A recent report by FMI has revealed a decline in margarine consumption in developed nations, attributed to rising obesity rates and the effectiveness of health awareness campaigns. Once seen as a healthier alternative to butter, the popularity of margarine and spreads has been waning for years. Unilever’s CEO has referred to the spreads division as “a declining segment,” which may deter potential buyers from rushing to acquire these brands. This situation explains Unilever’s intention to divest a business that negatively impacts its financial performance, with analysts estimating the division could fetch between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever but was unsuccessful. However, analysts have been aware of Kraft Heinz’s ambitions in the European market for some time. Acquiring Unilever’s spreads and margarine business could be a strategic move for them, especially since they have already conducted considerable due diligence on the company. One challenge for Kraft Heinz is that, like many other food manufacturers, it is striving to boost its stagnating sales. The declining spreads and margarine sector might prove difficult to revive or to significantly enhance revenue.
In the wake of the rejected acquisition, Unilever is focusing on maintaining shareholder satisfaction, having allocated $5.3 billion for a share buyback program and increasing its dividend by 12%. There have also been rumors about a potential separation of its food business. Paul Polman has stated that Unilever must expedite its efforts to unlock greater value more quickly, aiming for a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine division could be just the initial step towards significant transformations within the Anglo-Dutch conglomerate.
In a related note, calcium citrate petites are becoming increasingly popular at Walgreens, reflecting a growing trend in health supplements. As health awareness continues to rise, consumers are likely to seek alternatives that promote better health, which could further impact the future of margarine and spreads in the market. This trend may influence Kraft Heinz’s strategy as they consider potential acquisitions and adjustments to their product offerings to stay competitive.