Unilever’s food and beverage growth driven by price, not volume sales

By Augustus Bambridge-Sutton

- Last updated on GMT

Unilever's results showed the impact of commodity prices on food and beverage. Image Source: Augustus Bambridge-Sutton
Unilever's results showed the impact of commodity prices on food and beverage. Image Source: Augustus Bambridge-Sutton

Related tags Unilever results Ice cream

Unilever’s first quarter sees growth in all of its categories, including nutrition and ice cream. However, growth in these two categories is driven by price, with volume sales falling.

Unilever’s results from Q12024 have been released, showing a mixed picture for food and beverage. Despite significant growth, the impact of factors such as rising commodity prices has led to a fall in volume sales for food and beverage.

Growth driven by price, a decline in volume

While there are clear signs of growth in Unilever’s food and beverage categories, especially nutrition, this growth is driven by price, rather than volume.

Unilever’s food and beverage categories, nutrition and ice cream, have both seen growth this first quarter of 2024, at 3.7% and 2.3% respectively. Overall, both categories grew within Europe.

However, it is clear that this growth is being driven by price. In volume terms, both these categories have declined. Ice cream has seen a negative volume growth of 0.9% and nutrition by 0.4% (but in an improving trend). This suggests that sales of products, in terms of volume,  are not increasing, but in fact only growing because of increased prices. This is specific to food and beverage, and is not seen within Unilever’s other three categories (beauty and wellbeing, personal care, home care). 

“The sequential improvement in volume is important, remembering that nutrition is later in the commodity inflation cycle,” suggested Fernando Fernandez, Unilever’s CFO. The reduction in volume sales for nutrition, according to Unilever, is mainly due to SKU reductions. However, Unilever hopes that the volume of sales for nutrition will improve in quarter two within Europe.

Unilever's results in numbers

-        Turnover for the first quarter was €15bn, up 1.4% from previous year.

-        Average sales growth 4.4%.

-        Power brands drove 75% of turnover.

-        Underlying sales in Europe grew by 4%, with 5.5% by price and negative growth of 1.5% from volume.

-        Nutrition grew by 3.7%, with 4.1% by price and negative 0.4% by volume. Turnover was €3.4bn.

-        Ice cream grew by 2.3% with 3.2% from price and negative 0.9% by volume. Turnover was €1.8bn.

Ice cream’s growth was also paired with a decline in volume sales. This, according to Fernandez, “reflects necessary action taken given the increased costs of critical ingredients such as cocoa and sugar.”

Indeed, the price of cocoa has increased by 400%​ in a year, and the price of sugar has felt the pinch​ as well. Price changes have been seen due to a number of factors, including weather patterns, particularly those linked to climate change​, as well as crop diseases.

However, Unilever is working to mitigate this. “Significant operational improvements have been put in place in ice cream in preparation for the northern hemisphere summer season that is coming,” Fernandez said.

Ice cream is also being spun off, Unilever recently announced​, which it suggests will be complete by 2025. This means that operations will change significantly. The company suggested the spin-off was due to the fact that ice-cream wasn't compatible with the rest of its portfolio. 

Successes within food and beverage

There are, of course, outliers to this trend, such as Unilever Food Solutions, a hospitality brand, which grew in volume due to its success in China. Malted milk brand Horlicks also grew well, leading the market, according to Fernandez, in India.

Major brands' successes were driven by health and sustainability. Mayonnaise brand Hellman’s made significant gains with its plant-based range, and Knorr, which according to Unilever CEO Hein Schumacher is one of the company’s ‘power brands’ driving growth, found success with its ‘Eat for Good’ range.

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