Unilever is home to the world’s most iconic ice cream brands, from Magnum to Ben & Jerry’s.
In a new overhaul, the company is spinning off its ice cream business, which delivered a €7.9 billion ($8.6 billion) turnover last year, into a separate unit to ramp up its performance amid activist investor pressure to streamline the business.
London-headquartered Unilever announced that its ice cream unit, which includes five of the world’s top 10 best-selling brands, “has a very different operating model.” That has prompted the company’s board to separate it from the rest of the company, starting immediately.
The restructuring will be completed by the end of 2025, Unilever said in a statement Tuesday.
“As a standalone, more focused business, Ice Cream’s management team will have operational and financial flexibility to grow its business,” Unilever said. A “demerger,” possibly resulting in a newly listed company, was the most likely path for the soon-to-be separate unit.
That’s not the only major change Unilever announced—the company also plans to cut as many as 7,500 “office-based roles,” as part of a productivity push. Media outlets have reported that a bulk of the jobs slashed will be in London. The company’s total headcount is 128,000 globally.
“The separation of Ice Cream and the delivery of the productivity programme will help create a simpler, more focused, and higher performing Unilever,” Unilever’s chair Ian Maekins said in a statement.
Unilever pulling up its socks
The sweeping changes come within a year of Hein Schumacher taking over as CEO, who took on the top role to kickstart the company’s lackluster performance. When Schumacher laid out his plans for Unilever’s future to focus on its 30 strongest brands last year, investors didn’t immediately receive them well. However, Schumacher said his strategies were backed by activist investor Nelson Peltz, who joined Unilever’s board in 2022.
Peltz has been known for his aggressive turnaround asks and his interest in consumer-centric companies, including Procter & Gamble and Disney. He’s been building his stake at Unilever for a few years now, and has been among those adding pressure on the company to rework its strategy. Peltz’s appointment at the London-based company was seen as a welcome nudge for Unilever to revamp its operations.
The Dove soap and Marmite-maker has been criticized over the years for its awry GSK-Pfizer bid in 2022 under former CEO Alan Jope, as well as its inability to pull business’s margins back up after the COVID-19 pandemic.
The company’s underlying sales growth was up 7% in 2023, but Unilever reported a 0.8% revenue drop for that period. When the consumer goods giant announced its results last month, Schumacher said its “competitiveness remains disappointing and overall performance needs to improve.”
Tubs of trouble
Tuesday’s announcement marks a sizable undertaking for Unilever as it brings its restructuring and simplifying plans to fruition. By separating its ice cream business, Unilever could achieve higher margins, the company said.
For its part, some of Unilever’s ice cream brands haven’t been free of troubles. Ben & Jerry’s has been vocal in the past about its political stance by boycotting Israeli suppliers and pulling away from Israel-occupied territories. In January, Ben & Jerry’s called for a “permanent and immediate ceasefire” in Gaza—a stance that few consumer brands openly took, even if their sales were being hurt by the ongoing war between Israel and Hamas.
British investing platform AJ Bell’s Russ Mould said in a Tuesday note that one possible benefit of Unilever’s separation of the ice cream business is “it might quieten the ‘go woke and go broke’ noise.” Mould said the approach looked sound even otherwise, and could bring the company closer to achieving some of its goals.
“Less than a year into his tenure, CEO Hein Schumacher is certainly making his mark on the group,” Mould said. Schumacher will ultimately be judged on his ability to revive the fortunes of the remaining ‘simplified’ operation. Job cuts and efficiency savings are straight out of the corporate turnaround playbook but that doesn’t mean they are without any merit.
