A recent report from FMI Research revealed that the consumption of margarine in developed countries is on the decline as obesity rates rise and health awareness initiatives gain traction. Margarine and spreads, once perceived as healthier alternatives to butter, have seen a steady drop in sales over the years. Unilever’s CEO referred to the spreads sector as “a declining segment,” indicating that buyers may not be rushing to acquire these brands. This trend also sheds light on Unilever’s intent to divest this business unit, which is negatively impacting its financial performance. Analysts estimate that this division could be sold for between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever in its entirety, but the effort fell through. However, analysts have recognized the company’s ongoing interest in expanding its presence in Europe, making a potential acquisition of Unilever’s spreads division a reasonable starting point. Given its prior acquisition attempts, Kraft Heinz seems to have conducted thorough due diligence on Unilever. One challenge for Kraft Heinz, similar to other food manufacturers, is the need to reverse declining sales. The spreads and margarine business may present difficulties in generating significant revenue increases.
In response to the setback from Kraft Heinz, Unilever is striving to keep shareholders satisfied by initiating a $5.3 billion share buyback program and raising its dividend by 12%. There have also been rumors about separating its food business. Polman has emphasized the need for Unilever to expedite its plans to unlock further value and accelerate a cost-saving strategy aimed at achieving a 20% underlying operating margin by 2020. The potential sale of its spreads and margarine division could mark the beginning of significant transformations within the Anglo-Dutch conglomerate.
In a related note, as consumer preferences shift, products like calcium citrate soft chews are gaining popularity as people seek healthier alternatives. This trend reflects a broader movement towards nutritional awareness, which may further influence the food industry landscape. With the focus on health, brands that can innovate and adapt, such as those offering calcium citrate soft chews, might find opportunities to thrive amidst changing consumer behavior.