Leading companies like Unilever have a history of streamlining their portfolios, making the recent announcement regarding substantial cuts unsurprising. In a recent investor update, business leaders disclosed that significant reductions are on the horizon.
This sentiment is further underscored by CEO Hein Schumacher’s transparent approach to revamping the company, prioritizing 30 ‘power brands’ for future success.
However, separating the ice cream division from the larger entity was a more groundbreaking strategy. While the intention was to sell this complex sector, it will not function independently under new ownership.
Unilever has experienced positive growth under Schumacher’s leadership, with over a year in charge resulting in promising third-quarter figures, including critical volume increases.
Now, however, Schumacher aims to see greater profits reflected in the balance sheets. He is scrutinizing food brands that fail to produce revenue akin to that of Knorr and Hellmann’s.
Which Food Brands Might Unilever Eliminate Next?
According to a Sky News report, it appears that Unilever is set to part ways with the Vegetarian Butcher, having engaged Piper Sandler to facilitate a sale just six years post-acquisition.
While several potential buyers have been approached to assess interest in the brand, Unilever has been reticent, and there are currently no early signs of a completed sale.
What does this imply about Unilever’s confidence in the plant-based and meat alternative sector? Although this may raise questions, what truly matters is Unilever’s focus on its flagship brands and 24 core markets. Within this framework, the Vegetarian Butcher does not exhibit the strength needed to remain a priority, despite performing well across 55 countries.
Crucially, Schumacher is focused on launching 10 to 15 new innovations from within the 30 powerhouse brands, each aiming to generate at least €100 million in revenue.
Food constitutes approximately one-fourth of Unilever’s revenue, with the latest four-tier strategy indicating €13 billion in turnover along with a quarter of its profits.
Major brands like Knorr and Hellmann’s represent 60% of this division’s revenue, contributing €5 billion and €3 billion, respectively.
Innovative flavor developments in Hellmann’s have nearly doubled revenues this year and are projected to be a significant contributor to Schumacher’s targeted €100 million innovation streams.
Why Are Knorr and Hellmann’s at the Forefront of Unilever’s Food Strategy?
Interestingly, during the recent investor update, Knorr and Hellmann’s were the only brands highlighted by division head Heiko Schipper. This begs the question: where do the other brands fit within this framework? What iconic names might be discarded alongside the Vegetarian Butcher?
Unilever’s food strategy concentrates on three global verticals: condiments, cooking aids, and mini meals. Excluding the ice cream sector, Unilever holds around 60 brands within its food and nutrition portfolio.
These represent well-known names such as Graze, Pot Noodle, Marmite, Lady’s Choice, and Colman’s, among others. While some enjoy global recognition, others remain regional.
An outsider may deduce that Unilever is likely to drop smaller, less recognized brands. However, the Vegetarian Butcher, which is substantial in at least 50 countries, contravenes that assumption.
Does this suggest that brands which do not align with Unilever’s “three global verticals” are vulnerable to elimination? If so, what implication does this have for brands like Bovril or Graze, which may not fit neatly into the mini meals category?
