‘Does this spark joy?’ That’s a question household decluttering expert Marie Kondo encourages her 4 million Instagram followers to ask themselves when deciding whether to get rid of something. Presumably, Unilever’s huge ice cream division didn’t produce that particular emotion. As last year, they decided to spin it off into a separate entity.
The consumer giant told the BBC, its ‘shake-up would help it to "do fewer things better."’ The kind of Zen-like insight Kondo would undoubtedly approve off.
But why just spin it off? Why not sell it?
Well, according to The Telegraph, ‘the sheer size of the operations make it difficult to find a buyer.’
The division, whose major brands like Magnum, Wall’s, and Ben & Jerry’s are all household names, is valued by city analysts at £12-15bn. At that price, the paper points out, ‘a full takeover would be beyond even the deep-pocketed private equity firms and Middle Eastern state-backed funds that are circling the business.’
So, spinning it off makes sense. The huge demerger is due to be completed by the end of this year. But Unilever is expected to retain a small stake in the new business. And is placing the division in very experienced hands. The Grocer says, ‘Jean-François van Boxmeer has been appointed as chair designate for the separated business. Van Boxmeer is currently chair of Vodafone and non-executive director of Heineken, having been CEO of Heineken for 15 years.’
The vastly experienced Belgian is known to have prioritised ‘innovation’ at Heineken. It will be interesting to see what dynamic changes he can bring to the world of frozen confectionary.
One other reason Unilever may have decided not to sell is criticism of some of its past deals. Principally, that they had let assets go too cheaply. The Telegraph again, ‘Unilever sold its spreads division, which included the Flora and Stork margarine brands, to buyout firm KKR in 2017 in the wake of a hostile takeover approach from Kraft Heinz and Warren Buffett. KKR paid £6bn but some analysts think Unilever could have got more.’
Currently, the company are bullish about the demerger, commenting, ‘Ice Cream is already making significant operational changes at pace that are expected to drive stronger performance. These include improved productivity and efficiencies, product rationalisation, and investment behind significant innovations.’
But something about the deal – its part-still-in-part-out structure – suggests Unilever are, at the least, ambivalent about fully exiting the ice cream market.
Another favourite Kondo question is: ‘Would I buy it again?’ So, in five years’ time, will Unilever’s ice cream business return to the fold? Personally, I wouldn’t bet against it.