Unilever has completed its slow process of divesting from the Bertolli business.
Earlier this week (4 January), Netherlands-based Enrico-Glasbest took over what remained of Bertolli. The acquisition included the Bertolli European pasta sauces, mayonnaise and pesto activities, amongst other trademark rights under the Bertolli licence.
Unilever had already sold-off much of Bertolli’s activities piecemeal. In 2008, Deoleo snapped up the olive oil operations, in 2018 Upfield took ownership of the margarine activities and the Bertolli brand in the US has been owned by Japan’s Mizkan Group since 2014.
As Bernstein analyst Bruno Monteyne told FoodNavigator, Bertolli simply ‘is not very big for Unilever anymore’. In 2019, Euromonitor data revealed Bertolli contributed to just 0.3% of sales in the Food & Refreshments division.
In one sense, this scale means that the disposal is ‘too small to matter’ to a company of Unilever’s size, Monteyne suggested. But in another sense, it is an important indicator of Unilever’s M&A strategy – which is focused on exiting lower growth categories.
“This is the kind of growth-dilutive disposal we would expect. Unilever has said in the past that their portfolio management strategy would be more disposals- than acquisitions-driven, so yes, I think this fits the bill of disposing of low growth," Monteyne explained.
Monteyne expects that this strategy will continue to be evident in Unilever’s approach to M&A over the coming year. The company, he suggested, is likely to shed more low-growth businesses and concentrate acquisitions on high-growth spaces in the food and beverage sector. But success isn’t guaranteed, he stressed.
“I’d expect more of this kind of disposing of low growth categories and acquisitions of high growth, perhaps more material in nature, per their portfolio management strategy. Ultimately, their success here will depend on: (A) how successful they are in scaling these businesses and (B) what kind of valuations they pay.”
Unilever has a ‘bad track record’ when it comes to M&A, the ‘most obvious’ example being selling the spreads business for just 11X EBITDA in the same year in which Reckitt Benckiser sold their food business for around 20X EBITDA, the Bernstein analyst told us.
Enrico-Glasbest wants Bertolli to ‘bloom again’
Monteyne also stressed that simply selling off lower growth businesses from within its portfolio and using its purchasing power to buy its way into high growth segments is ‘not enough’. Unilever needs to be able to grow and nurture brands.
“They also need to create growth,” he argued. “A good example is tea: Are there really no growth opportunities there? How come coffee is such an attractive category for Nestle, but tea isn’t for Unilever?”
Indeed, listening to the management of Enrico-Glasbest expound the virtues of Bertolli, one is left wondering exactly how the brand came to its diminished state.
The architects of the deal were Jet van Koten, who will be Enrico-Glasbest Commercial Director following the deal, and Aleks Fiege who will be Enrico-Glasbest’s Director of Marketing & NPD. Both executives had been closely involved with Bertolli in the past as managers at Unilever.
They believe that Enrico-Glasbest will be an ideal custodian of the 157-year-old brand - one that will give it increased attention and investment.
”Bertolli is an iconic brand with a history of over 150 years,” Fiege and Van Koten stressed. “We see an enormous potential. With more attention for - and increased investments in - quality, innovation and marketing, more value will be created. In Enrico-Glasbest we have found an ideal home to bring this wonderful brand to bloom again.”
Likewise, Enrico-Glasbest Managing Director Robin Heetkamp is confident the brand will flourish under new ownership.
“As a brand, Bertolli fits in seamlessly with the strategy and ambitions of Enrico-Glasbest. The company has shown significant growth in recent years and is ready for this step forward. Entrepreneurship is present at all levels in the organisation and the infrastructure is ready to scale up further.”
The integration of Bertolli will see Enrico-Glasbest's turnover increase to around €50m annually, the group revealed.