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Like a vanilla cone on a scorching July day, Unilever’s faith in its ice cream biz is melting.
What happened: Gargantuan multinational Unilever plans to spin off (or if all else fails, sell) its ice cream business by the end of next year. With popular brands like Ben & Jerry’s, Breyers, and Magnum, the new entity would be the world’s largest ice cream company.
- As is, Unilever owns five of the 10 bestselling brands and controls nearly a fifth of global ice cream sales, raking in US$8.6 billion thanks to the cold stuff last year.
Why it’s happening: Ice cream is a moneymaker but is cost-intensive and doesn’t jive with many of Unilever’s other health and beauty product categories. Plus, Ben & Jerry’s — which operates under an independent board — has been a constant headache for the company.
Why it matters: Unilever’s willingness to basically give up on its ice cream dominance shows just how volatile the future is for the classic summertime treat. As appetites for it fade in places like Canada and the U.S., other factors are making it a less attractive business.
- Weight-loss drugs: Morgan Stanley research noted that ice cream was one of the top foods that users of GLP-1 weight-loss drugs cut back spending on.
- Green goals: Ice cream freezers consume a lot of energy. For Unilever, which just renewed its climate goals, freezers were responsible for 10% of its emissions.
- The weather: Speaking of climate, ice cream sellers are worried that summers will soon be too hot for ice cream, with people more likely to indulge in cold drinks.
Zoom out: Dumping ice cream is part of Unilever’s larger plan to spin off or sell brands in order to cut costs and drive growth — a growing trend among major multinationals.—QH