he is irritated by the attention given to him when he represents only one tiny part of the company.
Unilever’s change in direction was evident before Schumacher’s arrival. In 2018, when Unilever’s then-boss Paul Polman was considering moving the company’s stock listing to Rotterdam, I was shown a chart (kept privately by the company’s finance team) that showed that for more than a decade, personal care and home care brands had surpassed nutrition in importance and were soaring.
The brains and innovation, of which Unilever was very proud, were in the research laboratories in the Wirral, where the company was founded. Over the next year, Schumacher and his team will have their work cut out for them: 7,500 “office” layoffs, improving productivity and packaging ice cream in a separate company.
Other dramatic changes in nutrition brands, ranging from Unox smoked sausage to Pot Noodle and Bagel Bagel in Israel, will be in the departure lounge.
There should be no doubt: fundamental change is underway.