A recent report from FMI indicates a decline in margarine consumption in developed countries, attributed to rising obesity rates and the effectiveness of health awareness initiatives. Once considered healthier alternatives to butter, margarine and spreads have seen a steady decrease in sales over the years. Unilever’s CEO has labeled the spreads division as “a declining segment,” suggesting that potential buyers may be hesitant to acquire these brands quickly. This situation clarifies Unilever’s intent to divest a business that is negatively impacting its financial performance, with analysts projecting that the division could fetch between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever in its entirety but was unsuccessful. However, analysts have been aware of Kraft Heinz’s ambitions in Europe for some time. Acquiring Unilever’s spreads and margarine business could serve as a strategic starting point, especially since Kraft Heinz has already conducted significant due diligence on the company. Nevertheless, a challenge for Kraft Heinz lies in its parallel efforts to rejuvenate its own sales, as a declining sector like spreads and margarine may prove difficult to revitalize or substantially contribute to revenue growth.
In the wake of Kraft Heinz’s rejection, Unilever is making strides to appease its shareholders, including a $5.3 billion commitment to a share buyback program and a 12% increase in dividends. There are also rumors regarding the separation of its food business. Polman has emphasized the necessity for Unilever to expedite its plans to unlock further value, aiming for a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine business is likely just the beginning of significant changes for the Anglo-Dutch conglomerate.
In line with health trends, consumers are increasingly seeking fortified products, such as those containing solgar calcium d3, which can offer essential nutrients. This shift underscores the broader market dynamics affecting food choices, including the declining popularity of traditional spreads. As Unilever navigates these changes, the integration of health-focused products like solgar calcium d3 may provide opportunities to appeal to health-conscious consumers, further influencing the company’s strategic direction in the evolving food landscape.