---
title: "Not Just Chicecream: Ice Cream Giants Struggle"
description: "The world's largest ice cream maker is slimming down, starting with spinning off its ice cream business. On March 19, Unilever announced it would split its ice cream business into a standalone entity, expected to be fully separated by the end of 2025, and plans to cut 7,500 jobs globally, saving €800 million in total costs over three years to offset operational inefficiencies from the divestiture. As the world's largest ice cream producer, Unilever holds about one-fifth of the global market share, with Wall's and Magnum as its two flagship brands. In 2023, its ice cream business generated €7.9 billion (approximately ¥60.3 billion) in revenue, six times that of Yili's cold drinks business and ten times that of Mengniu's ice cream business (based on 2022 data)."
author: "杨典"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-03-29"
language: "en"
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---

# Not Just Chicecream: Ice Cream Giants Struggle

> The world's largest ice cream maker is slimming down, starting with spinning off its ice cream business. On March 19, Unilever announced it would split its ice cream business into a standalone entity, expected to be fully separated by the end of 2025, and plans to cut 7,500 jobs globally, saving €800 million in total costs over three years to offset operational inefficiencies from the divestiture. As the world's largest ice cream producer, Unilever holds about one-fifth of the global market share, with Wall's and Magnum as its two flagship brands. In 2023, its ice cream business generated €7.9 billion (approximately ¥60.3 billion) in revenue, six times that of Yili's cold drinks business and ten times that of Mengniu's ice cream business (based on 2022 data).

The world's largest ice cream enterprise is slimming down, starting with spinning off its ice cream business.

On March 19, Unilever announced it would split its ice cream business into a standalone business, expected to be fully separated by the end of 2025, and plans to cut 7,500 jobs globally, expecting to save €800 million in total costs over the next three years to offset the operational inefficiencies brought by the ice cream business divestiture.

As the world's largest ice cream producer, Unilever holds about one-fifth of the global market share, with Wall's and Magnum as its two trump cards. In 2023, the ice cream business generated €7.9 billion (approximately ¥60.3 billion) in revenue for Unilever, equivalent to six times Yili's cold drinks business and ten times Mengniu's ice cream business (calculated based on 2022 data).

However, this global ice cream giant is now planning to achieve cost reduction and efficiency enhancement by divesting its ice cream business and laying off employees.

First, Chicecream frequently fell into difficulties, and now Unilever is shedding its ice cream burden. In the ice cream business, why are both the old leader and new forces struggling so much?

**The Giant's Troubles**

It is somewhat surprising that ice cream has become the business dragging down the world's largest ice cream company.

Unilever has five major segments: Beauty & Wellbeing, Personal Care, Home Care, Nutrition, and Ice Cream. The other four segments each account for over 20% of the group's total revenue, while the ice cream business accounts for only 13%, the lowest proportion.

In 2023, the sales growth rates for Beauty & Wellbeing, Personal Care, Home Care, and Nutrition were 8.3%, 8.9%, 5.9%, and 7.7%, respectively, while the ice cream business only grew by 2.3%.

In other words, even though Unilever's ice cream brands are world-renowned, within the group, it remains a "small but beautiful" business with weak growth. More critically, the ice cream business dragged down Unilever's sales efficiency.

**One example: when Unilever enters a supermarket, it can place Hazeline and Vaseline in the personal care aisle, Dove and Lux in the adjacent hair care aisle, and Omo in the home care aisle, solving multi-category sales at once. But to place Cornetto and Wall's in the freezer, an extra step is needed—investing in freezers.**

Unlike other businesses, ice cream's characteristics—cold chain transportation, freezer distribution, and strong seasonality—determine that Unilever requires additional capital investment. According to Bloomberg data, the ice cream business's profit margin is less than half of the personal care division's.

So the decision to spin off has a "concentrate resources to accomplish major tasks" flavor. Unilever stated that after the split, it will become a simpler, more focused company, operating four business divisions: Beauty & Wellbeing, Personal Care, Home Care, and Nutrition, which can achieve complementary operations in markets, production, and distribution systems.

From a longer time perspective, ice cream, a traditional consumer product, is becoming less imaginative. Wall's, acquired by Unilever in 1922, has been diligently selling ice cream for 100 years.

But since three years ago, the claim that "Americans no longer love ice cream" has been gaining traction. The U.S. Department of Agriculture released data in 2021 showing that in 1986, the average American ate 18 pounds of regular ice cream, but by 2021, that number had dropped to 12 pounds.

Reducing sugar intake and replacing dairy with plant-based foods are becoming new trends. Newly popular weight-loss drugs are also impacting the food and beverage industry. According to Morgan Stanley data cited by The Wall Street Journal, **ice cream is one of the categories where weight-loss drug users cut spending the most.**

Unilever is naturally following the trend, shedding traditional food and beverage items and reaching out to categories with high growth and innovation.

As previously counted by Shindai, since 2017, Unilever has made 12 divestitures, with total proceeds of €11 billion (approximately ¥79.583 billion) almost entirely from tea and spreads. During the same period, Unilever spent €16 billion (approximately ¥115.757 billion) on 29 acquisitions, with functional nutrition being the largest investment area, accounting for 43%.

