Unilever is launching two pilots to trial warmer ice cream freezer cabinets, aiming to reduce energy use and greenhouse gas emissions by 20–30 per cent per freezer while ensuring the same ice cream quality and consumer experience. Read more
The federal government has announced $60 million in additional funding to boost the Recycling Modernisation Fund (RMF) and accelerate the uptake of recycled content in plastic packaging and products. Read more
Ekaterra is the world’s leading Tea business, with a portfolio of 34 brands including Lipton, PG tips, Pukka, T2 and TAZO. The business generated revenues of around €2 billion in 2020. Unilever announced the sale to CVC Capital Partners Fund VIII last week.
Meeting customers’ needs was pivotal in Unilever deciding to take on board PLM solutions from Siemens Digital Industries Software. Food & Beverage Industry News explains.
Unilever today has announced a new annual global sales target of €1 billion from plant-based meat and dairy alternatives, within the next five to seven years. The growth will be driven by increasing vegan alternatives from brands including Magnum, Streets, Continental, and Hellmann’s.
The target is part of Unilever’s ‘Future Foods’ ambition, launched globally today with two key objectives: To help people transition towards healthier diets and to help reduce the environmental impact of the global food chain. Unilever has also committed to:
• Halve food waste in its direct global operations from factory to shelf by 2025 – five years earlier than previously committed, as part of the Champions 12.3 coalition target.
• Double the number of products delivering positive nutrition globally by 2025 – defined as products containing impactful amounts of vegetables, fruits, proteins, or micronutrients like vitamins, zinc, iron and iodine.
• Continue lowering calorie, salt and sugar levels across products
o 85 per cent of Unilever’s global Foods portfolio will help consumers reduce their salt intake to no more than 5g per day, by 2022.
o 95 per cent of Unilever’s packaged ice cream will not contain more than 22g of total sugar, and 250 Kcal per serving, by 2025. This is in addition to the company’s children’s ice creams, which have been capped at 110 Kcal since 2014.
Read More: Woolworths to use Primary Connect platform
Unilever has already made progress expanding its plant-based dairy alternatives and reducing food waste. In Australia and New Zealand specifically, Unilever has:
• Accelerated availability of plant-based and dairy alternatives: Including offering dairy-free options of Magnum, Weis and Ben & Jerry’s ice creams. Meanwhile, Unilever Food Solutions is empowering chefs to cook more plant-based meals using vegan products including Hellmann’s Vegan Mayo, Knorr Intense Flavours and Knorr Tomato Powder.
• Significantly reduced food waste: Through longstanding programs to reduce waste to landfill across its Australian factories. Unilever has also donated almost 700,000 servings of food and beverage products including Continental, Knorr, Hellmann’s, Lipton Ice Tea, Pure Leaf and T2 to Foodbank for distribution across Australia and New Zealand. Furthermore, Unilever has positively contributed to Yume Food’s mission to achieve “a world without waste” by preventing over 4,000 kgs of surplus food from going to waste in the last year.
• Enhanced nutritional quality of food products and re-formulated ice-creams with less sugar and fewer calories: Continental’s Nutrish Soups range includes sources of protein or fibre and Future 50 ingredients such as amaranth, quinoa, hemp seed, sweet potato, lentils & sprouted peas. Weis have recently launched mini-sized bars giving Australians portion-controlled options.
“It is widely recognised that the current global food system is inequitable and inefficient. One billion people around the world are hungry while two billion are obese or overweight. One third of all food produced is thrown away. And animal agriculture is the second largest contributor to greenhouse gas emissions after fossil fuels and a leading cause of deforestation, water and air pollution and biodiversity loss,” Hanneke Faber, president of Unilever’s Foods & Refreshment Division, said.
