Unilever’s move this week to buy shampoo brands Tresemme and VO5 has led some industry watchers to claim the consumer goods giant is undergoing something of a makeover.
The Anglo-Dutch group’s plan to acquire US firm Alberto Culver – as well its proposed acquisition to buy Sara Lee’s body-care business, a deal being scrutinised by the EU – has caused certain commentators to suggest the company is pushing into non-food at the expense of grocery.
The news today (29 September) that Unilever could soon sell UK cooking sauce brands Chicken Tonight and Ragu could, to some, be seen as further evidence of a growing emphasis on home and personal care. The group’s disposal of its Findus Italy frozen-food unit this summer only supports that argument.
However, that argument is flawed. Unilever, which has a food stable from Ben & Jerry’s ice cream to Knorr soup, is still committed to expanding its grocery business. The company is just – to coin a favourite phrase of CEO Paul Polman – “weeding and feeding” its food business to get a better mix of international brands like Ben & Jerry’s and Knorr and faster-growing businesses in emerging markets – like Baltimor, the Russian sauce maker it acquired last year.
The sale of Findus Italy was part of what one analyst described as the “slow transformation” of Unilever’s portfolio in western Europe to businesses with better growth prospects. Although Unilever has yet to come to a final decision on whether to sell the Chicken Tonight and Ragu brands, the products no longer make the returns the company would want to see from its food business and a sale could give the company a chance to refocus its food offer elsewhere.
Unilever also said the Findus disposal would give it the chance to focus on its core business in the country, which includes ice cream. And ice cream is a sector central to Unilever’s food division and one that, as market leader, the company’s has been keen to expand upon in recent months.
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By GlobalDataYesterday, Unilever announced plans to buy the ice-cream brands of Greek firm EVGA, a move that will give the company leadership of the country’s ice-cream sector. The announcement came a month after Unilever said it had struck a deal to buy Danish ice-cream business Diplom-Is.
Food still accounts for over half of Unilever’s annual sales. The division may be facing some challenging markets in western Europe but Polman has signalled his plans to expand its grocery stable – particularly in its savoury brands – further into the world’s emerging markets.
For all of Unilever’s moves in home and personal care, the company’s recent actions suggest it remains aware of the potential of its food business and is weeding out the parts that can no longer provide the growth it needs – while planting seeds for future expansion.