Strategic Shift: Factors that Led to the Demerger
For many years Unilever has owned a multitude of brands selling stuff such as beauty products and ice cream. Under the ice cream category, brands such as Magnum and Ben & Jerry’s have stood out from the very beginning. While this consolidation made Unilever very large, it was also followed by a myriad of complexities.
Ice cream works differently than other Unilever products—since it needs cold storage and is a weather-specific food choice, it became costly and unpredictable to maintain, unlike the beauty products that sell steadily throughout the year.
Consequently, the demerger was first proposed in 2024, keeping in mind the focus of Unilever on faster-growing segments—personal beauty, healthcare, and well-being products would keep track of the company’s efforts to simplify operations.
“The separation of ice cream for me was very, very important to continue accelerating our performance and competitiveness,” CEO Fernando Fernandez said at an event hosted by JPMorgan.
Market response to the demerger
There has been a mixed response from the investors. While many have welcomed the demerger cheerfully, others are somewhat doubtful of the future results of the same. The positive response was guided by the fact that the ice-cream segment traditionally operates on lower margins compared to Unilever’s core beauty and personal care divisions. This separation would empower TMICC to work independently and pursue its very own growth strategy.
Investors now hold shares in two separate entities—Unilever and TMICC—leading to the creation of a more diversified portfolio. Shareholders are not adversely affected by the demerger, as their investments are now effectively split between two distinct businesses.
Rebirth of TMICC
As TMICC becomes the world’s largest independent ice cream company, it incorporates within itself the global power brands, such as Magnum, Cornetto, and Ben & Jerry’s.
As a standalone business, TMICC now operates in an independent decision-making market, instead of aligning with Unilever’s broader business strategy. This structural change separates ice cream operations from Unilever’s other categories.
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