The end of last year saw Unilever cut ties with its ice cream business, resulting in The Magnum Ice Cream Company (TMICC) becoming a standalone business.
The demerger followed other brand divestments from the FMCG giant, forming part of a strategy to simplify its operations and focus its portfolio.
In a statement on its former ice cream division, Unilever noted that its misalignment with the rest of the business had become “increasingly apparent” due to TMICC’s seasonality, capital intensive model and cold logistics operation.
Unilever said the demerger would enable it to place effort and resource more effectively behind brands and categories that “enjoy complementary operating models”.
Room to innovate
But it’s not just Unilever that’s set to benefit from this breakup, with TMICC’s head of country UK&I Jamie Farrell, explaining that the change will remove previous blockers and allow the business to enter into occasions and categories with far more agility.
“It’s about no dilution of priorities, no dilution of investment, of focus, of effort,” he told Food Manufacture.
According to Farrell, the business spends around twice as much on media campaigns than all its ice cream competitors put together, with its biggest ever spend this year. This new-found autonomy will allow TMICC to support its innovations and execute its plans “with confidence”, removing the risk of a last-minute diversion of funds because, for example, Unilever opt to prop up other areas of the business.
Stronger NPD
“The thing that drives our category more than anything else is innovation,” Farrell said. “We can now allocate our capital and our R&D resources in this non-diluted, fully focused way.”
The result is a much stronger pipeline of new products.
“There are over 100 global product projects for 2026, which is up just more than 10% year on year,” he continued.
“The lifeblood of our business and the lifeblood of our category for consumers is in a much healthier state now that we’re just one business.”
While Unilever raised issue with the business’ seasonality, Farrell isn’t concerned, outlining that the global footprint of the business enables it to navigate weather-related lulls. But its renewed focus on NPD will also help with any volatility – especially in the rainy Britain which currently represents its third biggest market.
“Now we are just an ice cream focused business, we can accelerate our innovation and our capabilities into channels and create occasions, some of which are less weather impacted. There’s a whole load of seasonal opportunities during colder months, especially in the out of home channel, that we were just not really tooled up to take advantage of in the past.”
Becoming a nimble, growth-led company
A recent £50 million facelift for its Gloucester site has helped prime the business to really capitalise on its UK market, with capacity increased by around a quarter. This 25% hike has enabled the business to produce and stock more in the winter months, ensuring that it’s full to the rafters when the sun comes out.
“We weren’t able to do that before because we didn’t have the production capacity because that money might have been spent on, for example, the beauty supply chain or homecare media.”
In addition, investment has also gone into machinery and technology, with TMICC keen to detangle itself from layers upon layers of legacy software that it had been previously committed to, with more modern offerings.
“Making a huge investment like that in Gloucester is a clear sign that we’re committed to the UK, see growth potential in the UK, and we’re here for the long term,” confirmed Farrell.
Teamed with its UK sales offices and its R&D centre in Bedfordshire – a trio TMICC calls the “golden triangle” – Farrell said for an FMCG company it’s getting “as close as it can get” to having independent managers on the ground, near to consumers.
“Our CEO has been really clear to investors, to the city, to shareholders, that the Magnum company is going to be a growth company rather than a dividend company.
“Unilever is one of the biggest beasts, it’s enormous, it’s very stable – but there’s a price for stability, which is perhaps a lack of dynamism compared with some smaller, more nimble, more growth-focused companies.”
The hope is that this concentration on growth will set TMICC up to be more consumer-led than the competition, allowing it to be first to market when new opportunities arise.
More than just Magnum
Part of that strategy will also mean reassessing its audience, with TMICC looking to move away from its perceived premium ice cream persona, driven predominately by its hero brands Magnum and Ben & Jerry’s.
“If we want the hyper fast growth, constantly share winning ice cream company, then there’s more than Ben and Jerry’s and Magnum. There are more price points, there are more formats, there are more occasions, there are more channels we need to get into. And in order to get into that quickly and successfully, you need a more entrepreneurial culture.”
Alongside an image shift, the business will also be looking to continue its innovation in on-the-go snacking, with its Ben & Jerry’s sandwich recently landing in shops, alongside developing more products and propositions for over 50s.
“If you look into the DNA of most of brands, they’ll be targeted at people between 20 and 40 years old. But a disproportionate amount of consumption of ice cream is by people over 50. That portion of the population is only getting bigger.”
This agility and renewed focus will be paired with a change in culture, with managers within TMICC having more freedom and, as such, the ability to influence elements such as R&D and production much more.
In turn, this will allow the business to “manoeuvre into these [new] spaces quickly” rather than being “handcuffed by a million policies and procedures and committees and hierarchies”.
Confidence is high
While some may speculate over the ice cream business’ lower-than-expected global organic volume growth revealed in Q4, Farrell maintains that the business is in a good position.
“Confidence is really high,” he said.
“It’s just about executing the plans that are hot off the press, as we move out from being part of an enormous, very stable company and towards a more exciting, entrepreneurial growth company. By the very nature of that you have more twists and turns.
“We’re really confident that we can build on the growth that we’ve already delivered, win more market share, deliver more for our shareholders. Share prices are a long-term game. Over time the share price will go up, I’m sure.”
