Food Business News - January 29, 2013 - 14

Unilever not ﬁnished with
its food unit makeover
Shedding will continue, chief executive says,
as will focus on emerging markets
Continued from Page 1
B&G Foods, Inc. for $325 million in cash.
The shedding continued in September 2012,
when Unilever completed the sale of its Bertolli and P.F. Chang’s Home Menu frozen
meals business to Omaha-based ConAgra
Foods, Inc. for $267 million. Most recently,
Unilever earlier this month agreed to sell its
Skippy peanut butter brand to Austin, Minn.based Hormel Foods Corp. for $700 million.
Mr. Polman said Unilever’s food business

Polman
now comprises three core activities: margarine, dressings and savory.
Despite the fact the margarine markets
are down and continue to decline, Unilever
has grown its share, Mr. Polman said. Meanwhile, dressings have been “a healthy business,” he said, noting Unilever continues to
expand the business with a good pipeline of
innovation.
It is the company’s savory business,
though, that Mr. Polman sees the most potential, particularly as it relates to emerging
markets.
“Our emerging market business is growing well,” Mr. Polman said. “Our European
business, where too much of that is, because
we have a relatively small business in the
U.S., our European business gets the doublewhammy of being in Europe already with
mature shares, if you want to, in markets
that are down. And then there’s a little drag
on the savory business because of non-strategic brands that we will continue to look at
and find solutions for.
“I am convinced that with our focus now

FOODBUSINESS NEWS

on the emerging markets and our innovation
pipeline that we can actually bring the
growth rate of that business up.”
While not identifying brands that the company would consider divesting, Mr. Polman
noted Unilever has about €500 million to €750
million ($665 million to about $1 billion) of
sales that needs to be looked at because it’s
either a distraction, it’s margin dilutive or it
has limited potential for global expansion.
“We can afford, with our current growth
rates and momentum, to be a little stricter on
that because we have enough opportunities
to focus the organization behind businesses
that are really important to us,” he said.
“I’m talking about these smaller businesses that you might find under some of these
conditions are not belonging to one of the
global franchises, not being globally expendable, being diluted for the top and bottom
line,” Mr. Polman explained. “Then you have
to have a very good explanation of why it
doesn’t work. We for a long time held onto
our frozen food business in Italy under the
excuse that we couldn’t sell ice cream otherwise. That turned out to be a fallacy. We sold
that business. We did reasonably well in selling it. It allowed us to focus more, and our
Italian business, despite the tough environment there, is doing reasonably well.
“So you get your returns by doing that.
You have to be very selective. And likewise
on some of the other minor businesses that
you might not even hear about, but the Brazilian tomato business was a commodity
business that we ended up having from an
historical perspective. We’re not going to
expand canned tomatoes globally. We have
significantly more exciting initiatives, like
the baking bag or the jelly bouillons that are
high-margin businesses, growing through the
franchise like Knorr. So we will be looking
at those type of things, carved out, probably
a little bit more skewed still in the food side
where there are more remnants still than in
the personal care side. But there you have it.
And we’ll talk to them in due time.”
Net profit at Unilever in fiscal 2012 totaled
€4.9 billion ($6.5 billion), up 7% from fiscal
2011, while operating profit totaled €7 billion
($9.3 billion), up 9%. Full-year revenues increased to €51.3 billion ($68.3 billion) behind
underlying sales growth of nearly 7%.
Core operating margin in the company’s
food business was flat, while revenues were
€14.4 billion behind underlying sales growth
of 1.8%. FBN

Chicago considers
ban on certain
energy drinks
CHICAGO — Edward M. Burke,
a city councilman in Chicago,
on Jan. 17 proposed that the
city ban distribution of certain
energy drinks. The proposed
ban would apply to a canned or
bottled beverage that contains
an amount of caffeine exceeding or equal to 180 mg per container and containing taurine or
guarana.
According to Monster Beverage Corp., Corona, Calif., Monster Energy drinks generally
contain 10 mg of caffeine per
oz from all sources. Thus, under
the Chicago proposal, a can or
a bottle of Monster Energy, or
other energy drinks with the
same level of caffeine, would
need to be less than 18 oz.
The proposal said anybody
convicted of selling, giving away,
bartering or exchanging such
a drink should receive a fine of
not less than $100 and not more
than $500. Any repeat violations
would be grounds for revocation
or suspension of a license.
The proposal gave several
reasons for the ban. Energy
drinks such as Red Bull, Rockstar, Monster, Full Throttle
and 5-Hour Energy are popular
among teenagers. They are sold
side by side with soft drinks and
fruit juices at retail outlets. Energy drinks contain high levels
of caffeine and may affect blood
pressure, heart rate and brain
function. Manufacturers may
label energy drinks as dietary
supplements, which fall under
different federal regulation than
beverages such as soft drinks
and juices.
Rodney Sacks, chairman
and chief executive officer
of Monster Beverage Corp.,
defended the safety of energy drinks in a Dec. 11, 2012,
investors’ meeting. He said
energy drinks are as safe as
coffee purchased at coffee
houses. He also said the Food
and Drug Administration reviewed literature on taurine
and guarana, two ingredients
found in many energy drinks,
and failed to find any information that questioned the safety
of the two ingredients. FBN

January 29, 2013

Food Business News - January 29, 2013

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