Finally Unilever Dumps Ben & Jerry’s

Unilever Announces Job Cuts and Spinoff of Ben & Jerry’s to Streamline Operations

Edited by: TJVNews.com

Unilever, the global consumer goods giant, unveiled plans on Tuesday to streamline its operations by cutting 7,500 jobs and spinning off its lucrative ice cream unit, which includes iconic brands like Ben & Jerry’s, as was reported by The New York Times on Tuesday. The move aims to reduce costs and simplify Unilever’s portfolio of brands, positioning the company for greater efficiency and growth in the future.

The NYT report indicated that Ian Meakins, Unilever’s chair, described the strategic overhaul as a step towards creating “a simpler, more focused, and higher-performing Unilever.” The ice cream division, which generated a staggering 7.9 billion euros ($8.6 billion) in sales last year, accounts for approximately 13 percent of the group’s total revenue.

The decision to spin off the ice cream unit, expected to be completed by the end of 2025, reflects Unilever’s commitment to refining its brand portfolio. According to the information provided in the NYT report, the division houses beloved brands such as Cornetto, Magnum, Talenti, and Wall’s, in addition to Ben & Jerry’s, which Unilever acquired in 2000.

Hein Schumacher, Unilever’s chief executive, who assumed the role in July, outlined a comprehensive plan last year aimed at driving growth and unlocking the company’s full potential, as was indicated in the NYT report. The recent announcement regarding job cuts and the ice cream spinoff represents an acceleration of this strategy, with projected cost savings of nearly $870 million over the next three years.

Schumacher emphasized that the layoffs, affecting predominantly office-based roles globally, would account for approximately 6 percent of Unilever’s workforce. The restructuring aligns with the company’s broader objective of optimizing efficiency and refocusing resources on key growth areas.

The move comes amidst the backdrop of investor pressure, with Nelson Peltz, a prominent activist investor, acquiring a stake in Unilever in early 2022. According to the information contained in the NYT report, Peltz, who is known for advocating simplification of corporate structures, secured a seat on Unilever’s board later that year. His influence is evident in the company’s strategic pivot towards a leaner and more agile operating model.

Following the proposed spinoff, Unilever’s remaining units will encompass health and beauty brands such as Dove soap, consumer goods such as Surf detergent, and food brands including Hellmann’s mayonnaise, the report in the NYT said. The restructuring mirrors similar actions taken by Unilever’s rivals, including Nestlé, which streamlined its ice cream business through joint ventures and divestitures in recent years.

In recent years, the company has relied heavily on steep price increases to buoy revenue growth, but the strategy has been undermined by shifting consumer preferences and mounting inflationary pressures.

“The company has tried accelerated cost-cutting for accelerated growth for at least a decade,” noted analysts at Bernstein in a research note, highlighting Unilever’s persistent struggle to translate cost-saving measures into sustained growth, the NYT reported.  The company’s shares saw a modest uptick of around 3 percent on Tuesday following the announcement of its restructuring plans, but have remained relatively stagnant over the past year.

The ice cream division, in particular, has borne the brunt of input-cost inflation, exacerbating Unilever’s woes. Last year, the division faced the highest input-cost inflation within Unilever’s portfolio, prompting the company to pass on some of those costs to consumers. However, the report in the NYT pointed out that the move backfired, as consumers opted to purchase less or switch to cheaper alternatives, resulting in declining market share and profitability.

“The disappointing year with declining market share and profitability underscores the challenges facing Unilever’s ice cream division,” remarked a company spokesperson, reflecting on the recent earnings report, the NYT report said. The struggles of the ice cream segment underscore broader trends within Unilever’s business, where efforts to spur growth through cost-cutting measures have yielded mixed results.

Meanwhile, Ben & Jerry’s, a highly visible brand under Unilever’s umbrella, has faced its own set of controversies that have further complicated the company’s position. Since its acquisition by Unilever, Ben & Jerry’s has maintained an independent board and a reputation for championing social and political causes, according to the NYT report. However, this independence has occasionally clashed with the corporate ethos of Unilever, leading to tensions and legal disputes.

In 2021, Ben & Jerry’s founders announced their decision to end sales in the Judea and Samaria region of Israel, sparking backlash from shareholders and prompting divestments from some U.S. pension funds. The NYT report noted that the move also resulted in a shareholder lawsuit against Unilever and legal battles over the sale of distribution rights in Israel. Ultimately, Unilever sold the rights to its longstanding local partner, albeit with slight alterations in branding.

As Unilever grapples with internal and external challenges, including shifting consumer trends, inflationary pressures, and brand controversies, the company faces a critical juncture in its trajectory. The success of its restructuring efforts, alongside efforts to address underlying market dynamics and navigate contentious issues surrounding its brands, will determine Unilever’s ability to regain momentum and secure its position in the fiercely competitive consumer goods industry.