The future direction of Anglo-Dutch household product giant Unilever (UL) has just become a little clearer. Almost immediately after announcing plans to sell its struggling margarine and spread operations, the maker of Hellmann’s mayonnaise and Ben & Jerry’s ice cream revealed that it is set to buy natural, non genetically-modified condiments specialist Sir Kensington.
The acquisition of U.S.-based Sir Kensington, which according to Bloomberg cost the European company about $140 million, forms part of Unilever’s drive to branch out into higher growth markets. Upstart Sir Kensington shot to fame for its hip and healthy ketchup and vegan mayo, which is made using aquafaba, a cooking liquid that has has become increasingly popular with a growing tide of consumers shopping for eco-friendly foods.
“Their mission to bring ‘integrity and charm to ordinary and overlooked food’ is very much in line with our Unilever Sustainable Living Plan,” said Kees Kruythoff, president of Unilever’s North America business. "Sir Kensington’s is an innovative business with outstanding products and a leader in the organic and natural marketplace. We look forward to leveraging our joint understanding of food trends and consumer preferences to significantly grow the business.”
Unilever rejected a $143 billion takeover offer from Kraft Heinz (KHC) in February and has undergone a big turnaround in recent months. A slowdown in key emerging markets, coupled with lower consumer prices in Europe, led the company to reward patient shareholders with a share buyback program. It also announced plans to sell its market leading margarine business. Revenues from margarines and spreads fell 5.1 percent in the first quarter of the year. (See also: Why Unilever Said No To Kraft's $50/shr Merger Offer.)
Unilever has developed a reputation for snapping up young brands to boost its image and exposure to faster-growing markets in recent years. Prior to buying Sir Kensington, the company made a number of other small bolt-on acquisitions. They include the purchases of Vermont-based Seventh Generation, which makes environmentally-friendly cleaning products, and Dollar Shave Club, a toiletry-delivery business popular with millennials. (See also: Unilever Announces Shareholder-Centric Moves.)