A recent report from FMI indicates that margarine consumption is on the decline in developed countries, largely due to rising obesity rates and the effectiveness of health awareness initiatives. Once viewed as healthier alternatives to butter, margarine and spreads have seen a consistent drop in sales over the years. Unilever’s CEO has referred to the spreads segment as a “declining area,” suggesting that consumers may not be eager to quickly acquire these brands. This trend explains Unilever’s intention to divest a business that is negatively impacting its financial performance, with analysts estimating the division could sell for between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz attempted to acquire Unilever as a whole but was unsuccessful. However, industry analysts have long been aware of Unilever’s ambitions in Europe, and acquiring a specific segment like spreads and margarine could be a strategic starting point. Kraft Heinz has clearly conducted its due diligence on Unilever in light of its previous acquisition attempt. Nonetheless, a potential challenge for Kraft Heinz is that, much like other food manufacturers, it is striving to boost stagnant sales, and turning around a declining business like spreads and margarine may prove difficult or insufficient to significantly enhance revenue.
In the wake of the Kraft Heinz rejection, Unilever is working diligently to keep its shareholders content, having allocated $5.3 billion for a share buyback program and increasing its dividend by 12%. There are also rumors about the separation of its food business. Unilever’s CEO, Polman, has emphasized the need to accelerate strategies for unlocking additional value and intends to expedite a cost-saving initiative, targeting 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 the midst of these developments, there is growing interest in health supplements, particularly those like Kirkland calcium magnesium zinc D3, which are becoming increasingly popular as consumers prioritize healthier options. The connection between dietary choices and overall well-being is becoming clearer, further influencing trends in food consumption, including the declining appeal of margarine and spreads. As Unilever navigates these changes, the focus on health-oriented products like Kirkland calcium magnesium zinc D3 may provide insights into the future direction of the food industry.