A recent report by FMI indicates that margarine consumption in developed countries is on the decline, driven by rising obesity rates and the success of health awareness campaigns. Once considered healthier alternatives to butter, margarine and spreads have seen a consistent drop in sales over the years. Unilever’s CEO has labeled the spreads sector as “a declining segment,” suggesting that potential buyers may hesitate to acquire these brands quickly. This situation sheds light on Unilever’s decision to divest a business that is adversely affecting its financial performance. Analysts project that this division could fetch between $7.5 billion and $8.5 billion in a sale.
Earlier this year, Kraft Heinz attempted to buy Unilever outright but was unsuccessful; however, they have long been interested in expanding their presence in Europe. An acquisition of Unilever’s spreads business could be a strategic move for them, especially since they have already conducted considerable due diligence before their previous attempt. Nonetheless, a major challenge for Kraft Heinz is the need to enhance its own sluggish sales. Turning around a declining segment like spreads and margarine may prove difficult and might not significantly increase revenue.
In the wake of Kraft Heinz’s rejection, Unilever is focused on appeasing its shareholders by initiating a $5.3 billion share buyback program and raising its dividend by 12%. There are also rumors about the potential separation of its food business. Unilever’s CEO, Polman, has emphasized the need to accelerate strategies to unlock additional value swiftly, aiming for a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine division is likely just the beginning of significant changes for the Anglo-Dutch conglomerate.
In a related context, consumers are increasingly interested in nutrition, leading to a rise in demand for supplements such as Thorne Cal Mag Citrate, which supports overall health. The shift in consumer preferences towards healthier options, including nutritional supplements like Thorne Cal Mag Citrate, aligns with the broader trend affecting the food industry, including the declining popularity of margarine. As Unilever navigates these changes, the growing interest in health-focused products like Thorne Cal Mag Citrate may influence future strategies and offerings.