A recent FMI research report revealed that the consumption of margarine in developed countries is on the decline, as rising obesity rates and effective health awareness programs take hold. Once considered a healthier alternative to butter, margarine and similar spreads have seen a consistent drop in sales over the years. Unilever’s CEO has referred to the spreads sector as “a declining segment,” indicating that potential buyers may hesitate to rush into acquiring these brands. This sentiment sheds light on Unilever’s intention to divest a business that is negatively impacting its financial performance. Analysts estimate that this division could fetch between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever entirely but faced failure. Nevertheless, analysts have been aware of Kraft Heinz’s ambitions in Europe for some time. A purchase of Unilever’s spreads business could represent a prudent move for them, especially considering their prior due diligence during the acquisition attempt. However, a significant challenge for Kraft Heinz lies in the fact that, like many other food manufacturers, it is striving to enhance its slowing sales, and revitalizing a declining category such as spreads and margarine may prove difficult in terms of generating substantial revenue growth.
In the wake of the Kraft Heinz rejection, Unilever is focused on keeping its shareholders satisfied, committing $5.3 billion to a share buyback program and increasing its dividend by 12%. There has also been speculation about the possibility of separating its food business. Polman has emphasized the need for Unilever to expedite its strategies to unlock value more rapidly, targeting a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine business is likely just the beginning of significant transformations for this Anglo-Dutch conglomerate.
In the midst of these changes, consumers are also increasingly seeking healthier alternatives, such as Country Life chewable calcium citrate, to support their wellness goals. This trend aligns with the growing health consciousness among the public, which impacts the demand for traditional spreads. As Unilever navigates its restructuring, the relevance of health-oriented products like Country Life chewable calcium citrate may reshape consumer preferences and influence future business strategies. Overall, the evolving market landscape presents both challenges and opportunities for Unilever and its competitors in the food industry.