As part of its efforts to streamline operations and save expenses, consumer products giant Unilever has revealed intentions to spin off its ice cream unit—which includes Ben & Jerry’s—and lay off workers.
The British firm plans to implement a “productivity program” that will eliminate around 7,500 positions, the bulk of which are office workers worldwide. The relocation is anticipated to be finished by the end of the year. Over the next three years, Unilever expects to save 800 million euros ($867 million) by investing in technology to uncover economies and minimize duplication.
The division houses well-known brands such as Wall’s, Magnum, Talenti, and Cornetto, which Unilever bought in 2000. The spinoff should be finished by the end of 2025.
Sales volume fell 3.6% in 2022 despite a 13.3% average price increase across all brands. As a result, sales increased 1.8%, and pricing increased 2.8% last year. According to several experts, Unilever may reap further benefits from Ben & Jerry’s decision to separate from the company. The latter’s reputation for social activism has caused friction between the former and its corporate owner.
Food brands like Hellmann’s mayonnaise, consumer goods like Surf detergent, and health and beauty products like Dove soap would make up the remaining units of Unilever. In 2016, Unilever’s competitor Nestlé sold its U.S. ice cream brands to a private equity group, including Dreyer’s and Häagen-Dazs. 2019, the company sold its European ice cream brands to the same venture.
Despite falling sales volumes, Unilever has raised its income through sharp price hikes in recent years. As a result of inflation, shoppers have been gravitating toward store brands in several of Unilever’s most lucrative product categories, especially for luxuries like ice cream.
Among Unilever’s product lines, ice cream saw the most significant increase in input costs last year, which forced the company to cut back on purchases or move to less expensive brands, ultimately resulting in a “disappointing year with declining market share and profitability.”
On Tuesday, shares of Unilever increased by over 3%, although they have remained relatively unchanged over the last 12 months.