Jessica Fanzo, Bloomberg Distinguished Associate Professor of Global Food & Agricultural Policy and Ethics, Johns Hopkins University and a co-author of the EAT-Lancet report said: “The average person’s daily diet will need to change drastically during the next three decades to make sure everyone is fed without depleting the planet. By improving food production and food environments, transforming eating habits, and reducing food waste, we can begin to solve these problems. Unilever’s commitments are integral to helping people make changes to their diet, with healthier and more sustainable food products that are accessible and affordable for their consumers.”
Unilever has set out a new range of measures and commitments designed to improve the health of the planet by taking even more decisive action to fight climate change. Building on our existing science-based targets to have no carbon emissions from our own operations, and to halve the green-house (GHG) footprint of products across the value chain by 2030, Unilever has announced we will achieve net zero emissions from all products by 2039 – from the sourcing of materials, up to the point of sale in store.
To accelerate action, Unilever’s brands will collectively invest €1 billion (AUD$1.89 billion) in a new dedicated Climate and Nature Fund. This will be used over the next ten years to drive meaningful sustainability action, and build on the work that is already underway, such as Ben & Jerry’s initiative to reduce GHG emissions from dairy farms; Seventh Generation’s advocacy for clean energy for all; and Continental’s support of farmers to grow food more sustainably.
To achieve net zero emissions from all our products 11 years ahead of the 2050 Paris Agreement deadline, Unilever must work jointly with our partners across our value chain, to collectively drive lower levels of greenhouse gas emissions. We will, therefore, prioritise building partnerships with our suppliers who have set and committed to their own science-based targets.
Unilever believes that transparency about carbon footprint will be an accelerator in the global race to zero emissions, and it is our ambition to communicate the carbon footprint of every product we sell. To do this, we will set up a system for our suppliers to declare, on each invoice, the carbon footprint of the goods and services provided; and we will create partnerships with other businesses and organisations to standardise data collection, sharing and communication.
Nicky Sparshott, CEO of Unilever Australia and New Zealand said: “The coronavirus outbreak is a stark reminder of the fragility of our economic system. The ongoing climate crisis is another clear threat to our shared stability, and its impacts are just as complex and challenging to mitigate.
“Businesses and governments across Australia have demonstrated their ability and willingness to step up at this critical moment and pull together to protect our communities. We need to continue working together to tackle the impacts of the coronavirus, whilst also setting our economy on a course to a more resilient, zero-carbon future that leaves no-one behind.”
Long-term economic stimulus packages must have climate action at their core
Unilever Australia has partnered with WWF Australia in calling on leaders to make Australia the world’s leading exporter of renewable energy by 2030. A new EY report commissioned by WWF – Australian renewable export COVID-19 recovery package – found an economic recovery based on renewables would boost local manufacturing, grow existing sectors, unlock new industries and 100,000 jobs, increase exports, reskill our workforce, and reduce carbon pollution. The report also revealed that every dollar of stimulus spent on clean projects generates nearly three times as many jobs per dollar than investment in fossil fuel projects.
“As our Government prepares to unleash some of the biggest stimulus packages Australia has ever seen, there is an incredible opportunity to use this moment of crisis and renewal to galvanise a more sustainable and future facing economy. Beyond short-term emergency measures, long-term economic stimulus packages must put climate action at their core and build a better future – one that ensures clean air, more jobs and a healthy, safe environment,” said Ms Sparshott.
“We need to transition away from high-carbon pathways, and public spending must align with the most ambitious goals of the Paris Agreement – limiting global warming to a maximum of 1.5ºC and reaching net-zero emissions by 2050 at the latest.
In January 2020, Unilever Australia joined Unilever globally in switching to 100% renewable electricity to power all of our operations, well ahead of our end-2020 target. The majority of Unilever’s renewable electricity supply is met through a five-year Power Purchase Agreement (PPA) with energy retailer Red Energy, which directly supports a number of wind and solar farms across NSW, Victoria & South Australia. The remainder is covered by purchasing Renewable Energy Certificates.
As a result of making this switch, Unilever will reduce its greenhouse emissions by about 30,840 tonnes of CO2, each year. This is equivalent to the emissions generated by powering more than 3,600 Australian homes or 6,600 cars annually.
