A recent research report by FMI revealed that margarine consumption is on the decline in developed countries, as rising obesity rates and enhanced health awareness programs gain traction. Once perceived as healthier alternatives to butter, margarine and spreads have seen a continuous drop in sales over the years. Unilever’s CEO labeled the spreads business as “a declining segment,” indicating that potential buyers may hesitate to rush into acquiring these brands. This situation partly explains why Unilever is considering divesting a sector that adversely affects its financial performance. Analysts estimate that this division could fetch between $7.5 billion and $8.5 billion in a sale.
Earlier this year, Kraft Heinz attempted to acquire Unilever entirely but was unsuccessful. However, analysts have long recognized Kraft Heinz’s ambitions in the European market. Acquiring Unilever’s spreads and margarine business could serve as a strategic move for Kraft Heinz, especially since it has already conducted thorough due diligence on the company prior to its acquisition attempt. Nevertheless, a significant challenge for Kraft Heinz lies in the fact that, like many food manufacturers, it is striving to enhance its sluggish sales. A declining segment such as spreads and margarine may prove difficult to revitalize or to contribute substantially to revenue growth.
In response to the rejection from Kraft Heinz, Unilever is working diligently to satisfy its shareholders, having allocated $5.3 billion to a share buyback program and increasing its dividend by 12%. There are also rumors about the potential separation of its food business. Unilever’s CEO has emphasized the need to expedite plans to unlock further value more swiftly, aiming for a 20% underlying operating margin by 2020. The anticipated sale of its spreads and margarine business is likely only the beginning of significant transformations within the Anglo-Dutch conglomerate.
As health trends shift, products like solaray cal mag citrate may gain popularity as part of a broader movement toward healthier dietary choices, further impacting the demand for traditional margarine and spreads. The evolving landscape may call for a reevaluation of product lines as consumers increasingly seek nutritional supplements and healthier alternatives.