Unilever announces split of ice cream business

Marmite and Dove soap-owner Unilever will cut almost 7,500 jobs globally as part of an extensive three-year cost-saving strategy.

In a strategic move aimed at streamlining its operations, consumer goods giant Unilever has revealed plans to separate its ice cream business, encompassing renowned brands like Wall’s, Ben & Jerry’s, and Magnum.

Immediate Spin-Off with Completion by 2025

Unilever disclosed that the spin-off of its ice cream division will commence promptly and is expected to conclude by the conclusion of 2025. This decision underscores the company’s commitment to focusing on core competencies and optimizing its portfolio.

Objective: “Do Fewer Things Better”

The rationale behind the shake-up, according to Unilever, is to enhance efficiency by concentrating on key areas of expertise. By divesting its ice cream business, the company aims to streamline its operations and drive performance in its core consumer product lines.

Significant Job Cuts Projected

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As part of the restructuring, Unilever anticipates implementing substantial job reductions, primarily targeting office personnel. The proposed cuts, which exceed 5% of the company’s global workforce of 128,000 employees, are forecasted to yield approximately €800 million in savings over the next three years.

Impact on UK Operations

Unilever’s operations in the UK, where it employs around 6,000 staff, will likely be affected by the restructuring. Notable locations include ice cream production facilities in north-east Gloucestershire, as well as manufacturing sites for iconic brands like Marmite, Bovril, and Pot Noodles.

Rationale for Separating Ice Cream Division

Despite the significant global sales generated by its ice cream brands, Unilever highlighted the unique operational requirements of the business. 

The frozen goods supply chain and seasonal demand patterns set the ice cream division apart from other consumer product lines within the company.

Market Response and Future Prospects

Unilever’s announcement buoyed investor sentiment, leading to a 5% increase in its share price. Analysts view the move as a strategic realignment, particularly considering the underperformance of the ice cream unit in recent years.

Next Steps

While Unilever indicated that a demerger is the most probable outcome for the ice cream business, other options such as a direct sale remain on the table. Regardless of the chosen path, the company aims to create a standalone ice cream entity with promising growth prospects and a robust market position.