What exactly is going on at Unilever? And why has the British consumer goods juggernaut just decided to spin off its coveted food division to the tune of a gargantuan £33.7 billion?
In any case, US spices and seasoning giant McCormick Foods has now vastly increased its global footprint as a result of the so‑called ‘megamerger’, which will see it become a new, combined entity alongside Unilever’s erstwhile food arm.
This deal is huge news in and of itself. Unilever is a shining beacon of British business and one of the nation’s most recognisable companies on the global stage; but when this news follows hot on the heels of the multinational’s decision to also divest its immensely valuable ice cream business, some serious questions need to be asked.
In what is no doubt a seismic development for numerous big‑name UK food favourites, including Hellmann’s, Marmite, Colman’s, and Pot Noodle; many will be wondering what this means for the future of Unilever itself.
Why did Unilever make the call?
With such a rich portfolio of household names, you could be forgiven for questioning the wisdom behind Unilever’s decision, but the call was ultimately made some time ago as part of a concerted plan by the multinational to streamline its operations in response to an increasingly complex and sluggish global economy.
In reality, Unilever had probably become too big for its own good, and lumbering superstructures of similar ilk have found the fast‑moving, and at times downright erratic, financial landscape of the 2020s hard going.
It was unquestionably time to trim things down and become leaner, but moving on some of its best‑loved brands will still come as a surprise to many.
The move reflects chief executive Fernando Fernandez’s ambition to steer Unilever towards becoming a pureplay health and personal care company. The decision to jettison food and ice cream was made in a bid to keep the business competitive during what has been one of the most challenging economic climates in decades.
“Unilever’s decision reflects a clear strategic recalibration. The food division, though immensely well established, hasn’t been keeping pace with the growth they’re seeing in beauty, wellbeing and personal care,” explains Chris Ross, corporate partner at UK law firm, Mills & Reeve.
“Consumer habits are shifting, private label competitors are gaining ground, and demand for packaged foods has softened, including due to GLP‑1‑driven changes in consumption patterns. Refocusing on higher growth categories is a pragmatic step that positions Unilever for stronger long‑term performance.”
Bluntly, Julian Wild, director at Wilkin Chapman Rollits, adds: “Clearly, the company thinks that the growth prospects and capital requirements of the rest of the group are better.”
A bad omen for food manufacturing?
So, does Unilever’s decision to pull back from its historic food manufacturing activities sound alarm bells for the sector at large?
When one of the world’s most illustrious manufacturers opts out of the food game almost entirely, despite owning some of Britain’s most culturally significant brands, it may not be a positive signal for the industry. However, it shouldn’t necessarily trigger panic stations.
The move does, however, highlight the intense pressure faced by food manufacturers in the current economic climate. It also underlines the importance of agility in a market shaped by volatile input costs, geopolitics and factors as uncontrollable as the weather.
As Wild points out, the fact that Unilever struggled to fully divest its food portfolio is telling: “The deal to merge the business for cash and equity with McCormick, leaving Unilever with 65% control of the spin‑off entity, is a curious partial exit. A straight sale did not seem to be achievable.”
Ross agrees that broader market conditions are at play. “The issue isn’t scale; the challenge lies in the underlying conditions of the global food sector.
“Traditional food portfolios are facing slower demand, heightened health scrutiny, and increased pressure from lower‑priced alternatives.”
He continues: “These dynamics have made sustained growth difficult for manufacturers of all sizes. The two recent break‑ups of major divisions reflect the reality that even major players must narrow their focus to remain competitive. It highlights the pressures on food manufacturers, rather than suggesting that large companies can’t compete.”
Will the strategy pay off?
Much has been written about Unilever’s strategic about‑face, and in business terms it is difficult to argue against making such a vast organisation leaner and more agile, particularly during a period of subdued consumer demand.
Spinning off two core divisions has inevitably raised eyebrows, but if executed effectively, Unilever’s narrower focus could help drive greater efficiency in the long term.
It is also far from the first UK&I multinational to slim down in the years following the pandemic. In 2025 Hovis acquired Kingsmill, while the start of this year saw Greencore complete its takeover of Bakkavor; and more recently, Nestlé announced its intentions to sell a 50% stake in its water business.
“Given what we know, this appears to be a well‑considered decision,” Ross says.
“The food business has been growing more slowly than other parts of Unilever, while the company’s core categories are delivering stronger momentum.
“The transaction also brings in substantial cash, strengthens the balance sheet, and allows Unilever to invest more decisively in areas aligned with its long‑term strategy. Stepping away from such a longstanding part of its portfolio is never easy, but strategically, refocusing on higher growth areas is a commercially sensible decision.”
Ultimately, this has been a difficult move for Unilever, but one it hopes will pay off. Given the current state of the market, the decision to steer the business towards greater profitability appears logical.
What this means for brands such as Marmite and Pot Noodle remains to be seen. But for Unilever, 2026 marked the beginning of a new chapter as a health and personal care pureplay, and the industry will be watching closely to see how CEO Fernando Fernandez’s strategy unfolds.
