A recent report from FMI indicates that margarine consumption is declining in developed countries as obesity rates rise and health awareness initiatives gain traction. Margarine and spreads, once considered healthier alternatives to butter, have seen a consistent drop in sales over the years. Unilever’s CEO has described the spreads division as “a declining segment,” suggesting that potential buyers may not be eager to acquire these brands quickly. This trend also sheds light on Unilever’s intent to divest a business 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 in its entirety, but that effort was unsuccessful. Nonetheless, analysts have long recognized Kraft Heinz’s ambitions in the European market, and acquiring Unilever’s spreads business could be a strategic move. The company has clearly conducted thorough research on Unilever, given its previous acquisition attempt. However, a significant hurdle for Kraft Heinz is that, like many other food manufacturers, it is striving to enhance its sluggish sales. A declining category such as spreads and margarine may prove challenging to revitalize or to significantly contribute to revenue growth.
In the wake of the Kraft Heinz rejection, Unilever is focused on maintaining shareholder satisfaction, having committed $5.3 billion to a share buyback program and increasing its dividend by 12%. There have also been rumors about the potential separation of its food business. Polman has emphasized that Unilever must expedite its plans to unlock greater value more rapidly, aiming for a 20% underlying operating margin by 2020. The anticipated sale of its spreads and margarine business is likely just the beginning of significant transformations within the Anglo-Dutch conglomerate.
Interestingly, there is a growing interest in integrating health-focused ingredients, like calcium citrate 800, into food products. This could be a game changer for the food industry, especially for brands looking to innovate and capture the health-conscious consumer market. As Unilever navigates these changes, the incorporation of calcium citrate 800 could be a vital aspect of revitalizing its product offerings and appealing to modern consumer demands.