Unilever has confirmed a major restructure that could potentially see the offloading of some of its global food brands, as the company narrows focus on its ice cream segment and personal care business – which includes brands like Dove, Comfort, Lifebuoy and Rexona. Furthermore, the industry giant is cutting 1,500 management jobs across the business as part of this significant shakeup.
The consumer goods company will move away from its current matrix structure and will be organized around five distinct Business Groups: Beauty & Wellbeing, Personal Care, Home Care, Nutrition and Ice Cream. Each Business Group will be fully responsible and accountable for their strategy, growth and profit delivery globally, the company underscores.
“As we are currently in a closed period, we’re limited in what more we can say,” a Unilever spokesperson tells FoodIngredientsFirst.
Speculation has been mounting over the future direction of Unilever since investors were angered last week when the company dropped a pursuit of GlaxoSmithKline’s healthcare business.
New category-focused groupings
CEO Alan Jope claims that moving to five a category-focused Business Groups will allow the company to be more responsive to consumer and channel trends, with “crystal-clear accountability for delivery.”
“We have an excellent Food & Refreshment business with global leading positions,” he remarked on a recent investor call. . “You will notice that it has performed well during the pandemic. But it is true that Food & Refreshment’s long term growth profile has been below other parts of the portfolio.”
“What we’re trying to landis the setting out of our future strategic direction into health, beauty, and hygiene. We have no immediate plans to separate Food & Refreshment but rotation of our portfolio is part of upgrading into higher growth spaces.”
The new organization model will result in a reduction in senior management roles of around 15% and more junior management roles by 5%, equivalent to around 1,500 roles globally. Changes will be subject to consultation.
Unilever states it does not expect factory teams to be impacted by these changes.
Focus on food is dwindling
In a document filed with the US Securities and Exchange Commission last week, the Unilever board concluded that the company’s future strategic direction “lies in materially expanding its presence in Health, Beauty and Hygiene.”
“Our new organizational model has been developed over the last year and is designed to continue the step-up we are seeing in the performance of our business,” Jope further explains.
Unilever’s Food & Refreshment business currently comprises global brands including Ben & Jerry’s, Magnum, Breyers, Knorr, Marmite and Hellmann’s.
In 2020, the company launched its initial strategy to “evolve” its portfolio to higher growth spaces, the British-Dutch food giant announced a strategic review of its sizable global tea business. These include long-established brands such as Lipton, Brooke Bond and PG Tips.
This strategic review eventually led to Unilever selling its tea business, ekaterra – which held a portfolio of 34 brands including Lipton, PG tips, Pukka, T2 and TAZO – to CVC Capital Partners for €4.5 billion (US$5 billion), last November.
Food business still appears robust
Even while Unilever has set its sights on trimming its global food and beverage portfolio, the growth potential of this sector cannot be ignored. Having completed significant investment moves in this space, ingredient innovation may represent one area that a refocused Unilever may want to hold onto.
Unilever’s food segment has continued to make moves to scale and diversify, particularly in the lucrative plant-based sector. In 2020, Unilever announced a new annual global sales target of €1 billion from plant-based meat and dairy alternatives, within the next five to seven years.
Last year, Unilever-owned The Vegetarian Butcher expanded its partnership with fast food giant Burger King to launch the Plant-Based Whopper in Latin America, the Caribbean and China.
Unilever did in fact report “steady growth” in its Foods & Refreshments segment in its half-year 2021 results. Despite sales not yet returning to pre-pandemic levels, innovation and marketing in ice cream brands Ben & Jerry’s and Magnum have produced double-digit growth.
Moreover, the food titan has launched various partnerships with a focus on scaling new ingredients, which includes a tie-up with the microalgae start-up Algenuity for discovering new applications for protein made from the single-celled organism.
In other moves, Unilever partnered with food-tech pioneer Enough to develop uses for its fermented mycoprotein Abunda in products. It also collaborated with the biotech company Holobiome to identify ingredients that benefit the gut-brain axis, which was announced this month.
Unilever changes course for personal care
Unilever’s recent and forthcoming divestments in food and beverages may indeed be indicative that the company is accumulating the requisite funds to channel into its new ventures in personal care.
The consumer goods titan recently confirmed that it has made offers to buy personal care company GlaxoSmithKline’s (GSK) consumer unit. The latest bid is worth £50 billion (US$67.5 billion).
All bids put forward have so far been rejected, however, with GSK claiming that Unilever has undervalued the market potential of its businesses.
Unilever demonstrated its readiness to spearhead big business moves when its shareholders decided to completely unify its structure – which was historically split between the UK and the Netherlands – in late 2020. It is said that this consolidation makes divestitures easier.
For the first time in its history, following its unification, Unilever was able to trade with one market capitalization, one class of shares and one global pool of liquidity, while also maintaining the Group’s listings on the Amsterdam, London and New York stock exchanges.
Executive shuffling
As a result of the new corporate restructuring this year, Unilever is making changes to its leadership team.
Fernando Fernandez, EVP Latin America, has been appointed President Beauty & Wellbeing, which includes Hair Care, Skin Care, as well as Vitamins, Minerals and Supplements, and Unilever Prestige.
Fabian Garcia, President North America, has been appointed President Personal Care, responsible for Skin Cleansing, Deodorants, and Oral Care.
Peter ter Kulve will continue in his role as President Home Care, responsible for Fabric Care, Home & Hygiene, and Water & Air.
Hanneke Faber, President Foods & Refreshment, has been appointed President Nutrition, which will be home to Scratch Cooking, Healthy Snacking, Functional Nutrition, Plant-Based Meat, and Food Solutions.
Matt Close, EVP Ice Cream, has been appointed President Ice Cream, a Business Group in its own right.
These appointments are effective from April 1, 2022.
By Benjamin Ferrer
Source: foodingredientsfirst.com
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