“Our switch to renewable electricity is not only good for the environment, but it also makes good business sense by delivering a combination of flexibility, cost savings and certainty on energy costs. It also gives our consumers reassurance that they are purchasing sustainably produced products, for which demand is increasingly growing,” said Ms Sparshott.
“This local milestone demonstrates how we are decoupling our growth from our environmental impact. But there is still more to be done and we recognise the ongoing urgency of addressing climate change, which is why we have set new actions to accelerate change.”
Collective action will be critical to creating a zero-carbon future for Australia
“The race to zero must be a collective effort, and business alone cannot drive the transition at the speed that is required. Instead, it requires coordinated action by multiple organisations from across all sectors. Nothing is more powerful than businesses demonstrating to governments that accelerated progress in de-carbonising the economy is possible. We’re doing this through ambitious targets within our own operations and we are also working in partnership with others to scale up action around the world,” Sparshott said.
“The planet is in crisis, and we must take decisive action to stop the damage, and to restore its health. Last year, we set out a plan to tackle perhaps the most visible environmental issue we have in the consumer goods industry: plastic packaging. We set ourselves new and stretching targets that include halving our use of virgin plastic and helping collect and process more plastic packaging than we sell. While it’s critical to address the impact that our products have at the end of their life, it’s just as important to continue to look at the impact they have on the planet at the start of their life – in the sourcing of materials – as well as in their manufacture and transport. We will reduce the impact that our products and our operations have on the environment, and we will do our part to bring the planet back to health,” Alan Jope, Unilever global CEO said.
Unilever Australia & New Zealand (ANZ) will start producing hand sanitiser locally as it redirects existing deodorant production facilities to help meet national demand and help in the fight against COVID-19.
The new 150ml aerosol hand sanitiser, which contains 70 per cent alcohol and kills 99.99 per cent of germs without water, will be produced in NSW, marking the return of Lifebuoy’s local production to Australia.
To ensure Australians and New Zealanders in need have access to this highly sought-after product, Unilever will donate 150,000 sanitiser cans – valued at over AU$1m ($7.50 RRP/can) – to its longstanding partner, Foodbank, to manage distribution across Australia and New Zealand.
The sanitiser will also be made available to the wider public and will hit shelves by the end of May in supermarkets. Nicky Sparshott, CEO of Unilever Australia & New Zealand, said, “Unilever has a long history of contributing to personal hygiene in Australia and New Zealand and across the world – beginning with the creation of Sunlight soap by Lord Lever in the late 1880s.
“We believe we have a social, medical, and moral obligation to make hand hygiene readily available. That’s why we’re responding to Government calls to action to increase supply of essential products by rapidly innovating and redirecting some of our Australian manufacturing.” 1
In addition to the AU$1m donation of hand sanitiser, Unilever will also donate $1m worth of essential homecare, personal care and food products to Foodbank to distribute across Australia, including leading household brands Comfort, Sunsilk, Love Beauty and Planet, Simple and Continental.
Unilever has also contributed funds to help Foodbank NSW & ACT with contingency staff costs, following volunteer number reductions as a result of social distancing measures.
“We are so grateful for this incredibly generous donation of much-sought-after sanitiser and other essential household items from Unilever,” said Brianna Casey, CEO of Foodbank Australia.
“Foodbank has seen a 50 percent increase in demand for food and grocery relief due to job loss and small business closures across the country and donations such as food, personal care and cleaning products are critical.”
“We know our brands can play a big role in bringing both hygiene and comfort to everyday life, particularly while we all spend more time than ever at home,” said Sparshott. “Whether it be providing a nourishing meal for the family, or keeping the home clean, Unilever is proud to play its part in helping Australian and New Zealand families stay safe amid the COVID-19 pandemic.”
Unilever brands rally together to protect the lives and livelihoods of Australians Through its portfolio of purpose-led brands, Unilever will continue to explore other ways to support the local community.
