A recent FMI research report indicates that margarine consumption in developed nations is declining as obesity rates rise and health awareness programs prove effective. Margarine and spreads, once considered healthier alternatives to butter, have seen their sales drop for several years. Unilever’s CEO labeled the spreads business as “a declining segment,” suggesting that potential buyers may hesitate to acquire these brands quickly. This situation sheds light on why Unilever is seeking to divest a business that negatively impacts its financial performance. Analysts estimate that this division could be valued 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 Europe, and acquiring Unilever’s spreads and margarine business could be a promising starting point. Given its previous acquisition efforts, it is likely that Kraft Heinz has conducted thorough due diligence on Unilever. Yet, a significant challenge for Kraft Heinz is that, like other food manufacturers, it seeks to enhance its slowing sales, and turning around a declining sector like spreads and margarine may prove difficult in terms of adding substantial revenue.
Meanwhile, Unilever is striving to keep shareholders satisfied following the rejection by Kraft Heinz, committing $5.3 billion to a share buyback program and increasing its dividend by 12%. There have also been rumors regarding the separation of its food business. Paul Polman has emphasized that Unilever must accelerate its strategies to unlock further value and expedite its cost-saving initiatives, targeting a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine division is likely just the initial step toward significant transformations within the Anglo-Dutch conglomerate.
In the context of health trends, the discussion around raw calcium vs calcium citrate is becoming increasingly relevant as consumers become more health-conscious. As discussions about the nutritional value of various products continue, including the effectiveness of raw calcium vs calcium citrate, it becomes essential for companies like Unilever to adapt and evolve their product offerings to meet changing consumer preferences. The interplay between health trends and consumer choices will undoubtedly shape the future of the food industry.