Unilever has announced plans to address challenges in its ice-cream business after a lackluster performance in 2023. The segment, comprising 13% of the company’s turnover, saw revenues of €7.9bn ($8.5bn) in 2023, marking a flat growth of 0.5% from the previous year. The underlying sales growth (USG) in the ice-cream category was 2.3% in 2023, but volumes experienced a 6% decline.
Despite a marginal decrease in in-home ice-cream sales, out-of-home ice-cream products witnessed high single-digit growth. Magnum and Cornetto ice creams, two of Unilever’s core power brands, contributed to close to 85% of the ice-cream unit’s turnover in 2023.
To counter the weak performance, Unilever is implementing a sharpened pricing and promotional strategy in the United States to reignite in-home ice-cream volumes. In addition, a new leadership team is in place to review the end-to-end economics of the ice-cream business, with a focus on enhancing operational grip and productivity.
Unilever’s annual turnover amounted to €59.6m in 2023, reflecting an “unacceptable” level of competitiveness, according to Fernando Fernandez, Unilever CFO. Operating profit declined 9.3% to €9.8bn, while net profit saw a 13.7% drop at €7.1bn. Similarly, the company’s nutrition business also faced challenges due to input-cost inflation, resulting in higher pricing.
The nutrition unit, which includes brands such as Knorr stock cubes and Hellmann’s mayonnaise, recorded a 5% drop in revenue from 2022 to 2023. The impact of cost inflation and private label share gains saw a decrease in both volumes and profitability, particularly in Europe.
Unilever’s challenges in the ice-cream and nutrition businesses reflect broader food and beverage industry trends. Amidst rising input costs and changing consumer preferences, companies in the food and drink business must adapt to stay competitive. These challenges highlight the continual need for innovation and strategic decision-making.