Other support provided to date, includes: – donating Dove soap to the NSW Department of Education for distribution to schools experiencing shortages; and Unilever Food Solutions partnered with @Yume to create a nation-first, online marketplace for food distributors to address market imbalances.
Unilever has announced a wide-ranging set of measures to support global and national efforts to tackle the coronavirus (Covid-19) pandemic. The company’s actions are designed to help protect the lives and livelihoods of its multiple stakeholders – including its consumers and communities, its customers and suppliers, and its workforce.
Consumers and communities Unilever will contribute $182m to help the fight against the pandemic through donations of soap, sanitiser, bleach and food. This includes:
• A product donation of soaps and sanitiser of at least $91m to the COVID Action Platform of the World Economic Forum, which is supporting global health organisations and agencies with their response to the emergency. In addition to the supply of soap, Unilever will adapt its current manufacturing lines to produce sanitiser for use in hospitals, schools and other institutional settings.
• Product donations, partnerships and handwashing education programmes, delivered through national health authorities and NGOs, to support local communities most at need.
In Australia and New Zealand, Unilever’s factories are operating 24/7 to help keep shelves across Australia and New Zealand stocked with essential food, personal care and cleaning products. As the situation evolves in Australia and New Zealand, Unilever will continue working closely with its partners, customers, industry groups, government and the wider public to offer timely support wherever possible.
For example, Unilever responded quickly to donate Dove soap to the NSW Department of Education for distribution to schools experiencing shortages due to stockpiling. Unilever has also provided funding to help Foodbank NSW and ACT employ paid casuals in lieu of corporate volunteer groups that have been cancelled due to new social distancing rules.
This will help Foodbank continue supporting Australians facing hardship, particularly as a result of the coronavirus. Customers and suppliers Unilever will offer $912m of cash flow relief to support livelihoods across its extended value chain, through:
• Early payment for our most vulnerable small and medium sized suppliers, to help them with financial liquidity.
• Extending credit to selected small-scale retail customers whose business relies on Unilever, to help them manage and protect jobs.
Workforce Unilever will protect its workforce from sudden drops in pay, as a result of market disruption or being unable to perform their role, for up to three months. We will cover our employees, contractors and others who we manage or who work on our sites, on a full or part-time basis. This will apply to workers not already covered by government plans or by their direct employer.
Unilever has announced that Nicole Sparshott, the CEO of its speciality teas business T2, has been appointed CEO of Unilever Australia and New Zealand (ANZ), after Clive Stiff decided to retire from the business following eight years in the role and 34 years in fast moving consumer goods.
Clive joined Unilever in 2012 and has been a transformative leader throughout his tenure. He is credited with driving purpose-led growth, leading the digitisation of the ANZ business as a pioneer for Unilever globally, leading a number of M&A initiatives, and championing sustainability, diversity and inclusion both within the company and in external forums.
During his time leading Unilever ANZ, he has also served in the Male Champions of Change movement, on the Board of the Business Council for Sustainable Development Australia, on the Advisory Council of UNSW Business School and as chair of the Australian Food & Grocery Council.
Nicole Sparshott (Nicky) will retain leadership of the T2 business as Global T2 CEO in addition to her role as CEO for Unilever Australia & New Zealand. She will assume the role from the beginning of April 2020 and will report to Unilever’s global chief operating officer, Nitin Paranjpe.
Sparshott brings to the role deep experience across general management, brand development and marketing, combined with a passion for purpose-led business. She joined Unilever ANZ in 2006 as marketing director for foods, ice cream and beverages, before moving to Singapore to take up various leadership roles in the refreshment business across Asia.
Following Unilever’s acquisition of T2, she was appointed CEO T2 in 2016; and has since accelerated the business through market expansion, channel diversification and driving transformation across the value chain to enable its recently-awarded B-Corp accreditation. Prior to joining Unilever, Nicky held multi-market roles at P&G, The Coca-Cola Company and at advertising agency George Patterson. She serves on the boards of WWF-Australia and Global Sisters.
