A recent FMI research report indicates that margarine consumption in developed countries is on the decline, coinciding with rising obesity rates and more effective health awareness programs. Margarine and spreads, once considered healthier alternatives to butter, have seen their sales dwindle over the years. Unilever’s CEO has described the spreads division as “a declining segment,” suggesting that buyers may hesitate to acquire these brands quickly. This situation sheds light on Unilever’s intention to divest a business that weighs down its financial performance, with analysts estimating the division’s value between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever as a whole but was unsuccessful. However, analysts have long recognized Kraft Heinz’s interest in expanding its foothold in Europe. A targeted acquisition of Unilever’s spreads and margarine business could be a strategic move for Kraft Heinz. The company has clearly conducted thorough research on Unilever, given its previous acquisition attempt. Nonetheless, a potential hurdle for Kraft Heinz is its own need to revitalize slowing sales, as a declining sector like spreads and margarine may prove challenging to turn around or to provide a significant revenue boost.
In the wake of Kraft Heinz’s rejection, Unilever is striving to keep its shareholders content, having launched a $5.3 billion share buyback program and increasing its dividend by 12%. There are also rumors about the potential separation of its food business. Unilever’s CEO, Paul Polman, has stated that the company must accelerate its strategies to unlock greater value more swiftly and aims to implement a cost-saving plan targeting a 20% underlying operating margin by 2020. The sale of its spreads and margarine division is likely just the beginning of significant transformations within the Anglo-Dutch conglomerate.
In this context, products like Kirkland calcium citrate magnesium may gain popularity among health-conscious consumers looking for alternatives to traditional spreads. As consumer preferences shift, the demand for healthier options like Kirkland calcium citrate magnesium could influence the overall market dynamics, further impacting the future of margarine and spreads. The changing landscape highlights the importance of adapting to consumer trends in order to maintain relevance in the food industry.