Unilever to Create Ice Cream Business Spin-Off and Tech-Powered Productivity Program
Unilever’s ice cream business will now be under separate ownership as the company focuses on four primary groups: Beauty & Wellness, Personal Care, Home Care, and Nutrition.
The company has decided to shift its ice cream business to a different ownership structure, which will include brands like Wall’s Magnum, and Ben & Jerry’s, and delivered $8.5 billion in turnover in 2023.
It includes its supply chain and point of sale system and, according to the company, ice cream as a standalone, more focused business segment will have “operational and financial flexibility to grow its business, allocate capital and resources in support of the company’s distinct strategy,”
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This includes optimizing the business’ manufacturing and logistics network, and creating more flexible distribution channels. Efforts are already underway and will also include improved productivity and efficiencies, product rationalization, and investing in significant innovations.
The transition is slated to be finalized by the end of 2025 and will most likely result in a demerger, according to the company. This would mean the ice cream business would operate with a similar capital structure to comparable listed companies.
Unilever has introduced a lot of innovation in its ice cream business over the years. In November, it granted a free non-exclusive license for 12 of its reformulation patents, allowing ice cream manufacturers to tap into insights garnered from two pilots where Unilever kept products stable at a warmer freezer temperature.
Last year, the company developed an e-commerce app for its retail partners to work with AI-based refrigerators to monitor stock levels, make electronic payments, and view discounts and special offers. More recently, the company added image capture and AI within 50,000 of its freezers to ramp up these inventory and order systems.
Most Cost-Saving Measures
The company also announced it would be addressing additional efficiency opportunities by launching a productivity program focused on driving growth through a leaner, more focused approach — and supported by investments in tech.
Over the next three years, Unilever expects total cost savings of about $868 million from the program, which will be reinvested in R&D and into the company’s four core business areas.
The company said technology-led investments will help reduce complexity and duplication of efforts. The initiative will result in around 7,500 job cuts.
“Simplifying our portfolio and driving greater productivity will allow us to further unlock the potential of this business, supporting our ambition to position Unilever as a world-leading consumer goods company delivering strong, sustainable growth and enhanced profitability,” said Hein Schumacher, CEO of Unilever, in a statement. “We are committed to carrying out our productivity program in consultation with employee representatives, and with respect and care for those of our people who are impacted.”
Unilever’s Growth Action Plan
These moves are part of Unilever's Growth Action Plan, announced last October to focus on high-performing brands in the company’s portfolio and address challenges related to cost management, productivity gains, and production and logistics innovation.
The company’s four core business groups share similar routes to market, R&D, manufacturing, and or distribution systems, per Unilever. By separating ice cream, which functions with a different core operating model, the company believes it can focus on “doing fewer things, better, with greater impact to drive consistent and stronger topline growth.”
The company plans to continue optimizing its portfolio within the remaining four business groups.
Schumacher said the company’s decision to separate its ice cream business will help create a simpler, more focused, and higher-performing Unilever.
“Under the Growth Action Plan, we have committed to do fewer things, better, and with greater impact. The changes we are announcing today will help us accelerate that plan, focusing our business and our resources on global or scalable brands where we can apply our leading innovation, technology, and go-to-market capabilities across complementary operating models,” he added.
