Analysis: Unilever plan to offload €7.9bn ice cream arm will remove headache over West Bank sales

Ben & Jerry’s had objected to its products being sold in the Israeli-occupied West Bank

In December 2022, Unilever settled a court battle with the ice cream label’s independent board after the brand objected to its products being sold in the Israeli-occupied West Bank.

The new boss of Unilever wants to reverse years of lacklustre performance with an ambitious plan to separate the conglomerate’s ice cream arm and remove layers of middle management.

About nine months since taking charge of the Anglo-Dutch company, Hein Schumacher has moved to offload a division which had sales of €7.9bn last year. 

It’s home to brands including Ben & Jerry’s, Cornetto, and Magnum — which a previous Unilever chief, Paul Polman, dubbed “one of the greatest-ever success stories in the consumer goods market”. 

It’s just one part of Mr Schumacher’s wider plan to drive growth and boost profits at Unilever and unpick a legacy of overexpansion, missed opportunities and failed deals. 

The new CEO, who was appointed after activist investor Nelson Peltz took a stake in the company and joined its board, also plans to cut 7,500 jobs — almost 6% of the Dove soap maker’s total of 128,000 staff.

“Ice cream is truly a different business. It is already managed separately than our other activities,” Mr Schumacher told reporters. 

The ice cream division's profit margin is less than half that of the company’s personal care unit. Unilever shares climbed 3% in London trading, leaving the shares down 3% for the past year.

The new chief executive is aiming for €800m in cost savings over the next three years. The restructuring will leave the company focused on four businesses: Beauty and wellbeing; personal care; home care; and nutrition. Rival Nestle previously separated its ice cream business. 

Shedding the unit will remove a headache for Unilever, which has had to deal with controversies over political stances taken by Ben & Jerry’s. In December 2022, Unilever settled a court battle with the ice cream label’s independent board after the brand objected to its products being sold in the Israeli-occupied West Bank. 

Big food companies have also been trying to adjust their portfolios as new weight-loss drugs from Novo Nordisk and Eli Lilly gain popularity. 

Ice cream no longer sits well alongside other Unilever brands like Knorr stock cubes and Domestos cleaners, analysts said.

“Unilever’s plan to separate out its ice cream arm for probable divestiture makes sense, removing seasonality from growth and a low-margin drag. Yet the end-2025 separation date suggests there’s a long and bumpy road ahead, combined with disruption from a new productivity programme.” Deborah Aitken, senior analyst said.

If the ice cream business is spun off with a separate listing, the destination will be decided in the next 18 months, Mr Schumacher said. 

The food and ice cream divisions are currently based in the Netherlands, and the ice cream business is in the process of moving its headquarters to Amsterdam from Rotterdam, he said.

Unilever was formed from a fusion of British and Dutch companies. About four years ago, it decided to consolidate its overall headquarters in London after maintaining dual nationality for decades. Schumacher said Unilever as a whole is committed to staying in London. 

• Bloomberg