Why Unilever, the King of Margarine, wants out

Unilever margarine brands Becel, Blue Band, Bona and Zeeuws Meisje are displayed in a supermarket in Zwijndrecht, the Netherlands. Unilever will cease the production of its spreads brand due to the company's margarine division being put up for sale a
Unilever margarine brands Becel, Blue Band, Bona and Zeeuws Meisje are displayed in a supermarket in Zwijndrecht, the Netherlands. Unilever will cease the production of its spreads brand due to the company's margarine division being put up for sale after the takeover bid from US rival Kraft Heinz.PHOTO: EPA

(BLOOMBERG) - Unilever, formed in 1930 by the merger of a Dutch margarine maker (Margarine Unie) and a British soapmaker (Lever Brothers), is ditching the margarine.

From chief executive officer Paul Polman's statement on April 6: After a long history in Unilever, we have decided that the future of the Spreads business now lies outside the Group.

That "spreads" business includes the two leading margarine brands in the US. Country Crock and I Can't Believe It's Not Butter. Among Unilever's other margarine brands around the world are Becel, Blue Band, Dorina, Flora, Pyschka and Rama. The company is basically Margarine Central.

But margarine is not where the action is anymore. "Sales in spreads declined", Unilever acknowledged in its 2016 annual report, "as modest growth in emerging markets was offset by the continued but slowing decline in developed markets". This decline is partly due to the comeback of butter, as the previous medical consensus that it was a health risk and margarine was not crumbled in the face of new evidence. Butter's resurgence probably also has something to do with rising affluence and food snobbery. In any case, after outselling butter in the US from 1958 through 2004, margarine is back in second place: Unilever, after years of throwing shade at butter ("Butter kills," Polman said in 2010), actually began adding the stuff to some of its margarines in 2013 to make them taste better.

From Matthew Boyle's January 2014 Bloomberg story on the shift: "Margarine has become a marker for cheap, processed, artificial, unhealthy food," says Marion Nestle, a nutrition professor at New York University. "The irony is hilarious. Unilever went to a lot of trouble to formulate healthy margarines, but the zeitgeist has caught up with them."

Adding a little butter to the company's margarine was not going to change that perception: If people want butter, they want butter. More important, though, is that it is not just the return of butter that did margarine in. This is quite clear if you look at consumption data from Margarine Unie's home market, the Netherlands: In the Netherlands, butter has not really made a comeback (although, once you convert those kilograms to pounds, it is apparent that the Dutch eat more of it than Americans do), but margarine consumption has nonetheless collapsed. Also apparent is that the Dutch ate insane amounts of margarine - more than 18kg per person per year! - in the 1950s and 1960s.

It is testimony, I guess, to the power of having the world's leading maker of a product in your backyard. Maybe the Dutch felt like they had to eat the stuff out of patriotic duty. Even now (or at least as of 2009), they eat a lot more margarine and what they call "halvarine" (light margarine with about half the fat of regular) than butter. The country's national breakfast consists of bread smeared with margarine (or butter, but usually margarine) and covered with chocolate, fruit or anise sprinkles.

Still, dietary habits can change. I was not able to find actual statistics on this, but my impression from a recent visit is that bread with sugary sprinkles is not quite as universal a morning meal as it used to be in the Netherlands. In the US, when you look beyond butter and margarine to other fats, you get a similar picture of changing diets: So yes, there is evidence of a comeback not just by butter but also by lard as a hankering for real food combines with concerns about trans fats (which explains that collapse in shortening consumption). But the really big story is the rise of oils made of corn, safflowers, canola, olives and such. We are pouring our fats instead of spreading them. And that is bad news for the spreads business.

1. Why isn't there any margarine data after 2010? Because, according to the US Department of Agriculture", in 2011, the Census Bureau discontinued the Current Industrial Reports (CIR), which provided data for added fats & oils (except butter), durum flour, and candy & other confectionery products." And here is why that happened, according to the Census Bureau: In preparation for the FY 2012 budget, the Census Bureau did a comprehensive review of a number of programmes. The review concluded it necessary to terminate and reduce some existing programs in order to secure funding for new programs and manage cyclical increases for other data collection programs.

2. In 2009, per-capita butter consumption was pounds in the Netherlands to pounds in the US. Or, if you prefer, it was kilograms to kilograms.

3. In this case I do not have an answer for why it ended, and it did not really seem like it would be a good use of my time to call the Hague to try to find out.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of The Myth of the Rational Market.