The long-anticipated separation of Unilever’s ice cream business is already paying dividends for the consumer goods giant, with second-quarter sales exceeding market expectations and signaling renewed confidence in CEO Hein Schouten’s transformation strategy.
The London-based conglomerate reported organic sales growth of 4.1% for the quarter, comfortably surpassing analyst projections of 3.5%, according to data from LSEG. The performance marks a significant win for Schouten, who has faced mounting pressure from investors to revitalize the company’s sprawling portfolio.
What’s particularly striking is that the ice cream division – housing iconic brands like Ben & Jerry’s, Magnum, and Wall’s – delivered the strongest performance among Unilever’s business units. The division posted a remarkable 5.5% growth despite operating in a competitive category and navigating complex weather-dependent consumption patterns.
“This is precisely why spinning off the ice cream business makes strategic sense,” noted Bernstein analyst Bruno Monteyne in a research note shared with clients yesterday. “The division has unique operational rhythms and growth dynamics that differ fundamentally from Unilever’s other consumer categories.”
The Financial Times reports that Unilever has already begun the complex process of separating the ice cream business, with completion expected by the end of 2025. The move represents the most significant structural change in the company’s 95-year history since the merger of the British soap maker Lever Brothers and Dutch margarine producer Margarine Unie in 1930.
Having covered Unilever for nearly a decade, I’ve observed the company’s ice cream strategy evolve from straightforward seasonal products to premium, year-round offerings. The division now generates approximately €7.9 billion ($8.56 billion) in annual revenue.
During yesterday’s earnings call, Schouten emphasized that the separation would allow both entities to pursue more focused growth strategies. “Our ice cream portfolio requires different capabilities, investment priorities, and performance metrics than our other categories,” he explained. “As standalone operations, both businesses will be better positioned to realize their full potential.”
The spinoff decision follows similar moves by other consumer goods conglomerates seeking to streamline operations and improve agility. Just last month, I attended an industry conference where multiple executives from competing firms privately acknowledged they were closely watching Unilever’s restructuring as a potential blueprint.
Wall Street has responded positively to the news, with Unilever shares climbing 3.2% in London trading. The stock has now gained nearly 8% since the separation announcement in March, outperforming the broader European consumer goods index.
“The question now is whether this performance can be sustained through the transition period,” said Jane Williamson, senior analyst at Morgan Stanley. “Separation processes often create operational disruptions that temporarily impact results.”
Behind the scenes, Unilever is addressing this concern by establishing distinct management teams for both entities well before the formal separation. According to internal sources cited by Bloomberg, the company has already appointed interim leadership for the ice cream business and is conducting an external search for a permanent CEO.
The ice cream division’s strong performance comes despite challenging economic conditions in key markets. Inflation has pressured consumer spending, yet premium offerings like Magnum and Ben & Jerry’s have maintained robust demand. This resilience suggests the standalone ice cream business may be well-positioned to thrive independently.
“Premium indulgence categories have historically demonstrated inflation resistance,” explained Martin Rogers, consumer analyst at Goldman Sachs. “Consumers might cut back on major purchases during economic uncertainty, but small luxuries like premium ice cream often remain affordable treats.”
The Federal Reserve’s recent interest rate pause could further boost consumer confidence in the U.S. market, which accounts for approximately 35% of Unilever’s ice cream sales according to company filings.
Beyond the ice cream division, Unilever reported mixed results across its portfolio. Beauty and wellbeing delivered 3.9% growth, while home care products grew by 4.3%. The nutrition segment underperformed with just 1.8% growth, highlighting the disparate performance across the company’s diverse business units.
CFO Fernando Fernandez emphasized during the earnings call that the separation would enable more targeted investment in both entities. “We’re already seeing benefits from our more focused approach,” he noted. “The separation will accelerate this strategic clarity.”
Industry observers have speculated about potential acquisition interest in the standalone ice cream business once the separation is complete. Private equity firms with consumer goods expertise, including KKR and Blackstone, have reportedly expressed preliminary interest according to sources familiar with the matter.
For now, Unilever appears focused on executing a clean separation while maintaining operational momentum. The company has reiterated its full-year guidance of 3-5% organic sales growth, suggesting confidence in continued strong performance through year-end.
As someone who’s tracked Unilever through multiple strategic pivots, this quarter’s results represent a crucial validation of Schouten’s vision. The ice cream division’s strong performance amidst separation plans demonstrates the potential upside of this bold strategic move – though the most challenging implementation phases still lie ahead.
