A recent FMI research report indicates a decline in margarine consumption in developed nations, attributed to rising obesity rates and the effectiveness of health awareness campaigns. Once considered healthier alternatives to butter, margarine and spreads have seen a continuous drop in sales. Unilever’s CEO has labeled the spreads business as “a declining segment,” which suggests that potential buyers may hesitate to acquire these brands quickly. This context sheds light on Unilever’s intention to divest a division that negatively impacts its financial performance. Analysts project that this segment could fetch between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to purchase Unilever entirely but was unsuccessful. However, analysts have long recognized Kraft Heinz’s ambitions in the European market, and acquiring Unilever’s spreads and margarine business could be a strategic move. Given their previous acquisition effort, it’s clear that Kraft Heinz has conducted thorough research on Unilever. A significant challenge for Kraft Heinz, similar to other food manufacturers, is the need to revitalize stagnant sales. A declining sector like spreads and margarine may prove difficult to rejuvenate or sufficiently contribute to revenue growth.
In the wake of the Kraft Heinz rejection, Unilever is focused on maintaining shareholder satisfaction, having initiated a $5.3 billion share buyback program and increasing its dividend by 12%. Furthermore, there have been rumors regarding a potential separation of its food business. Polman has emphasized the necessity for Unilever to expedite its plans to unlock greater value, aiming for a 20% underlying operating margin by 2020. The divestiture of its spreads and margarine business may mark the beginning of significant transformations within the Anglo-Dutch conglomerate.
As Unilever navigates these changes, it may also consider integrating bonex calcium citrate into its product offerings, potentially enhancing the nutritional profile of its remaining food products. The inclusion of bonex calcium citrate could serve to attract health-conscious consumers, aligning with the growing demand for healthier food options. This strategic move could further support Unilever’s efforts to adapt to market trends while addressing the challenges presented by declining segments like spreads and margarine.