Unilever sheds food assets to bridge valuation gap with rivals

The strategy centers on the belief that narrow focus drives superior innovation and efficiency. While Unilever historically relied on diversification as a buffer against shifting consumer tastes, the market now penalizes complexity. Investors are pushing for a leaner operation, pointing to the success of Procter & Gamble, which streamlined its portfolio to achieve a decade of growth and premium valuation. Unilever’s recent move to combine its food division with spice maker McCormick serves as the latest step in this pivot toward beauty, personal care, and home products.

Despite an uptick in sales volumes—the highest in over a decade—skepticism remains. Portfolio managers remain wary of the 10% stake Unilever will retain in the new McCormick entity, viewing it as continued exposure to a slower-growing category. For Dan Hanbury of Ninety One, the burden of proof lies with management. He suggests the company requires several consecutive quarters of strong performance to convince the market that the turnaround is genuine. As the focus shifts from portfolio reshuffling to operational execution, Fernandez maintains that consistent delivery of results will ultimately demonstrate the company's true value to shareholders.