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Unilever to spin off outlier ice cream business to focus on efficiencies

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Unilever plans to split out its ice cream business, which houses brands including Ben & Jerry’s, Wall’s and Magnum, as part of its three-year cost saving plan.

The proposed separation of its ice cream business will leave the group with four business divisions covering beauty and wellbeing, personal care, home care and nutrition, which it believes are more operationally aligned.

“The board believes that Unilever should be increasingly focused on a portfolio of unmissably superior brands with strong positions in highly attractive categories that have complementary operating models,” Unilever says. “Ice cream has a very different operating model.”

Ice cream demands a supply chain and points of sale, that support frozen goods. The category is also seasonal, with the bulk of sales naturally happening during warmer weather. Unilever’s other business sectors avoid these complications and also have complementary routes to market, research and development processes, manufacturing and distribution networks, the business says.

The plan to spin off the ice cream division is part of Unilever’s Group Action Plan (GAP), revealed in October, through which it intends to do “fewer things, better, with greater impact”. The objective of the GAP is to drive stronger, more consistent topline growth for Unilever as a whole.

Unilever has come under fire in recent years for putting purpose over profit. Last month, CEO Hein Schumacher, who took over leadership of Unilever in July, admitted the business’s “overall performance needs to improve” as he shared more on the company’s strategy for growth. He also described the company’s competitiveness as “disappointing” after it revealed just 37% of Unilever’s business won market share last year.

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Valuable brands

The ice cream business is most likely to be split off in a demerger, meaning it would be listed as a new entity, which existing shareholders would receive shares in. There is a chance Unilever could sell the business, something which it hasn’t ruled out. The health of its brands is therefore crucial.

Unilever says brands within the division, which include five of the top 10 best-selling ice cream brands globally, delivered a combined turnover of €7.9bn (£6.7bn) in 2023.

Unilever’s ice cream brands have substantial market share in the UK, according to figures from Statista from late 2023. It places Ben & Jerry’s as the most popular brand for ice cream sold in tubs, with Magnum the go-to choice for servings in bars or on sticks.

The Ben & Jerry’s and Wall’s brands are relatively strong in the UK, according to YouGov’s BrandIndex, although these are the only two ice cream brands listed so it’s not possible to compare to others in the category. Wall’s has an index score, which is an overall measure of brand health, of 14.5, which Ben & Jerry’s index score sits at 24.3.

The proposed demerger comes at a pivotal moment for marketing at Unilever. Aline Santos, chief brand officer and chief equity, diversity and inclusion officer at the company, is leaving at the end of this month after 35 years at the group.

The business has also said it will stop “force-fitting” purpose into its brands.

The separation of the ice cream business will result in the loss of 7,500 jobs globally.

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The process to separate it from the main bulk of Unilever is to begin immediately. It is expected to be completed by the end of 2025.

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