Unilever accelerates sale of underperforming food brands

Unilever’s new chief executive, Fernando Fernandez, has announced plans to expedite the sale of underperforming brands in the company’s Foods Europe division, marking a swift shift in its restructuring strategy. Speaking publicly for the first time since his appointment, Fernandez revealed that €1 billion worth of food brands have been identified as unsuitable for the company’s portfolio. This comes shortly after the FTSE 100 group revealed its intention to refocus efforts on its core “power brands.”

Under the leadership of Fernandez, who replaced Hein Schumacher in February, Unilever plans to act decisively. The strategy builds on prior announcements in December 2024, where the group sold two food labels, Unox and Zwan. Fernandez outlined this updated focus during a “fireside chat” with Barclays analyst Warren Ackerman, explaining how brand performance and scalability will dictate current business decisions. Smaller markets totalling €500 million may also face disposal depending on prevailing market conditions.

During his address, Fernandez emphasised a results-oriented approach to management. Each brand, he explained, must “earn the right” to remain within the company’s portfolio. This pragmatic stance highlights Unilever’s drive to concentrate resources where returns are most compelling, free from emotional ties to legacy brands. He confirmed that growth plans for its key food brands remain intact, flagging Knorr and Hellmann’s as prime performers.

Knorr is Unilever’s second-largest brand, while Hellmann’s holds the fifth position. These labels together represent 60 per cent of the Foods Europe division and contribute significantly to the group’s margins and cash generation. Fernandez underscored their value, noting their strong return on invested capital and importance to Unilever’s long-term outlook.

Despite certain shareholders expressing doubts over the overall fit of the food division within Unilever’s integrated portfolio, Fernandez downplayed any immediate restructuring of these core assets. Questions have also surrounded the group’s handling of its ice-cream division, which has been spun off rather than sold or incorporated into a joint venture. Fernandez defended this move as the “most logical option” for maximising shareholder value, though he admitted that alternative avenues are subject to ongoing evaluation.

The decisive leadership of Fernandez signals a significant acceleration in Unilever’s pivot toward its core brands, which currently account for 70 per cent of turnover from only 30 of its 400-plus labels. The renewed push to divest weaker-performing brands indicates the group’s strategic commitment to enhancing operational efficiency and sustaining profitable growth.