“It’s been an absolute privilege to lead Unilever Australia & New Zealand for the past 8 years. I leave with a strong sense of pride in what our talented team has achieved together over this time – from continuing to deliver great brands and innovation for our consumers and retail partners, through to better serving our society and planet with the way we do business. I’m also confident that I’m leaving the business in very good hands under Nicky’s leadership,” Stiff said.
“Having started my Unilever career in the ANZ business, I’m delighted to be returning to Australia to lead this fantastic organisation. Consumer trends and preferences are evolving rapidly, providing brands with an opportunity to be more innovative and dynamic than ever before. By leading Unilever ANZ during a period of significant change, Clive has laid a strong foundation of agility in the business, paving the way for our next stage of growth in this market,” Sparshott said:
Stiff will continue with the business until March 31 to ensure an orderly transition to the new CEO.
Unilever has announced that by 2025 it will eliminate more than 100,000 tonnes of plastic packaging and collect and process more plastic packaging than it sells.
The company, owner of brands including Lipton, Ben & Jerry’s and Walls Ice Cream, has announced new commitments to reduce its plastic waste and help create a circular economy for plastics
Unilever has confirmed that by 2025 it will:
- Halve its use of virgin plastic, by reducing its absolute use of plastic packaging by more than 100,000 tonnes and accelerating its use of recycled plastic.
- Help collect and process more plastic packaging than it sells
This commitment makes Unilever the first major global consumer goods company to commit to an absolute plastics reduction across its portfolio.
Unilever is already on track to achieve its existing commitments to ensure all of its plastic packaging is reusable, recyclable or compostable by 2025, and to use at least 25 per cent recycled plastic in its packaging, also by 2025.
“Plastic has its place, but that place is not in the environment. We can only eliminate plastic waste by acting fast and taking radical action at all points in the plastic cycle,” said company CEO Alan Jope.
“Our starting point has to be design, reducing the amount of plastic we use, and then making sure that what we do use increasingly comes from recycled sources. We are also committed to ensuring all our plastic packaging is reusable, recyclable or compostable.
“This demands a fundamental rethink in our approach to our packaging and products. It requires us to introduce new and innovative packaging materials and scale up new business models, like re-use and re-fill formats, at an unprecedented speed and intensity.”
Unilever’s commitment will require the business to help collect and process around 600,000 tonnes of plastic annually by 2025. This will be delivered through investment and partnerships which improve waste management infrastructure in many of the countries in which Unilever operates.
READ MORE: Preventing a global recycling armageddon
“Our vision is a world in which everyone works together to ensure that plastic stays in the economy and out of the environment. Our plastic is our responsibility and so we are committed to collecting back more than we sell, as part of our drive towards a circular economy. This is a daunting but exciting task which will help drive global demand for recycled plastic,” said Jope.
Since 2017, Unilever has been transforming its approach to plastic packaging through its ‘Less, Better, No’ plastic framework.
Through Less Plastic Unilever has explored new ways of packaging and delivering products – including concentrates, such as its new Cif Eco-refill which eliminates 75 per cent of plastic, and new refill stations for shampoo and laundry detergent rolled out across shops, universities and mobile vending in South East Asia.
Better plastic has led to pioneering innovations such as the new detectable pigment being used by Axe (Lynx) and TRESemmé , which makes black plastic recyclable, as it can now be seen and sorted by recycling plant scanners, and the Lipton ‘festival bottle’ which is made of 100% recycled plastic and is collected using a deposit scheme.
As part of No plastic, Unilever has brought to the market innovations including shampoo bars, refillable toothpaste tablets, cardboard deodorant sticks and bamboo toothbrushes. It has also signed up to the Loop platform, which is exploring new ways of delivering and collecting reusable products from consumers’ homes.
Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. The world’s 50 most valuable food brands are included in the Brand Finance Food 50.
