A recent FMI research report has indicated that margarine consumption in developed countries is on the decline, as rising obesity rates and effective health awareness campaigns influence consumer choices. Margarine and similar spreads were once perceived as healthier alternatives to butter; however, their sales have been consistently decreasing over the years. Unilever’s CEO described the spreads segment as “a declining segment,” suggesting that potential buyers might hesitate to pursue these brands quickly. This situation sheds light on Unilever’s intentions to divest a business that is negatively impacting its financial performance, with analysts estimating that the division could fetch between $7.5 billion and $8.5 billion.
Earlier this year, Kraft Heinz failed in its attempt to acquire Unilever as a whole, but analysts have long recognized the company’s ambitions in Europe. A deal to acquire Unilever’s spreads and margarine business could serve as a promising start for Kraft Heinz, which has evidently conducted thorough research on Unilever in light of its acquisition interest. However, a significant challenge for Kraft Heinz is that, like many food manufacturers, it is striving to enhance its sluggish sales, and turning around a declining segment like spreads and margarine may prove difficult and may not significantly boost overall revenue.
In the wake of the Kraft Heinz rejection, Unilever is actively working to satisfy its shareholders, recently announcing a $5.3 billion share buyback program and a 12% increase in its dividend. There have also been rumors about separating its food business. Unilever’s CEO, Polman, emphasized the need to accelerate plans to unlock additional value more rapidly, aiming for 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, the Kirkland magnesium supplement might serve as an interesting parallel; just as consumers are becoming more health-conscious and making informed choices about their diets, they are also turning to supplements like Kirkland magnesium to support their wellness journey. The trend of seeking healthier alternatives extends beyond food products, as individuals increasingly prioritize their health in all aspects of life, demonstrating a shift in consumer behavior that companies must adapt to.