Unilever is reducing its focus on food products to prioritize its beauty, personal care, and home goods divisions. The British consumer goods company, which owns brands such as Dove and Axe, is attempting to eliminate a "conglomerate discount," a term describing when investors value a complex company at less than the sum of its individual parts.
This strategy follows a trend among large corporations, including General Electric and Siemens, that have simplified their structures to improve efficiency. In the consumer sector, Procter & Gamble previously exited the food industry and streamlined its brands, a move that Dan Hanbury, a portfolio manager at Ninety One, said resulted in a decade of valuation premiums for that company.
Under Chief Executive Fernando Fernandez, Unilever has spun off its ice cream business and reached a roughly $65 billion deal in March to merge its food division with U.S.-based McCormick. According to LSEG data, Unilever currently trades at 11.5 times core earnings, lower than the 14.8 for Procter & Gamble and 22.7 for Coca-Cola. The McCormick transaction will leave Unilever with a nearly 10% stake in the combined entity, while Unilever shareholders will hold approximately 55%.
The scale of the restructuring is significant, involving a $65 billion merger and the divestment of a food division that, while profitable, had slower growth than the company's beauty sectors. While Unilever reported that sales volumes reached a 10-year high in July, analysts like Warren Ackerman of Barclays noted that some investors remain concerned about the ongoing exposure to the food market through the McCormick stake. A person holding Unilever shares would notice the value of their investment increasingly tied to the performance of personal care products rather than the diversified grocery portfolio the company previously maintained.
The success of this move sets a precedent for whether massive consumer conglomerates can effectively "re-rate" or increase their market value by narrowing their focus. CEO Fernando Fernandez stated at a June industry event that he expects the company's value to become evident as they continue to deliver quarterly results and move toward closing the McCormick deal. The specific effective date for the completion of the McCormick merger was not reported, though the company cited operational improvements and high volume growth as of late July 2026.