Combining the values of these brands based on ownership reveals the brand portfolio values of the FMCG corporate giants. Unilever’s total portfolio value is US$42.9 billion, more than double that of KraftHeinz, which recently attempted a takeover of the Anglo-Dutch company.
Unilever is a major UK employer, well-known for its business ethics and focus on sustainability. Dozens of its brands, such as Marmite, Colmans and PG Tips, have achieved ‘national treasure’ status in the UK and beyond. So when KraftHeinz (whose brand portfolio is worth just US$20.2bn) launched its bid, there was widespread surprise and trepidation. Eyebrows were raised in UK government circles and the upper echelons of business too, as the bid appeared to confirm the vulnerability of British firms to takeover by foreign counterparts following the Brexit vote.
In the event, Unilever’s CEO Paul Pohlman rebuffed the US$143 billion deal, which was seen to significantly undervalue the company. Brand Finance’s CEO David Haigh comments, “Unilever has one of the world’s most valuable brand portfolios, more than double the value of KraftHeinz. Quantifying this and bringing it to the fore will be key to defending any future bids or ensuring that shareholders receive fair value.”
The size and scope of the world’s biggest food brand portfolios can be found in the Brand Finance Food & Beverage 2017 report. Click here to access the document.
In general, the last year has proved challenging for food brands. Brands with significant confectionary lines have had the most difficulty as concerns around health eat into revenues. Kraft, Hershey’s, Mars and Nestle have lost 4%, 10%, 14% and 17% of their brand value this year respectively. This trend is global, with Chinese snack food manufacturers Want Want and Master Kong dropping significantly too. Kellogg’s brand value has dropped 3%. Demand for cereal is faltering as consumers explore a wider variety of breakfast options.
The dairy segment is holding up a little better than the food sector as a whole. This year’s fastest growing food brand is Australia’s largest dairy brand, Devondale. Its brand value is up 35% year on year to US$1.5 billion. Devondale’s growth is the result of changing consumer tastes and growing demand in South East Asia. Asia’s growing taste for dairy bodes well for Yili. It is barely known in the West, but thanks to marketing initiatives such as sponsorship of China’s Olympic team, it scores very highly on brand equity measures such as Consideration, Familiarity and Recommendation in China, its domestic market. Yili is now the world’s second most valuable (and the strongest) dairy brand.
Kraft Heinz has withdrawn its US$143bn offer to buy Unilever because it judged by Unilever as too low.
In a joint statement, the companies said: “Unilever and Kraft Heinz hereby announce that Kraft Heinz has amicably agreed to withdraw its proposal for a combination of the two companies.
“Unilever and Kraft Heinz hold each other in high regard. Kraft Heinz has the utmost respect for the culture, strategy and leadership of Unilever.”
As the Independent reports, if the deal had been successful the resources of Kraft Heinz and Unilver combined would have been enough to rival the world’s biggest packaged food maker, Nestle.
Unilever has committed to ensuring that all of its plastic packaging is fully reusable, recyclable or compostable by 2025.
The company has also committed to renewing its membership of the Ellen MacArthur Foundation for another three years and endorsing and supporting that organisation’s New Plastics Economy initiative. As part of this, it will publish the full “palette” of plastics materials used in its packaging by 2020 to help create a plastics protocol for the industry.
Unilever has also committed to investing in proving, and then sharing with the industry, a technical solution to recycle multi-layered sachets, particularly for coastal areas which are most at risk of plastics leaking into the ocean.
The company has already committed to reducing the weight of the packaging it uses this decade by one third by 2020, and increasing its use of recycled plastic content in its packaging to at least 25 per cent by 2025 against a 2015 baseline, both as part of the Unilever Sustainable Living Plan. In 2015, it achieved its commitment of sending zero non-hazardous waste to landfill across its manufacturing operations.
“Our plastic packaging plays a critical role in making our products appealing, safe and enjoyable for our consumers. Yet it is clear that if we want to continue to reap the benefits of this versatile material, we need to do much more as an industry to help ensure it is managed responsibly and efficiently post consumer-use,” said Paul Polman, Unilever CEO.
