Kamothe
Agency News

For food company Unilever, the future is bright

Unilever is a mega-company selling a huge range of food items and other daily essential products through a wide variety of brands. From sauces, drinks, and pantry items to cleaning products and toiletries, Unilever has a very broad business model. It is based in the UK but active across many countries, including India, with many millions of people buying its products.

Sometimes, covering such a wide area of the consumer market can be both a blessing and a curse for a company like Unilever. Growth is great, because it brings in new customers and more revenue to multiply and expand the company even further. On the other hand, the world of business can be difficult. Sometimes, the greatest sign of success is making the tough choice to cut back your product range.

In recent years, the sectors where Unilever operates have taken a substantial hit thanks to global factors outside the company’s control. The outbreak of wars in Europe and the Middle East has hit supply chains of many industries, including food. Meanwhile, we are still feeling the effects of the effective shutdown of the global economy during the Covid-19 pandemic.

Food inflation remains high, as do interest rates from central banks. Consumers continue to feel the squeeze on their wallets of the increased cost of living, which is affecting their purchasing decisions. Prices of many products continue to climb, and many consumers are still finding it difficult to make ends meet. That has a knock-on effect for companies like Unilever.

It is against that backdrop that Unilever recently made a significant announcement: that it is hiving off its ice cream business. Brands like Magnum and Ben & Jerry’s, which sell ice cream around the world, will be cut off from the main Unilever business and kept separate. Unilever has even indicated that it is open to selling off its ice cream business altogether, washing its hands of the ice cream trade.

Managing so many brands, as Unilever does, can feel like spinning plates. It can be challenging to balance everything. Sometimes, new and unique challenges emerge. In recent years, ice cream brand Ben & Jerry’s has presented one of the more difficult challenges a company like Unilever will ever have to face.

Ben & Jerry’s has a penchant for political activism. But unlike other brands, which may seek to use politics to enhance their sales and marketing, Ben & Jerry’s pursued politics at all costs. It made political campaigning its primary mission, demoting profitmaking to second place. Anuradha Mittal, who has run Ben & Jerry’s in recent years, also runs the Oakland Institute, a political pressure group.

For that reason, Ben & Jerry’s has adopted many controversial positions, including upsetting its American customers by choosing July 4th, America’s Independence Day, to declare that America “exists on stolen Indigenous land”. Equally, environmental campaigning led Ben & Jerry’s to boycott palm oil, a key ingredient in ice cream.

There is a misconception, promoted by Ben & Jerry’s, that producing palm oil fuels deforestation. In fact, the opposite is true: switching away from palm oil is likely to cause more deforestation. That is because other oils are much less land-efficient than palm oil. Boycotting palm oil means switching to rapeseed, soybean, olive, or some other oil, which takes up more land, and therefore would mean more, not less, deforestation.

Crucially, Ben & Jerry’s ignored progress which has been made in recent years to make palm oil yet more sustainable. Malaysia, which provides much of the world’s palm oil, has seen great strides forward in this area thanks to a range of new schemes within the palm oil industry.

For example, 83% of Malaysian palm oil is now produced under a ‘no deforestation, peat and exploitation’ commitment. Thanks to the sustainability trend, there has been a sharp reduction in forest loss, according to Global Forest Watch reporting from June 2023. Using sustainable palm oil is the eco-friendly choice.

When combining politics with commerce, it is important to get the facts right and keep your eye on the ball. Unfortunately, Ben & Jerry’s fell into the trap and abandoned palm oil, causing difficulty for its supply chains and leading it into a doomed public campaign against palm oil. This may have been the straw that broke the camel’s back, causing Unilever to call it a day and conclude its ice cream business.

The case of Unilever goes to show how caution and realism are needed for a business, large or small, to succeed in today’s difficult climate. By getting out of the ice cream business, Unilever has made its future brighter. 

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