Each week, Just Food’s editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value, or the highest profile, but it will tells us where the leading companies are focusing their efforts, and why.
This new, thematic deal coverage is driven by our underlying disruptor data which tracks all major deals across our sectors.
The deal
Unilever, the world’s largest ice-cream maker, has extended its portfolio of frozen desserts with the acquisition of Yasso, a US business offering products based on Greek yogurt.
Founded in 2009 by Amanda Klane and Drew Harrington, Colorado-based Yasso offers novelty stick bars, chocolate crunch bars, frozen Greek yogurt sandwiches, bite-size Yasso Poppables and Yasso Mochi, all of which can be found at grocery and club stores in the US.
Unilever said the deal – struck for an undisclosed sum – aligns with a “premiumisation strategy” for its ice cream business, with Yasso joining brands such as Ben & Jerry’s, Magnum and Talenti.
Why it matters
There may have been a heap of speculation about Unilever’s intentions in ice cream in recent months but the company has moved to add to its freezer cabinet.
Unilever has scooped up Yasso, a US brand of frozen ‘better-for-you’ desserts and sweet treats.
Colorado-based Yasso, set up in 2009, can be found at major US retailers Kroger and Safeway.
With brands like Magnum and Ben & Jerry’s, Unilever is the world’s largest ice-cream business but there has been some chatter in the market in recent months about its future in the sector.
In December, Bloomberg reported the FMCG giant had hired advisors to explore the idea of selling some of its ice-cream brands in the US.
According to Bloomberg, Unilever was weighing up offloading brands such as Breyers and Klondike. Approached by Just Food at the time, the company simply said: “We’re not commenting.”
The report caught the eye as, throughout 2022, the future of parts of Unilever’s portfolio had been the subject of debate in the investment community after the company reorganised its business divisions at the start of the year. The revamp saw ice cream spun off into a standalone arm outside of its other food interests.
A couple of weeks before the Bloomberg story appeared, speaking to UK-based media outlets – including Just Food – Matt Close, the global president of the separate ice-cream unit, said there was “no reason to believe” a sale of the division could be on the horizon.
“I know there’s lots of rumours out in the market ... but the ice cream business is a big global business and, actually, if you look at single-category positions, ice cream is our biggest… Unilever loves scale,” Close said. “It loves businesses that can drive value creation and it loves businesses that can really underpin our compass and sustainability commitments.”
Among Unilever’s ESG targets feature two specifically on the levels of sugar and calories ice cream and one on “positive nutrition”.
It’s unclear at the time of writing – Just Food has approached Unilever – how specifically the acquisition of Yasso would help the company’s meet those aspirations.
However, announcing the deal, the Cornetto maker described its new asset as “offering a high-quality range of low-calorie yet indulgent products”.
On LinkedIn, Close echoed the statement and added: “The brand joins our North America premium portfolio, including Ben & Jerry’s, Magnum and Talenti, which is a great step in the evolution of our ice cream business there.”
Research produced on the US ice-cream market in November last year by GlobalData, Just Food’s parent, suggested there is growing consumer interest in healthier ice-cream products, a trend that Unilever could tap into with Yasso.
The UK-based research and intelligence company said ice-cream products carrying “health and wellness claims” in both the take-home (bulk) and impulse segments grew at a faster rate (5.8% and 5.1% CAGRs, respectively) than not (0.1%) in the period from 2016 to 2021.
It's the impulse nature of the Yasso portfolio that struck Karel Zoete, an analyst covering Unilever for European financial services group Kepler Cheuvreux.
“I thought it was in line with their strategy to invest in impulse ice cream, which is an area where they’ve done well in the United States but where they’re still behind probably compared to other parts of their global ice cream business,” Zoete says.
Unilever’s US ice-cream has “a big bulky part to it”, he adds, referring to larger pack sizes, including tubs. “Yasso plays a role in the portfolio as a complementary brand proposition and raises the exposure of impulse.”
GlobalData’s research suggests the take-home ice-cream segment in the US is expected to grow at a CAGR of 3.2% in the period from 2021 to 2026, slightly faster than impulse ice creams, which the group forecasts will see a CAGR of 2.9%.
Adding an impulse-centric brand to your portfolio does have another benefit, Zoete explains.
“Impulse has a much, much better gross margin than the one-litre traditional Breyers where the gross margin’s less and the competitive situation is also more intense,” he says.
There is, of course, scope to use Unilever’s global frozen and ice-cream distribution to potentially launch Yasso outside the US. The company, of course, has had success in taking brands like Magnum and Ben & Jerry’s into multiple markets. The challenge would be selecting which countries are most ripe for healthier indulgence.
In all, the deal may cool speculation about Unilever’s overall intentions in ice cream.
The Bloomberg report in December stressed Unilever’s global ice-cream brands such as Magnum and Ben & Jerry’s were not part of the deliberations. Unilever’s global position in ice cream means the company is unlikely to exit the category but it would not be a surprise if new CEO Hein Schumacher looks – in the words of one of his predecessors – looks to “weed and feed” the company’s ice-cream and frozen-treats portfolio in the years ahead. The move to lasso Yasso could be just the start.
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