As part of its commitment, the company will ensure that by 2025, it is technically possible for its plastic packaging to be reused or recycled and there are established, proven examples of it being commercially viable for plastics re-processors to recycle the material.
It has been a very busy few weeks for food behemoth Nestlé. Currently it is in advanced discussions to launch a joint venture with British ice cream manufacturer R&R, owned by private equity firm PAI Partners.
Those whose memories last longer than two weeks will remember that the company has repeatedly stated that it aims to become a leading manufacturer in the health and wellness industry. So what does this move mean for the allegedly health-focused Nestlé asks Jack Skelly, Euromonitor’s International’s confectionery expert.
Although cynics may suggest that Nestlé has an extremely flabby definition of what constitutes “health”, the reality is that indulgence is an extremely important source of revenue for the company.
In 2014, confectionery, ice cream and frozen dessert sales accounted for nearly a third – or US$24 billion – of the company’s total food sales.
Of that US$24 billion, 49 per cent stems from Western Europe and North America. However, these are two markets where many snacking companies are enduring a difficult time, with chocolate confectionery sales achieving just 2 per cent and 4 per cent CAGRs, respectively. By broadening the reach of Callier, Nestlé has smartly moved into the premium segment of chocolate, which is substantially outperforming the overall chocolate market in these two regions.
Nestlé is looking to consolidate its share in a number of fast growing markets, including Egypt, Brazil, and Western Europe. Combined, ice cream and frozen desserts have grown by US$4.9 billion in these three markets between 2010 and 2015. In the latter two markets, the company is significantly overshadowed by Unilever, the world’s largest ice cream manufacturer with 21 per cent global market share. Nestlé has been underperforming, seeing market share decline from 12 per cent to 10 per cent over the last five years.
Both Nestlé and Unilever have been selling off their slow growing food business parts, but ice cream is seen as a growth area, with the global market set to rise to US$107 billion by 2020, up from US$71 billion currently.
Nestlé has a long-standing working relationship with R&R, with whom it has licensing agreements in place in a number of countries. R&R is extremely strong in Western Europe, where it manufactures a vast range of private label products and ice cream for the likes of Mondelez and Mars.
The company has needed to focus on reversing the fortunes of its ice cream business in Western Europe for some time. Thus, the joint venture is certainly in harmony with a strategic priority for Nestlé.
The partnership with R&R also provides Nestlé with a number of options in ice cream. It could move into a more premium, dairy based ice cream mould.
This is something that Unilever has had significant success with in relation to its Magnum, Carte D’Or and Ben & Jerry’s ranges, which have contributed an additional US$658 million in sales in Western Europe since 2015.
However, given Unilever has so effectively cornered this market, an alternative option is to focus on the mass market. Given R&R has extensive expertise in producing private label goods, which are generally aimed at as wide an audience as possible, this could be logistically easier to achieve.
In the medium term, Nestlé certainly has the financial wherewithal to purchase R&R outright. Whether the company will do this is a different question. Certainly, it goes against the health message that features so prominently in Nestlé’s annual reports and investor calls.
It may be that Nestlé will stay true to its newly found principles, and eventually spin off its ice cream division in several years’ time. However, considering R&R has already been subject to cost-cutting measures during the tenure of PAI Partners, it will be interesting to see how Nestlé could possibly improve efficiencies further, and how it could boost values further.
Ultimately, with R&R providing such a useful fit, and with ice cream being such a significant cash generator, we may hear Nestlé continue with its Janus-faced approach to business for some time to come.
Euromonitor International Food Analyst Lianne van den Bos noted that, "If the venture goes ahead, Nestlé will be further removed from its aim to be the world’s leading nutrition, health and wellness company. In 2014, a third of Nestlé packaged food sales were generated by its ice cream and chocolate divisions, combine that with its recent global launch of premium Swiss chocolate brand Callier and the company’s health and wellness vision is becoming blurred."