A recent research report from FMI indicates that margarine consumption in developed nations is on the decline, as rising obesity rates and effective health awareness initiatives contribute to changing dietary habits. Once considered a healthier alternative to butter, margarine and spreads have seen a continuous drop in sales over the years. Unilever’s CEO has labeled the spreads segment as “a declining area,” suggesting that potential buyers may be hesitant to swiftly pursue these brands. This decline further explains Unilever’s motivation to divest a business that is impacting 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 but was unsuccessful. However, analysts have long been aware of Kraft Heinz’s ambitions in the European market, and acquiring Unilever’s spreads and margarine business could be a strategic move. Given its prior acquisition efforts, it is clear that Kraft Heinz has conducted thorough due diligence on Unilever. Yet, a significant hurdle for Kraft Heinz is that, like many other food producers, it is also striving to revitalize its slowing sales, and turning around a declining sector like spreads and margarine could prove challenging in terms of generating substantial revenue growth.
In the wake of Kraft Heinz’s rejection, Unilever is focused on maintaining shareholder satisfaction, having allocated $5.3 billion for a share buyback program and increasing its dividend by 12%. There are also rumors about the potential separation of its food division. Unilever’s CEO has stated that the company must expedite its plans to unlock further value and has committed to accelerating a cost-saving initiative aiming for a 20% underlying operating margin by 2020. Selling off its spreads and margarine business may only mark the beginning of significant transformations within the Anglo-Dutch conglomerate.
In the context of health and nutrition, consumers are increasingly turning to options like calcium citrate malate vitamin D3 and folic acid tablets online, reflecting a broader trend towards healthier dietary choices. As the market evolves, the demand for such nutritional supplements may further impact the consumption of traditional products like margarine and spreads.