Unilever will cut 7,500 jobs and spin off Ben & Jerry’s Ice Cream Unit

Unilever, the consumer goods giant, said Tuesday that it would cut 7,500 jobs and divest its ice cream division, which includes Ben & Jerry’s, to cut costs and simplify its brand portfolio.

These steps would create “a simpler, more focused and better performing Unilever,” Ian Meakins, chairman of the London-based company, said in a statement. The group’s ice cream division generated sales of 7.9 billion euros ($8.6 billion) last year, or about 13 percent of the group’s total.

The division is home to Ben & Jerry’s, which Unilever acquired in 2000, along with other brands such as Cornetto, Magnum, Talenti and Wall’s. The spin-off is expected to be completed by the end of 2025.

Hein Schumacher, who took over as CEO of Unilever in July, announced a plan late last year to “drive growth and unlock potential”, partly by focusing more attention on just 30 of the group’s hundreds of brands.

On Tuesday, he said the job cuts and ice cream spin-off would “accelerate” the plan, saving nearly $870 million in costs over the next three years. The redundancies, from “predominantly office-based roles” around the world, amount to around 6 percent of Unilever’s workforce.

After the split, Unilever’s remaining units would include health and beauty brands such as Dove soap, consumer goods such as Surf detergent and food brands including Hellmann’s mayonnaise.

Unilever rival Nestlé transferred many of its European ice cream brands to a joint venture with a private equity firm in 2016 and sold its US brands, including Dreyer’s and Häagen-Dazs, to the company in 2019.

Unilever has struggled in recent years, with sales growth supported by sharp price increases while sales volumes fell. Under pressure from inflation, consumers have instead turned to cheaper brands in many of Unilever’s biggest categories, especially less essential products such as ice cream.

The ice cream division suffered the highest input cost inflation in Unilever’s portfolio last year, the company said in an earnings report last month. The company has passed some of these costs on to consumers, prompting them to buy less or switch to cheaper brands, leading to a “disappointing year of declining market share and declining profitability,” the company said.

“The company has been trying to accelerate cost reductions to accelerate growth for at least a decade,” Bernstein analysts wrote in a research note. “This plan remains ‘we will try harder’ to implement the same plan, or hope for experience,” she added. Unilever shares rose 3 percent on Tuesday, but have remained broadly stable over the past year.

Ben & Jerry’s, which has been led by an independent board since its takeover by Unilever, has not always sat comfortably in the portfolio of a staid multinational. The founders of the Vermont-based brand are outspoken on current social and political issues; in 2021 they said they would end sales in Israeli-occupied territories.

This prompted some American pension funds to divest Unilever, which led to a shareholder lawsuit. Ben & Jerry’s sued Unilever in 2022 to prevent it from selling distribution rights to a licensee in Israel. Unilever eventually sold the rights there to its long-standing local partner, who continues to sell the ice cream under a slightly different brand name.