A company spinning off a business involves many considerations, but the most realistic and direct reason is: the company that can't sell ice cream is not just Chicecream.

**The High-Price Dilemma**

"2023 was a challenging year for the ice cream business." This is Unilever's summary of its ice cream business in its annual report.

Last year, Unilever's ice cream revenue was €7.9 billion, with underlying sales growth of 2.3%, but this was not due to increased volume, but from "price increases"—pricing grew 8.8% last year, but volume fell 6%.

Unilever gave two reasons for the volume decline: last summer's weather was not conducive to ice cream sales (mainly in Europe); and due to high price elasticity, consumers began to "trade down" on ice cream.

As for weather, although hot summers pair well with ice cream, in extremely hot weather, people may abandon the sweet, sticky ice cream. "There is an optimal temperature (for ice cream sales)," Unilever CFO Graeme Pitkethly previously told CNN. "If it's too hot, people are likely to give up ice cream and switch to other cold drinks."

As for price, Unilever's products must be viewed within the entire ice cream market. Taking the Chinese market as an example, Unilever's super single product Magnum Vanilla Ice Cream and Cornetto Strawberry Cone have median prices (label prices) of ¥10 and ¥5, respectively, occupying the mid-to-high-end market of ¥5 and above.

According to monitoring data from MaShangYing, during the peak sales season from May to September 2023, the price bands of the top 20 selling products showed a clear "decline" trend. The number of products priced above ¥6 dropped from nearly 50% in 2022 to just over 20% of total SKUs in 2023, showing a significant retreat of high-priced products from the bestseller list.

High-priced products not selling well is bad news for both Unilever and Chicecream, especially when the industry is not very prosperous. According to MaShangYing's monitoring data, in 2023, the sales volume and sales value of the ice cream category decreased by 13.52% and 13.85% year-on-year, respectively.

The result is that Yili, a leading enterprise occupying the low-end market, further increased its concentration in the industry, while Unilever, Nestlé, and Chicecream, which occupy the mid-to-high-end market, saw their shares eroded. In 2023, Yili's market share growth rate reached 5.83%, with market share increasing by 1.74%, while Unilever's market share growth rate was -4.96%, with market share dropping by 0.62%.

Of course, Chicecream was hit hardest, with a market share growth rate of -50.64% in 2023, and its market share fell by 1.61%.

**Divergent Fates**

Countless historical experiences tell us that when the industry is sluggish, it actually benefits the leaders. A global consumer company with a century-long history and a new consumer company founded seven years ago face the same market environment but have completely different fates.

An objective fact is that among the top ten ice cream products globally, Unilever accounts for five. Magnum is already a super single product with €1 billion in sales, and Cornetto is expected to achieve this by 2025. In contrast, Chicecream has been struggling on hot searches for the past six months: its prices dropped from ¥60 to ¥2.5, multiple platform accounts stopped updating, it was executed for ¥810,000, owed wages, and its founder was restricted from high consumption... all indicating Chicecream's current dire situation.

Chicecream's current predicament is not entirely due to high prices. When a new ice cream consumer brand moves from online to offline, it truly feels the huge disparity with giants in channels, products, and supply chain.

In 2020, Chicecream entered offline channels, relying on higher channel fees than traditional ice cream products, entering nearly 400,000 freezers in over 200 cities. But by then, Unilever had already established cooperation with 3 million store owners worldwide, while Yili had over 6 million terminal outlets nationwide, penetrating deeply into lower-tier markets like capillaries—with nearly 1.096 million township outlets alone.

The gap is not only in quantity but also in attractiveness to channels. For channels, selling a Chicecream can earn more, but only if the product sells well to realize the profit. Now, high-priced ice cream that doesn't sell well lacks the incentive for distributors to put it on shelves.

Traditional ice cream companies with deep pockets also have advantages in the supply chain. For any brand wanting to scale and develop long-term, the supply chain is an unavoidable link. In 2021, Genki Forest suffered a ¥1 billion sales loss due to insufficient erythritol supply and had to invest in suppliers themselves.

Since 2020, major ice cream manufacturers like Unilever, Meiji, and Mars have also started building factories. Unilever planned to invest €100 million in a lighthouse factory in China in 2022, which, based on 2021 data, is roughly equivalent to Chicecream's annual earnings without spending.

Beyond business comparisons, century-old consumer companies often place great importance on brand value and social reputation, as these are precious intangible assets in the company's development.

Chicecream's current situation of being toppled and beaten while down is partly due to its strategic mistakes and partly due to changes in the consumption environment, but the core issue is likely losing public trust in a series of PR incidents, losing the intangible assets that could sustain it.

**An ice cream distributor lamented Chicecream's collapse: "All this talk of 'assassins' has scattered the market's trust. The fall of one Chicecream is a blow to the entire cold drinks industry, because no one believes they can get genuine products anymore."**

_PS: Click **Read Original** to view more highlights from the 9th China FMCG Innovation Conference and the 2nd China FMCG Hard Discount Conference & the 2nd China FMCG Distributor Conference..._


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