Unilever has hired advisors to sell The Vegetarian Butcher as the consumer goods giant continues to optimise its portfolio around its 30 big ‘power brands’.
The group is working with bankers at Piper Sandler to explore options for the plant-based brand, just six years after buying the business for an undisclosed sum.
News of the plan was first reported by Sky earlier today and follows a report by Reuters earlier this month that Unilever is looking to offload Dutch food brands including Unox soups and Conimex seasonings, as part of the ongoing turnaround at the group.
Unilever CEO Hein Schumacher confirmed last week at the company’s capital markets day for shareholders and analysts that plans to “prune” the vast portfolio of food brands would be considered.
Barclays analyst Warren Ackerman said Unilever viewed about €1bn-€1.5bn of its food revenues, particularly in Europe, to be non-core.
“These are overwhelmingly local brands where the potential to globalise them is limited,” Ackerman added.
The analyst highlighted brands such as Colman’s, Marmite, Pot Noodle and The Vegetarian Butcher as those which could be considered for divestment.
Unilever acquired The Vegetarian Butcher – founded in 2007 by Jaap Korteweg – at the tail-end of 2018 as the hype for plant-based food gathered momentum.
It invested considerable sums in promoting the brand, including an £8m marketing push in 2019 to support the nationwide retail rollout in Tesco, Sainsbury’s, Waitrose and Ocado.
However, sources in the City expected Unilever to struggle to recoup its investment as the wider plant-based category battled challenging economic headwinds, with value growth slowing from the 2021 peak of £659.9m [Kantar 52 w/e 8 August 2021] to £483.7m in 2024 [NIQ 52 w/e 7 September 2024].
There has also been a string of high-profile failures in the space, including Meatless Farm and, more recently, Allplants, which last week filed for administration having burned through almost £70m in fundraising.
The Vegetarian Butcher is one of small handful of brands to register a rise in the UK market. It sits just outside the top 10 biggest meat-free brands and saw a 0.2% increase in sales value to £7.8m as volumes rose 2.2% [NIQ 52 w/e 7 September 2024].
“Buying Vegetarian Butcher was a classic case of Unilever jumping on a popular bandwagon, but that bandwagon doesn’t look quite as exciting any more,” one City source said. “It’s a very good brand and doing better than others in the category, but the sector as a whole is struggling to find its feet.
“However, plant-based is not going anywhere and it isn’t a fad. Indeed, brands in the space will only become more important as the focus on the climate becomes ever more intense. The sector will continue to grow, but not at the previous rapid rate. And there will be successful brands and others that fall away.”
The dealmaker added he expected to see lots more non-core Unilever food brands come to market in the coming year, including the likes of Graze.
“There are lots of examples of where Unilever has overpaid and the results have underdelivered. The future for those brands under Unilever ownership will be very uncertain,” he said.
Unilever is also in the process of spinning off its €15bn ice cream division. Earlier this month, The Financial Times reported that Unilever had shelved plans to sell the division to a private equity buyer and would focus instead on spinning off the unit in an independent stock market listing.
The group said at the CMD event last week that the separation of ice cream remained on track for the end of 2025.
Unilever added its medium-term guidance remained unchanged, but post the separation of ice cream, it aimed to deliver mid single-digit underlying sales growth, supported by underlying volume growth of at least 2%.
Unilever has not yet responded to a request for comment.
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