Unilever vs. Ben & Jerry's: Ice Cream War
Unilever, the consumer goods giant, is making a monumental move by spinning off its entire ice cream business, known as the Magnum Ice Cream Company, with a planned listing in mid-November. This isn't just about selling off a few brands; it's a strategic overhaul led by CEO Fernando Fernandez to create a more focused portfolio and boost margins.
The new independent company will house some of the world's most iconic frozen treats, including the luxurious Magnum, the socially conscious Ben & Jerry's, the classic Wall's, and the delightful Cornetto. Unilever is banking on this new entity to achieve an average annual organic sales growth of 3-5% in the medium term, surpassing the ice cream business's historical 3% average. This is a crucial test, as the global ice cream market is projected to swell to nearly $106 billion by 2029, up from an estimated $88 billion now.
Unilever's ice cream division was a powerhouse in 2024, generating 7.9 billion euros ($9.3 billion) in revenue. While it was their fastest-growing category in Q2 with 7.1% underlying sales growth, it has historically lagged in terms of margins. This spin-off aims to address that by allowing the new company to enhance productivity and streamline its complex "cold" supply chains, targeting 500 million euros in medium-term savings.
Example: Think of it like a parent company deciding its diverse children (different brands) would thrive better with more autonomy. Just as Kraft Heinz and Keurig Dr Pepper have recently explored or announced similar splits to unlock value and growth, Unilever is following suit, hoping to create a leaner, more agile, and ultimately more profitable ice cream powerhouse to compete with rivals like Nestle-backed Froneri.
While Unilever is busy painting a rosy picture for investors, one of its most famous brands, Ben & Jerry's, is stirring up its own kind of rebellion. The U.S. brand, known for its outspoken social activism and quirky flavors like Chubby Hubby, seized the spotlight at the investor day to renew its call for its own spin-off.
The core of the conflict? Ben & Jerry's believes an independent spin-off is essential to protect its social values, which have repeatedly clashed with its corporate parent. This tension dates back to at least 2021 when the ice cream maker announced it would stop selling in the Israeli-occupied West Bank. More recently, Ben & Jerry's has sued Unilever over alleged attempts to silence its voice and has openly called the conflict in Gaza a "genocide" – a highly unusual stance for a major U.S. brand.
Example: Imagine a rock band (Ben & Jerry's) signed to a major label (Unilever). The band wants to sing about social justice, but the label worries it might alienate some fans or investors. Ben & Jerry's founder, Ben Cohen, even protested outside the London hotel where the investor day was held, chanting to "free Ben & Jerry's."
However, Peter ter Kulve, the new CEO of Magnum Ice Cream Company, was unequivocal. "The business is not for sale. It's fully integrated in Unilever, in the Magnum Ice Cream Company," he stated to investors. Unilever has consistently maintained that Ben & Jerry's comments reflect the views of its independent social mission board, not the broader corporation. This stand-off highlights a significant challenge for the new firm: how to balance the unique, activist identity of a brand like Ben & Jerry's with the commercial goals of a large, publicly traded company.
The new Magnum Ice Cream Company faces more than just internal squabbles. It's entering a market increasingly shaped by evolving consumer preferences and health trends. One major consideration is the investor appetite for "sugar-heavy products" at a time when health is a growing concern globally. With initiatives like "Make America Healthy Again" and the rising popularity of GLP-1 weight loss drugs, the future of indulgent treats is under scrutiny.
Despite these headwinds, Magnum's leadership remains optimistic. They stated that GLP-1 drugs should have "limited impact" on their business. Their strategy involves not only driving productivity savings but also continuing to innovate and appeal to consumers looking for both indulgence and potentially healthier options within the ice cream category. The challenge will be to adapt their portfolio to these shifting tastes while maintaining the strong brand loyalty built over decades.
Q2. What are Unilever's primary motivations for spinning off its ice cream business into a separate company?
A. Unilever aims to streamline its portfolio, enhance productivity, and boost margins by creating a more focused and agile ice cream business. This move is part of a broader strategy to unlock value and drive growth across its various divisions.
Q3. How does the new Magnum Ice Cream Company plan to address concerns about sugar-heavy products and the rise of weight loss drugs like GLP-1s?
A. The Magnum Ice Cream Company is targeting 500 million euros in productivity savings and expects GLP-1 drugs to have a "limited impact" on its business. Their strategy will likely involve innovation, portfolio diversification, and adapting to consumer trends while emphasizing the indulgent appeal of their core products.