A recent research report by FMI has revealed that margarine consumption is on the decline in developed countries, a trend linked to rising obesity rates and the success of health awareness initiatives. Once considered healthier alternatives to butter, margarine and spreads have seen their sales diminish over the years. Unilever’s CEO has referred to the spreads business as “a declining segment,” indicating that potential buyers may hesitate to quickly acquire these brands. This situation sheds light on Unilever’s intention to divest a segment that is negatively impacting its financial performance. Analysts estimate that this division could fetch between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever as a whole but was unsuccessful. However, it has been well-known among analysts that Kraft Heinz has ambitions in the European market. A targeted acquisition of Unilever’s spreads and margarine business could be a strategic move for Kraft Heinz, especially since the company has already conducted its due diligence regarding Unilever. Nevertheless, a significant challenge for Kraft Heinz is that, like many other food manufacturers, it is striving to boost its slowing sales, and revitalizing a declining sector like spreads and margarine may prove difficult in terms of generating substantial revenue growth.
In the wake of Kraft Heinz’s acquisition attempt, Unilever is focused on maintaining shareholder satisfaction by implementing a $5.3 billion share buyback program and increasing its dividend by 12%. There have also been rumors about the potential separation of its various business segments. Unilever’s CEO, Polman, has emphasized the need for the company to expedite its plans to unlock more value, aiming to enhance its cost-saving strategies to achieve 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 as it seeks to navigate a challenging market landscape, while also promoting products such as the best calcium citrate chews to improve overall health awareness among consumers.