Unilever to sell margarine unit
Margarine's fortunes seem to be taking another sad turn, with the owner of Country Crock and I Can't Believe It's Not Butter looking for someone to take the brands off its hands.
Consumer products heavyweight Unilever said Thursday it is seeking to unload its spreads business that has suffered from soft sales in the United States and other developed markets.
Unilever is overhauling its operations and returning billions of dollars to shareholders, in an effort to maximise value after rebuffing a US$143-billion takeover bid by rival Kraft Heinz.
The owner of brands, including Hellmann's and Lipton, said on Thursday that it plans to sell its spreads or margarine division and combine its foods and refreshments units.
The Anglo-Dutch company will carry out a €5-billion (US$5.3-billion) share buyback and raised its dividend by 12 per cent, a move the company said reflected "increased confidence in the outlook for profit growth and cash generation".
Chief Executive Officer Paul Polman said in a statement that he is confident the changes "will accelerate the transformation of Unilever and the delivery of sustainable shareholder value over the long term".
Unilever in February rejected a takeover approach by Kraft Heinz, whose brands include Oscar Mayer, Jell-O and Velveeta. The merged company would have rivalled NestlÈ as the world's biggest packaged food maker by sales, but Unilever had said it would be able to unlock more value for shareholders by remaining independent and overhauling its operations.
The planned divestment of the spreads division is just the latest blow for butter alternatives, which most think of as 'margarine', even if some don't technically conform to the federal definition of the word.
Margarine enjoyed popularity for decades before research emerged in the 1990s about the harms of the trans-fats. Many manufacturers have since reformulated their spreads sold in tubs to remove trans-fats, but the bad health associations have persisted.
In the meantime, butter has benefited from the trend towards foods people see as "real" and consumers' greater willingness to accept more fat in diets. McDonald's has even switched from margarine to butter across its breakfast menu as part of a push to improve perception of its food.
"Butter has a more natural image. I think people have always been a bit suspicious about margarine," said Bonnie Liebman, director of nutrition at the Center for Science in the Public Interest.
Liebman noted butter still has more saturated fat than many alternative spreads, and that the American Heart Association recommends limiting saturated fats to no more than five to six per cent of daily calories.
The decision by Unilever, whose products include Dove soaps and Ben & Jerry's ice cream, to get rid of its spreads is just the latest chapter in margarine's history.
In the 1880s, a federal tax was passed on margarine, which was dinged as being "counterfeit butter " by a lawmaker at the time. Some states even prohibited it being dyed yellow, a move intended to prevent people mistaking it for butter.
It's not yet known who will snap up Unilever's spreads, but others already in the business include ConAgra, which owns Blue Bonnet and Parkay. Even though margarine's image has been suffering for years, overall US sales of margarines and spreads still came to US$1.81 billion last year, according to industry tracker Euromonitor International.
Per capita consumption of butter, meanwhile, surpassed margarine in 2005 and has inched up since, according to data from the US Department of Agriculture.