Unilever, the global consumer goods company behind popular brands such as Ben & Jerry’s ice cream, Dove soaps, and Vaseline, has announced plans to reduce its workforce by 7,500 employees. Additionally, the company intends to separate its ice cream business, including the well-known Ben & Jerry’s brand, in an effort to cut costs and boost profits.
Unilever, headquartered in London and employing 128,000 individuals, believes that its ice cream business has unique characteristics that would benefit from separate ownership to drive growth. This strategic move is expected to be completed by the end of the next year. Alongside this separation, Unilever is launching a productivity program aimed at reducing approximately 7,500 office-based jobs worldwide. The company plans to invest in technology to streamline operations and eliminate duplication, with the goal of saving 800 million euros ($867 million) over the next three years. Earlier this year, Unilever had already laid off 1,500 employees.
The CEO of Unilever, Hein Schumacher, expressed his optimism about these changes stating, “Simplifying our portfolio and driving greater productivity will allow us to further unlock the potential of this business, supporting our ambition to position Unilever as a world-leading consumer goods company delivering strong, sustainable growth and enhanced profitability.”
Investors responded positively to these developments, with Unilever’s shares rising over 3 percent in late-morning trading on the London Stock Exchange. Richard Hunter, head of markets for interactive investor, noted that this bounce in share price is a welcome change after a challenging year for the company. Unilever has faced concerns from investors due to limited high-growth prospects and the need for streamlining, despite being considered a solid defensive play.
Unilever’s decision to separate from Ben & Jerry’s could have additional benefits beyond cost reduction and increased profitability. The ice cream brand has been known for its social activism, which has sometimes put it at odds with its corporate owner. By parting ways, Unilever may be able to appease critics who argue that the brand’s activism is negatively impacting its financial performance. Russ Mould, investment director at AJ Bell, a financial services company, commented, “A side benefit of the brand exiting Unilever’s portfolio is it might quieten the ‘go woke and go broke’ noise, but more widely the reasoning for the decision looks pretty sound.”
Ben & Jerry’s has been involved in various left-wing causes, including the decision to stop selling its ice cream in the West Bank and contested east Jerusalem. Unilever subsequently sold its business interest in Ben & Jerry’s in Israel to its Israeli licensee, allowing the products to be marketed with Hebrew and Arabic labels. A U.S. judge dismissed a lawsuit from Ben & Jerry’s to block this plan in 2022. Most recently, following the Israel-Hamas war, Ben & Jerry’s independent board chair, Anuradha Mittal, called for a permanent ceasefire in Gaza.
As Unilever moves forward with its plans to reduce its workforce and separate its ice cream business, it aims to achieve mid-single-digit underlying sales growth. The company experienced a drop in sales volume of 3.6 percent in 2022 after raising prices by an average of 13.3 percent across its brands. In response, Unilever increased prices by only 2.8 percent last year, resulting in a sales rise of 1.8 percent.
Overall, these changes reflect Unilever’s commitment to maximizing growth and profitability while streamlining its operations. By separating its ice cream business and implementing a productivity program, the company hopes to unlock the full potential of its portfolio and solidify its position as a leading consumer goods company in the global market.
