Why Unilever should choose vegan burgers over toothpaste

In 2018, the Dutch company The Vegetarian Butcher was acquired by Unilever. Some accused the producer of meat alternatives of selling out to Big Food and Big Money. Others, among which vegan enthusiasts like myself, applauded the move, because the acquisition could take the activities of the Butcher to the next level. If we are really serious about a fundamental shift in what we eat, small idealistic companies won’t be enough, and Big Food needs to step in as well. Unilever did.

?Four years later, Unilever’s entire food division - including its vegetarian range - seems to hang in the balance. This week, GlaxoSmithKline turned down Unilever’s bid to buy its consumer products arm - which includes brands like Aquafresh toothpaste and Advil pain relief medication - for ￡50 bn.?

?Investors didn’t seem to be too happy about the failed bid, and the sell-off brought Unilever’s stock price to its lowest point in almost five years. In response, the company stated it would henceforth focus on health, beauty and personal care products, and potentially sell its food division to help finance new acquisitions.

?Increased worldwide adoption of meat alternatives and other plant based products is of crucial importance not just for the sustainability of our diet - but also for public health, and for phasing out intensive factory farming. But in spite of their growing popularity, plant based products still face significant hurdles. There’s image. There’s price. There’s taste. There’s distribution.

?A giant like Unilever, with tons of R&D experience and a distribution network in 190 countries could play a pivotal role in addressing these hurdles, and help mass market sustainable, healthy and animal friendly food products, which are at the same time affordable.?

?Sure, Unilever is not the only party, and other big brands like Nestlé and Danone are investing more and more in plant based. But none of them have shown the same dedication to animal free foods as Unilever has. And once sold off, for all we know Unilever’s plant based alternatives end up in the hands of less capable players who are less driven and lack vision.

?Unfortunately, sustainability isn’t exactly top of mind for most investors. In fact, in a letter to his shareholders, Terry Smith, founder of Fundsmith - one of Unilever’s top investors, stated that Unilever’s management is obsessed with “publicly displaying sustainability credentials at the expense of focusing on fundamentals.” He criticized, among other things, the company’s decision to stop sales of Ben & Jerry’s icecream in Israeli- occupied Palestinian territories.?

?Never mind sustainability and other “non-fundamental” issues then: let’s look at financials. Yes, some of Unilever’s food brands are growing slower than its other consumer products - which some analysts are blaming on a lack of innovation. But at the same time, sales in the plant based food products range are spectacular, with a growth of 70% for the Vegetarian Butcher brand in 2020. And there are good reasons to believe this upward trend won’t stop anytime soon.?

?Scenarios by different consultancy firms predict double digit growth for many years to come, with some viewing the collapse of the meat and dairy industry as a matter of time. Not only, therefore, does it look like major investments in plant-based foods will be amply rewarded: there is also huge risk for companies in not diversifying.

?The world is not waiting for marginal improvements in the functionality of toothpaste. But it is waiting for a structural change in our diets towards more plant based. We’re talking about what might be the biggest food revolution in centuries. Unilever has the keys in hand to become a market leader in this segment, and play a significant role in the protein shift. They can earn lots of money with it for their shareholders and at the same time save our planet for future generations. We could feed four billion more people with existing cropland if we stop using it for animal feed or biofuels.?

?It would be a sad thing to see Unilever sell off a division that is both financially rewarding and socially impactful for the sake of whiter teeth and appeasing shareholders in the very short term.?

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