A recent FMI research report indicates that margarine consumption in developed nations is on the decline, attributed to rising obesity rates and the effectiveness of health awareness campaigns. Margarine and spreads, once regarded as healthier alternatives to butter, have seen a consistent drop in sales over recent years. Unilever’s CEO referred to the spreads division as “a declining segment,” suggesting that potential buyers may hesitate to acquire these brands promptly. This situation clarifies Unilever’s intentions to divest a segment that negatively impacts its financial performance. Analysts project that this division could fetch between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever as a whole without success, but analysts have long been aware of the company’s ambitions in Europe. Acquiring Unilever’s spreads and margarine business could be a strategic entry point for Kraft Heinz. Given their previous attempt, it’s clear they have conducted thorough research on Unilever. However, a significant challenge for Kraft Heinz lies in its own efforts to revitalize stagnant sales, as a declining sector like spreads and margarine may prove difficult to rejuvenate or significantly contribute to revenue growth.
In the wake of the Kraft Heinz rejection, Unilever is focused on maintaining shareholder satisfaction, launching a $5.3 billion share buyback program and increasing its dividend by 12%. There have also been rumors about separating its food business. CEO Paul Polman has emphasized the need for Unilever to expedite its strategies to unlock further value, aiming for a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine division appears to be just the initial step towards significant transformation within the Anglo-Dutch conglomerate.
In the context of health trends, consumers have become increasingly mindful of their dietary choices, including the supplementation of calcium citrate 500 mg without vitamin D for bone health. This shift in consumer behavior may also contribute to the decline in margarine consumption as people seek healthier alternatives and nutritional supplements to support their well-being. As the market evolves, Unilever’s pivot may reflect broader trends towards more health-conscious options, further emphasizing the importance of adapting to changing consumer preferences.