Unilever melts off its ice cream biz as conglomerates get hungry for splits
Clearing out the freezer… Temps are up, but Unilever’s not screaming for ice cream. The consumer goods giant said it plans to spin off its 100-year-old ice cream division, which includes half of the top 10 global ice cream brands and scooped $8.6B in revenue last year. Without a buyer, Unilever’s 35 ice cream labels (including Ben & Jerry’s, Klondike, Breyers, Popsicle, and Magnum) will likely become a standalone biz by the end of next year. The move is part of Unilever’s restructuring plan, which includes laying off 7.5K employees.
Rocky road: Ice cream’s need for its own cold-temp supply chain proved too costly for Unilever. The biz hiked ice cream prices by 9% last year to offset costs, leading shoppers to switch to cheaper brands.
Coned out: Looking ahead, Unilever will be left with a few hundred other multinational consumer brands. Its portfolio includes Hellmann’s mayo, Axe body spray, Dove soap, and Vaseline.
Sundae scaries… Ice cream was Unilever’s slowest-growing unit last year (sales rose just 2%). On average, Americans eat about a third less ice cream annually than they did in 1986, and purchases fell 8% from 2018 to 2022. Ozempic’s effect on snacking could take an even bigger bite out of sales. Other creamy cos have faced struggles: Nestlé sold its US ice cream biz (including its rights to Häagen-Dazs) in 2019 for $4B, Ample Hills Creamery went bankrupt in 2020, and McDonald’s is in a legal showdown over its seemingly forever-broken soft-serve machines.
Splitting the flavors can add value… Unilever, which also sold its tea biz for $5B in 2022, isn’t the only conglomerate that’s cut ties with an ill-fitting division to get more focused. Kellogg split into two companies last year as cereal sales went stale but snacking spiked. Johnson & Johnson recently spun off its consumer-health products biz (think: Band-Aid, Tylenol) to focus on pharma and tech.