Unilever confirms job cuts in food and refreshment split

CEO Alan Jope announced the company will be restructured into five divisions: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. The new set-up sees Hanneke Faber, President Foods & Refreshment, appointed President Nutrition, which will be home to Scratch Cooking, Healthy Snacking, Functional Nutrition, Plant-Based Meat, and Food Solutions. Matt Close, EVP Ice Cream, becomes President Ice Cream, a Business Group in its own right. The overhauls comes amid much speculation about the company’s future after its rejected £50 billion takeover approach for GlaxoSmithKline's consumer healthcare division. The bid was met with a backlash from shareholders and investors, spooked at the steep price tag. The company had also run into criticism for sacrificing returns for an excessive focus on corporate sustainability . Shares then rallied on reports that activist investor Nelson Peltz, owner of the activist hedge fund Trian Partners, had built a stake in the company. Trian’s history of revamping brands – notably Unilever rival Procter & Gamble – encouraged investors that it could also unlock value at the Anglo-Dutch consumer goods giant by demanding it exit low-growth categories and demerge its food division from its home and personal care business. “The fox would now appear to be inside the henhouse,” said Martin Deboo, analyst at investment bank Jefferies. He noted that in 2007 Trian prompted a split into confectionery and soft drinks at Cadbury, which concluded with a listing of soft drinks and an eventual take-out of confectionery by Kraft. Trian also argued successfully for splitting Kraft into Kraft Heinz and Mondelez International, though it was unsuccessful in its fight to engineer a split between drinks and snacks at PepsiCo. Bruno Monteyne, an analyst at Bernstein, had suggested back in the summer of 2021 that Unilever could be a target for Peltz, who would be able to cut through its “suffocating bureaucracy”. In a note to investors, the analysts at Barclays also noted Peltz’s reputation for encouraging company managements to go ‘faster and harder’. “From Unilever’s perspective, the status quo is not an option. It would seem that the stars are aligning with both Unilever management and an activist pushing for more urgency,” they said. It is however believed that Unilever’s shake-up was not prompted by reports of Trian's stake and that the plans had been "in the works for some time". Jope said: “Our new organisational model has been developed over the last year and is designed to continue the step-up we are seeing in the performance of our business. Moving to five category-focused Business Groups will enable us to be more responsive to consumer and channel trends, with crystal-clear accountability for delivery. Growth remains our top priority and these changes will underpin our pursuit of this.” The proposed new organisation model will result in a reduction in senior management roles of around 15% and more junior management roles by 5%, equivalent to around 1,500 roles globally. It does not expect factory teams to be impacted by these changes. In a separate development, an international coalition of institutional investors and individuals have filed a shareholder resolution at Unilever, urging the company to adopt ambitious targets to increase the share of healthy foods in its sales. The coalition of activist investors is led by ShareAction, which last year forced UK supermarket Tesco to reduce its exposure to less healthy food and drink products. The move was the first health-based shareholder resolution filed at a UK-listed company. Ignacio Vazquez, Senior Manager of Healthy Markets at ShareAction, said: “Unilever has long been a sustainability leader. Some even criticise it for being too focussed on ESG. Yet the health profile of the food and drink products it sells remains a blind spot. This is surprising, as the rapid growth of regulation means that health is a critical ESG issue presenting a real financial threat to its business. "By voicing their support for this resolution, Unilever’s investors can help to drive change at the heart of one of the biggest foods and drink manufacturers in the world while also shielding themselves from regulatory and reputational risks.” ShareAction complained that only 17% of Unilever’s food and beverage sales were derived from healthier products. This was a smaller proportion than many of its competitors, including Danone (61%), Nestlé (43%), Kraft Heinz (36%), General Mills (29%) and Kellogg (26%). Dr Mike Nutt, individual co-filer, added: “Whilst working as a GP in the poorer districts of Sheffield, I was constantly struck by the relationship of poor health to poor nutrition. We are experiencing an epidemic of obesity, which is disproportionately affecting the poorer sectors of our society, due to the increased prevalence of cheap, processed foods. “Obesity impacts on so many chronic health conditions and is the main cause of type two diabetes, a condition which is growing exponentially in western populations including the UK.”

Unilever confirms job cuts in food and refreshment split

Unilever says around 1,500 jobs will be cut globally in a business shake-up that will see the company split its foods and refreshment division.

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