SOUTH AFRICA – Unilever has recently announced its decision to downsize its popular Magnum Mini ice cream packs, reducing the number of ice creams from six to five and decreasing each unit’s size from 60ml to 55ml.
While this move, often referred to as “shrinkflation,” has drawn criticism from consumers who feel deceived, it illustrates the company’s response to rising raw material costs and shifting market dynamics.
According to Unilever, the adjustment aims to maintain the quality of its products while avoiding significant price hikes for consumers.
“This strategy is crucial in a challenging economic environment where inflation continues to impact operational costs,” the company stated.
“By prioritizing product integrity, we are committed to delivering value to our customers, which is essential for maintaining brand loyalty.”
Ant Borstlap, Unilever’s marketing lead for ice cream in Southern Africa, noted that the decision was driven by soaring global chocolate costs.
“Our goal is to provide an affordable product without compromising quality,” she emphasized.
Despite the reduction in quantity, Borstlap highlighted that the change aligns with industry standards and allows the company to remain competitive.
However, the announcement comes amid a broader strategic overhaul for Unilever.
In March, the consumer goods company cut 7,500 jobs globally and announced plans to spin off its ice cream division as part of an initiative aimed at saving approximately €800 million (£684 million) over the next three years.
The ice cream division, which includes five of the world’s top-selling ice cream brands such as Wall’s, Magnum, and Ben & Jerry’s, generates annual revenues of €7.9 billion and accounts for 16% of group sales.
Unilever is considering a demerger of this division as the most likely outcome, with completion expected by the end of 2025.
While Schumacher, a company representative, declined to specify where the demerged ice cream business would be listed, he confirmed that all options are being evaluated.
“The default route we’re pursuing at this moment is a demerger and a separate listing for that business,” he stated.
This separation will leave Unilever with four main divisions: beauty and wellbeing, personal care, home care, and nutrition.
The restructuring aims to enhance operational efficiency and address the unique challenges of the ice cream sector, which is characterized by a frozen supply chain, high seasonality, and significant capital requirements.
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