Ratings agency Fitch has said it expects consumer goods group Unilever to offload individual food brands and focus on its fast-growing personal care business.
According to the ratings agency, Unilever will sell its savoury, dressing and spreads business and use the proceeds to fund acquisitions for its personal care division, which it says is focused on emerging markets.
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In recent months, Unilever has sold a number of its food brands. In October, B&G Foods announced it would acquire Mrs Dash salt-free seasonings, butter sprinkles brand Molly McButter, calorie-free sugar substitute Sugar Twin and Baker’s Joy, a baking spray with flour, from Unilever in a US$325m deal.
In August, Unilever sold the UK and Irish rights to its Chicken Tonight and Ragu cooking sauces brands to local firm Symington’s.
Unilever has also made a number of major acquisitions outside food, including US haircare business Albert Culver and household and body care brands from Sara Lee.
Fitch argued Unilever could look to sell off more individual food brands, which, it argued, would be easier to achieve than finding a single buyer for the products worldwide.
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By GlobalData“A string of small divestments would maximise the value the group could obtain and would also be easier than finding a single buyer for a specific food category or brands globally in the current environment,” Fitch said.
Fitch claimed Unilever would face some challenges in finding buyers, with “many” of its remaining brands being global, which the agency said would make it “harder to dispose of solely developed-market exposure”.
Speaking to just-food today (15 November), an analyst from Fitch said some of Unilever’s food categories are “clearly diminished, even in developed markets”. He believed Unilever would start by selling non-core low growth brands and then try and build a platform for its personal care sector in the next couple of years.
He argued global buyers for some of Unilever’s food brands could be available and said US agribusiness Bunge, for example, could be a possible buyer of its margarines and mayonnaise brands.
However, Unilever is also the world’s largest producer of ice cream, with brands including Magnum and Ben & Jerry’s. The Fitch analyst said Unilever’s position in ice cream meant it was unlikely to completely exit the food sector.
“We think it is hard to believe Unilever will be willing to dismantle all of its exposure to the sector, maybe yes in developed markets (especially regional/domestic brands) but certainly not in emerging countries or where Unilever ticks the boxes of dominant market positions and intact or strong growth prospects,” he said.
When contacted by just-food today, Unilever said it is unable to comment on Fitch’s report.
