Splat! Unilever drops its ice cream

You find yourself in charge of a large, underperforming corporation. You have a choice. You can either go out and buy something which you think will add growth, or you can split off bits which you have decided don’t fit. You could, of course, concentrate on making what you’ve got work better, but that doesn’t look very dynamic. It’s much more like hard work, and generates no fees for all those hungry advisers.

This week’s big corporation looking for dynamism is Unilever, traditionally described as the fats-to-soaps conglomerate. The newish CEO has decided that ice cream doesn’t fit with Marmite or Dove soap, and so it will either be sold or, failing that, given away to Unilever’s existing shareholders. The shares, as us holders know only too well, have gone nowhere in seven years. On this exciting news, they merely twitched a bit.

This sad performance is hardly surprising. Quite apart from trading, Unilever’s record is, ahem, mixed. It has bought expensively and sold businesses cheaply. It narrowly avoided being captured when its Dutch directors plotted to take the listing to Rotterdam (!) until the shareholders revolted at the last minute. It went enthusiastically down the ESG rabbit hole until it was mocked back up to the daylight by Terry Smith. 

Unilever should be a great company. It has the sort of reach to consumers in growing markets in the Indian sub-continent that takes decades to build up. Hindustan Unilever, its quoted associate, is valued at about £50bn, compared to £100bn for the whole of Unilever. Competitors like Nestle or Procter & Gamble have had soggy patches and recovered. 

There’s a deal of ruin in an established multinational selling things which will always be needed. The hard graft lies in improving the way it’s done. The danger with this round of business sales is the familiar one: something must be done, this is something, and therefore it must be done.

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