Consumer goods giant Unilever He said on Tuesday It will cut 7,500 jobs and spin off its ice cream unit, which includes Ben & Jerry's, to cut costs and simplify its portfolio of brands.
The moves will make “Unilever simpler, more focused and higher performing,” Ian McInnes, president of the London-based company, said in a statement. The group's ice cream unit achieved sales of 7.9 billion euros ($8.6 billion) last year, or about 13 percent of the group's total sales.
This division is home to Ben & Jerry's, which Unilever acquired in 2000, along with brands such as Cornetto, Magnum, Talenti and Wall's. The offer is expected to be completed by the end of 2025.
Hein Schumacher, who took over as CEO of Unilever in July, Announce a plan Late last year to “drive growth and unlock potential”, partly by focusing more attention on just 30 of the group's hundreds of brands.
Job cuts and ice cream spin-offs would “accelerate” the plan, saving nearly $870 million in costs over the next three years, he said Tuesday. The rate of layoffs in “predominantly office-based roles” around the world amounts to about 6 percent of Unilever’s workforce.
In early 2022, Nelson Peltz, one of Wall Street's most prominent activist investors, began building a stake in Unilever. Mr. Peltz, known for pushing companies to simplify their corporate structures, earned a seat on Unilever's board later that year, where he remains.
Following the proposed spin-off, Unilever's remaining units will include health and beauty brands such as Dove soaps, consumer goods such as Surf detergents and food brands including Hellmann's mayonnaise.
Unilever's rival Nestlé turned several of its European ice cream brands into a joint venture with a private equity firm in 2016 and sold its US brands, including Dreyer's and Häagen-Dazs, to the venture in 2019.
Unilever has struggled in recent years, with revenue growth fueled by sharp price increases and falling sales volumes. Because of inflation, consumers have instead turned to cheaper brands in many of Unilever's major categories, most notably less important products such as ice cream.
The ice cream division faced the highest input cost inflation in Unilever's portfolio last year, the company said in an earnings report last month. The company said it passed some of these costs on to consumers, causing them to buy less or switch to cheaper brands, resulting in a “disappointing year with declining market share and profitability.”
“The company has been trying to accelerate cost-cutting for accelerated growth for at least a decade,” analysts at Bernstein wrote in a research note. “The plan remains that we will do our best to implement the same plan, or hope for experience,” they added. Unilever shares rose 3% on Tuesday, but have remained roughly flat over the past year.
Ben & Jerry's, run by an independent board since its takeover by Unilever, has not always sat comfortably in the portfolio of a staid multinational. The Vermont-based brand's founders are outspoken about hot-button social and political issues. In 2021, they said they would end sales in the territories occupied by Israel.
This led some US pension funds to withdraw their investments from Unilever, and prompted shareholders to file a lawsuit. Ben & Jerry's sued Unilever in 2022 to prevent it from selling distribution rights to a licensee in Israel. Eventually, Unilever sold the rights to its old local partner there, which continues to sell ice cream under slightly different brands.
