By Stephen Wilmot and Ben Dummett
Do food and toiletries belong in the same place? For almost 100 years, the answer for consumer-goods behemoth Unilever was yes. Not anymore.
Unilever said Friday it was in talks with spice maker McCormick about a sale of its food business, which includes Hellmann's mayonnaise and Knorr stock cubes. News of a potential deal, which could be valued at tens of billions of dollars, confirmed an earlier Wall Street Journal report.
A sale would mark the biggest portfolio shake-up for Unilever since it was created nearly a century ago through the merger of Dutch group Margarine Unie and British soap maker Lever Bros. It would also be the company's most significant move yet to shed slower-growing food brands and push deeper into health and hygiene products.
To boost growth and lift its stock price, Unilever has worked to reshape its portfolio in recent years. The company spun off its ice-cream brands, such as Magnum and Ben & Jerry's, in December. It sold its tea business, including Lipton, in 2021, and Country Crock and other spreads in 2017.
The divestment of its remaining food brands would be a milestone for a group that long championed holding pantry and bathroom staples in one corporate cupboard. The approach is unusual, with peers such as Procter & Gamble, Kraft Heinz and Nestlé mostly focusing on either personal care or food but not both.
Unilever used to argue that scale across both categories was a big asset in emerging markets, which accounted for almost three-fifths of revenue last year. Mom-and-pop stores in countries like India tend to stock all kinds of products. A single distribution network that served them with small packets of shampoo as well as jars of mayo made sense.
But then slower growth around the world and intense competition from upstart brands forced long-stable consumer-goods companies to rethink their strategies.
Unilever's wake-up call came in 2017 with an unsolicited takeover approach from Kraft Heinz, then lauded for its skill in cutting costs. While Unilever successfully rebuffed that deal, it suddenly needed new answers to questions from investors about flagging growth.
Selling food brands was one response to Unilever's Kraft Heinz crisis. Growth in many traditional packaged-food categories has been lackluster or negative as consumers embrace fresh produce and startup brands that emphasize health benefits.
Another was moving into health itself: In 2022, Unilever revealed it had approached GSK and Pfizer about a potential acquisition of their consumer-healthcare joint venture. When the news came out, however, Unilever's stock tanked, eventually scuttling the deal and souring management on bigger ones.
Investors are more sanguine about Unilever's potential transaction with McCormick, which brings the years of food divestments to their logical conclusion. The shares rose a little more than 1% on Friday.
Shares of both Unilever and McCormick have trailed the broader market over the past year, highlighting the pressure both companies are under to revive growth.
Other consumer-goods groups have also slimmed down or sharpened their focus in recent years. Kellogg split into three separate businesses. Nestlé has sold water and confectionary brands, and said last month it would spin off its remaining ice-cream business.
Consumer-goods companies used to benefit from massive scale in buying media spots, among other things. But the rise of digital technology and decline of linear TV have eroded those advantages and instead favor nimbler startups that can respond to trends.
"The benefits of scale across categories no longer outweigh the drawbacks of complexity," wrote Bernstein analyst Callum Elliott in a note to clients Friday.
Unilever's remaining food brands made 12.9 billion euros of revenue last year, equivalent to $14.9 billion. Analysts see them as a useful source of cash flows, helping to fund the company's dividends.
But the Unilever food business hasn't generated any growth in volume terms over the past six years, according to brokerage Jefferies. Weight-loss drugs have only added to investor concerns that traditional food businesses are approaching their sell-by date.
Unilever Chief Executive Fernando Fernandez has signaled the company is focused on its beauty and personal-care unit. However, he has also said the company is in no rush to divest itself of its food business, telling an industry conference last month that the division was outperforming the broader food sector in terms of both profit and volume growth.
A deal with McCormick could come within weeks, assuming the talks don't fall apart, people familiar with the matter said. The exact structure couldn't be learned. One possibility could involve Unilever first spinning off its food business and then merging it with McCormick, leaving Unilever shareholders retaining majority ownership of the combined entity.
Write to Stephen Wilmot at stephen.wilmot@wsj.com and Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
March 20, 2026 11:26 ET (15:26 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
