Unilever food troubles vindicate beauty makeover
30/04/2026 11:39
The author is a Reuters Breakingviews columnist. The opinions expressed are her own. By Aimee Donnellan DUBLIN, April 30 (Reuters Breakingviews) - Fernando Fernández has plenty of evidence to support his plan to ditch food. On Thursday, the Unilever ULVR.L boss released results that showed the group's stock-cubes-to-mayonnaise division as its weak link. Stir in the poor performance of the $125 billion company's former spreads and tea businesses, which haven't thrived under private equity, and the pivot to health and beauty looks ever-more logical. Unilever has spent nearly a decade unraveling its food and drinks empire. In 2017, it sold its spreads business to buyout giant KKR KKR.N. Four years later, it offloaded its tea division to CVC Capital Partners CVC.AS for 4.5 billion euros. Late last year, Fernández spun off the company’s ice cream unit, which includes brands like Magnum MICCT.AS and Ben & Jerry’s. It then went a giant leap further last month, by announcing plans to hive off the division that makes Hellmann’s mayonnaise and merge it with U.S. rival McCormick MKC.N to create a $66 billion food and flavourings giant. The lacklustre performance of food, in results reported on Thursday, shows why the shrinkage strategy makes sense. In the first quarter of 2026, sales in home care grew by over 6%, while beauty and wellbeing and personal care grew by 3.6% and 3.7% respectively. Meanwhile, food only grew by 2.2%. The businesses that Unilever offloaded long ago are hardly doing any better. The bosses of CVC Capital-owned Lipton Teas and Infusions held a call with bondholders on Wednesday, where they revealed a bleak performance in 2025, according to a person with knowledge of the call. Lipton's sales declined from 1.6 billion euros in 2024 to 1.4 billion euros last year. EBITDA fell from 330 million euros in 2024 to 252 million euros in 2025. The KKR-owned spreads business also struggled and only delivered 1% compound annual growth between 2019 and 2025, according to the Financial Times. Shedding food has many benefits. For Fernández, it will allow a greater focus on brands that are already performing far beyond the wider market’s growth. Vaseline, one of Unilever's “power brands”, has enjoyed double-digit revenue growth for the past five years, according to a person familiar with the company's operations. Dove has enjoyed more than 6% revenue growth for 14 consecutive quarters, the same person said. The hope, among shareholders, is that sharper focus will lift Unilever's valuation. The group trades at about 15 times 12-month forward earnings, well below beauty heavyweight L'Oréal OREP.PA on 26 times. The more that Unilever looks like a fast-growing health, beauty and wellness group, rather than a stodgy food conglomerate, the quicker that gap will close. Follow Aimee Donnellan on LinkedIn. CONTEXT NEWS Unilever's first-quarter underlying sales growth beat analysts' forecasts on April 30, driven by increased volumes in emerging markets and demand for its "power brands", including Dove soap and Vaseline. The British company posted underlying sales growth of 3.8% in the three months to March, ahead of the 3.6% growth expected by analysts in a company-compiled consensus. The volume rise was led by so-called power brands, which include Dove, Axe deodorant and Dermalogica skincare. They grew underlying sales by 5%, with 4% volume growth. Magnum Ice Cream, the business spun out of Unilever in 2025, also reported results on April 30. It said that organic sales growth was 4.5% in the first quarter. The company said it was on track to deliver 3% to 5% sales growth in 2026. Shares in Magnum were up 11.3% by 0810 GMT on April 30. KKR is exploring a sale of a spreads business, which includes Flora, that it bought from Unilever, the Financial Times reported on April 30. CVC is putting 210 million euros into the tea business it bought from Unilever, according to a Financial Times report on April 29. Beauty brands like L'Oreal are valued more highly than food businesses https://www.reuters.com/graphics/BRV-BRV/dwpkyylqlpm/chart.png (Editing by Liam Proud; Production by Shrabani Chakraborty) ((For previous columns by the author, Reuters customers can click on DONNELLAN/Aimee.Donnellan@thomsonreuters.com))