Shares in Unilever tumbled today (Tuesday 17th December) after the consumer-goods giant said its 2019 sales growth would miss its target – and the questions over the company’s food portfolio will only grow, argues GlobalData.
Dean Best, Food Editor at GlobalData, says: “Despite recent small acquisitions such as The Vegetarian Butcher, Unilever’s legacy food portfolio can still be argued to be anchored in mature, centre-store categories.
“Unilever said today its 2019 underlying sales growth will come in below its previous guidance of 3-4% growth – itself below its long-term target of 3-5% growth a year. It also said sales growth in 2020 would be weighted to the second half of the year.
“The company pointed to macroeconomic issues in Asia – predominantly India – and in west Africa, namely Nigeria and Ghana.
“Unilever is set to give more detailed information on its category performance when it announces its full 2019 financial results next month.
“However, the Hellmann’s mayo and Magnum ice cream owner did insist today its recent efforts to breathe fresh life into some of its problem areas in food, such as in the North American dressings and ice-cream markets, are paying off.
“That said, although Unilever’s sluggish growth is not just down to its food business, today’s sales warning will only add to the questions in the market about the company’s position in food.
“Some want disposals to be made but that could hamper Unilever’s scale in some emerging economies. There could, however, be some candidates up for sale in developed markets, such as in parts of its condiments business.
“When GlobalData asked the head of Unilever’s food division this month if disposals could come from that portfolio, she replied simply: ‘Time will tell.’”