LONDON — On July 1, 2015, Unilever established its Baking, Cooking and Spreads (B.C.S.) business as a stand-alone entity within its Foods business unit. The move came at a time when the business was struggling and company chief executive officer Paul Polman said he would wait a year to see how the business performed before deciding what next steps to take. During the Bernstein 13th Annual Pan-European Strategic Decisions Conference, held Sept. 20-22 in London, it appears management’s focus is now on preserving the business rather than growing it.
The B.C.S. business includes such brands as Flora, Country Crock and I Can’t Believe It’s Not Butter. The division covers developed markets and is not focused on emerging markets.
|Amanda Sourry, president of Unilever's Foods business unit|
“It’s just over a year since we set it up as a separate, focused operation but within our Foods business …,” said Amanda Sourry, president of the Foods business unit, on Sept. 21. “And in the year that we’ve had the standalone operation, we’ve seen markets continuing to contract in North America and Europe, which is where we’re focused within B.C.S., and we’ve also seen increasing competition as a result of the decrease in butter prices in many of those markets.”
She said Unilever is seeing “some green shoots” from the division in terms of consumer response to recent innovation programs. One effort is related to the relaunch of Flora and the fact that the I Can’t Believe It’s Not Butter returned to “flat growth” during the first part of the year.
“The team is very focused on making sure that we are making the right portfolio choices on this business, that we’re driving innovation into relevant on-trend segments and we’re very aggressive in terms of looking at every cost line on the business so that we do our role as far as preserving value in the portfolio is concerned,” Ms. Sourry said.
Preserving the value of the business was a key theme of additional comments made by company representatives during the question and answer portion of the presentation.
|Graeme Pitkethly, c.f.o. of Unilever|
“This is a business that as most people know is very profitable and it generates a lot of cash,” said Graeme Pitkethly, chief financial officer, during the presentation. “Therefore, it generates a lot of value. The words that Amanda used in the presentation were ‘preserve value.’ That’s exactly how you think about that business.”
Mr. Pitkethly added that it would be nice if the rate of category declines slowed, but it’s not an imperative for the company.
“What’s an imperative is that we manage the business to preserve the value in the business and actually its options for us …,” he said.
By comparison, Ms. Sourry said during the presentation that Savory and Dressings, two other divisions within the Foods business unit, are growing in the range of 4% to 6% annually and are profitable.
“I think as a contextual point, we’ve gone through this period of divesting of some of our Foods businesses that didn’t make strategic sense for us,” she said. “So, if you go back to 2010 and onwards, there’s (about £3 billion) of Foods turnover that we've disposed of. I think that now gives us a much stronger (and) focused portfolio …”
In 2015, Unilever’s Foods business generated sales of $14.1 billion.