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Unilever, the consumer goods giant, said Tuesday that it would cut 7,500 jobs and spin off its ice cream unit, which includes Ben & Jerry’s, to cut costs and simplify its brand portfolio.
The moves would create “a simpler, more focused and higher-performing Unilever,” Ian Meakins, president of the London-based company, said in a statement. The group’s ice cream unit generated 7.9 billion euros ($8.6 billion) in sales last year, or about 13 percent of the group’s total.
The division is home to Ben & Jerry’s, which Unilever acquired in 2000, along with brands such as Cornetto, Magnum, Talenti and Wall’s. The spin-off is expected to be completed by the end of 2025.
Hein Schumacher, who took over as CEO of Unilever in July, announced a plan late last year to “drive growth and unlock potential”, in part by focusing more attention on just 30 of the group’s hundreds of brands.
On Tuesday, he said the job cuts and the ice cream spinoff would “accelerate” the plan, saving nearly $870 million in costs over the next three years. The redundancies, from “predominantly clerical roles” around the world, represent around 6 per cent of Unilever’s workforce.
In early 2022, Nelson Peltz, one of Wall Street’s most prominent activist investors, began taking a stake in Unilever. Peltz, known for pushing companies to simplify their corporate structures, landed a seat that same year on Unilever’s board of directors, where he remains.
After the proposed spin-off, Unilever’s remaining units would include health and beauty brands such as Dove soap, consumer goods such as Surf detergent and food brands such as Hellmann’s mayonnaise.
Unilever rival Nestlé transferred many of its European ice cream brands into a joint venture with a private equity firm in 2016 and sold its U.S. brands, including Dreyer’s and Häagen-Dazs, to the company in 2019.
Unilever has struggled in recent years, with revenue growth sustained by sharp price increases as sales volumes have declined. Exhausted by inflation, consumers have been turning to cheaper brands in many of Unilever’s biggest categories, particularly less essential products like ice cream.
The ice cream division faced the highest input cost inflation in Unilever’s portfolio last year, the company said in an earnings report last month. It passed some of those costs onto consumers, prompting them to buy less or switch to cheaper brands, leading to a “disappointing year with declining market share and profitability,” the company said.
“The company has been trying to aggressively cut costs to accelerate growth for at least a decade,” Bernstein analysts wrote in a research note. “This plan is still ‘we will try harder’ to execute the same plan, or hope over experience,” they added. Unilever shares rose 3 percent on Tuesday, but have remained largely flat over the past year.
Ben & Jerry’s, which has been run by an independent board since it was acquired by Unilever, has not always sat comfortably in the portfolio of a serious multinational corporation. The founders of the Vermont-based brand are outspoken about hot-button social and political issues; In 2021, they said they would end sales in the Israeli-occupied territories.
That led some U.S. pension funds to divest from Unilever and sparked a shareholder lawsuit. Ben & Jerry’s sued Unilever in 2022 to prevent it from selling distribution rights to a licensee in Israel. Unilever eventually sold the rights to its former local partner there, which continues to sell the ice cream under a slightly different brand.