Unilever to spin off ice cream brands, launch productivity program

Unilever on Wednesday announced steps to accelerate its Growth Action Plan through the separation of its Ice Cream division—including Ben & Jerry’s—and the launch of a major productivity program.

The company’s Board of Directors believes Unilever should focus on a portfolio of superior brands with strong positions in leading categories that have complementary operating models. This is where the company can most effectively apply its innovation, marketing and go-to-market capabilities. Ice Cream has a very different operating model, so the Board has decided that divesting the Ice Cream business best serves the future growth of both Ice Cream and Unilever.

Following the separation, Unilever will become a simpler, more focused company, operating four business groups: Beauty & Wellbeing, Personal Care, Home Care and Nutrition. These business groups have complementary routes to market, and/or R&D, manufacturing and distribution systems, across both developed markets and Unilever’s extensive emerging markets footprint.

Without the Ice Cream division, Unilever’s management can accelerate the implementation of its Growth Action Plan, announced in October. The plan revolves around Unilever doing fewer things, better to drive consistent and stronger topline growth, enhance productivity and simplicity, and improve performance. In addition, Unilever will continue to optimize its portfolio within the four business groups towards higher growth spaces and through brands with global reach or significant potential to scale.

Separation of Ice Cream

The Unilever Board is confident that the future growth potential of Ice Cream is more likely to be realized under a different ownership structure. Ice Cream has distinct characteristics compared with Unilever’s other operating businesses, including a supply chain and point of sale that support frozen goods, a different channel landscape, more seasonality and greater capital intensity.

Ian Meakins, chair of Unilever said, “The Board is determined to transform Unilever into a higher-growth, higher-margin business that will deliver consistently for all stakeholders. Improving our performance and sharpening our portfolio are key to delivering the improved results we believe Unilever can achieve.

“The separation of Ice Cream and the delivery of the productivity program will help create a simpler, more focused, and higher performing Unilever. It will also create a world-leading ice cream business, with strong growth prospects and an exciting future as a standalone business.”

The separation of Ice Cream will create a world-leading business, operating in a highly attractive category, with brands that together delivered turnover of €7.9 billion (US $8.77 billion) in 2023. The business has five of the top 10 selling global ice cream brands, including Wall’s, Magnum and Ben & Jerry’s, with retail and food service sales across the globe.

Under new leadership, Ice Cream is already making significant operational changes expected to drive stronger performance. These include improved productivity and efficiencies, product rationalization and investment behind significant innovations.

As a standalone, more focused business, Ice Cream’s management team will have operational and financial flexibility to grow its business, allocate capital and resources in support of the company’s distinct strategy and developing wide-reaching, flexible, distribution channels.

A demerger of Ice Cream is the most likely separation route, and in that case, Unilever officials expect the company to operate with a capital structure in line with comparable listed companies. Other options for separation will be considered to maximize returns for shareholders. The costs and operational dis-synergies relating to the separation of Ice Cream will be determined by the precise transaction structure chosen.

Separation activity will begin immediately, with full separation expected by the end of 2025.

Launch of productivity program

Building on the early momentum of GAP we have identified additional efficiencies that can now be accelerated. In addition to the portfolio changes, Unilever intends to launch a comprehensive productivity program, driving focus and faster growth through a leaner and more accountable organization, enabled by investment in technology.

The productivity program is anticipated to deliver total cost savings of around €800 million over the next three years, more than offsetting estimated operational expenses from the separation of Ice Cream. Incremental net savings from the program beyond dis-synergies will provide flexibility for accelerated growth investments behind our brands and R&D, and support margin improvement over time. The program will further reduce complexity and duplication through technology-led interventions, process standardization and operational centers of excellence to drive efficiencies.

The proposed changes are expected to impact around 7,500 predominantly office-based roles globally, with total restructuring costs now anticipated to be around 1.2% of Group turnover for the next three years (up from the around 1% of Group turnover previously communicated). These proposals will be subject to consultation.