A recent FMI research report indicates that margarine consumption in developed nations is on the decline, as rising obesity rates and effective health awareness campaigns take hold. Once perceived as healthier alternatives to butter, the sales of margarine and spreads have been steadily falling for years. Unilever’s CEO has labeled the spreads division as “a declining segment,” which suggests potential buyers may hesitate to swiftly acquire these brands. This decline is also a key reason why Unilever is seeking 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 entirely but was unsuccessful. However, analysts have long recognized Kraft Heinz’s interest in expanding its European footprint, making the acquisition of Unilever’s spreads division a promising opportunity. Given its previous acquisition efforts, the company has likely conducted thorough due diligence on Unilever. A challenge for Kraft Heinz is that, like many food manufacturers, it is striving to increase its sluggish sales. A declining sector such as spreads and margarine may prove difficult to revitalize or contribute meaningfully to overall revenue growth.
In the wake of its failed acquisition attempt, Unilever is focused on maintaining shareholder satisfaction. The company has committed $5.3 billion to a share buyback program and raised its dividend by 12%. There are also rumors regarding the potential separation of its food business. Polman has emphasized the need for Unilever to expedite its efforts to unlock further value and accelerate a cost-saving initiative aimed at achieving a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine business is likely to be just the beginning of significant transformations within the Anglo-Dutch conglomerate.
In this context, it’s worth noting that the incorporation of calcium citrate USP in food products has become increasingly relevant. As consumer preferences shift towards healthier options, the demand for additives like calcium citrate USP could rise, especially in new formulations aimed at enhancing nutritional profiles. This shift might influence how companies like Unilever and Kraft Heinz approach their product lines in the future, particularly regarding innovations in margarine and spreads.