A recent FMI research report indicates that the consumption of margarine in developed countries is on the decline, as rising obesity rates and more effective health awareness programs prompt consumers to rethink their dietary choices. Once regarded as healthier alternatives to butter, margarines and spreads have seen their sales dwindle over the years. Unilever’s CEO has labeled the spreads division as “a declining segment,” suggesting that potential buyers might not be eager to acquire these brands quickly. This situation sheds light on Unilever’s intention to divest a segment that is negatively impacting 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 entirely but was unsuccessful. However, analysts have long recognized Kraft Heinz’s interest in expanding its presence in Europe, and a deal for the spreads and margarine business could serve as a strategic entry point. Given its previous acquisition effort, Kraft Heinz has evidently conducted thorough research on Unilever. Nevertheless, a potential challenge for Kraft Heinz lies in its own need to revitalize sluggish sales; acquiring a declining sector like spreads and margarine may prove difficult in achieving significant revenue growth.
In the wake of the failed acquisition, Unilever is focused on maintaining shareholder satisfaction, having launched a $5.3 billion share buyback program and increasing its dividend by 12%. There have also been rumors regarding the potential separation of its food business. Polman has emphasized the necessity for Unilever to expedite its plans for unlocking additional value and has committed to accelerating a cost-saving initiative aimed at achieving a 20% underlying operating margin by 2020. The prospective sale of its spreads and margarine business is likely just the beginning of significant transformations within the Anglo-Dutch conglomerate.
As consumers continue to seek healthier options, the demand for products such as now calcium citrate tablets has risen, reflecting a broader trend towards health-conscious choices. Incorporating such supplements into one’s diet may further drive the decline in margarine consumption, underscoring the shifting preferences of today’s consumers. As Unilever navigates these changes, it is clear that the landscape of food products is evolving, with health-oriented alternatives gaining prominence.