Earlier this week, Bloomberg reported that Unilever plans to spin off its food business, after carving out its ice-cream unit into The Magnum Ice Cream Company, including India’s Kwality Walls. It continues to sell brands such as Hellmann’s, Kissan, Brooke Bond and Horlicks in India.
“Looking ahead, our priorities are clear: more beauty and well-being and personal care,” Unilever CEO Fernando Fernandez said in July 2025.
Later, the Financial Times reported that Unilever and Kraft Heinz held talks about a potential merger of their food businesses.
While the future of these deals is uncertain, they reflect a broader global trend of major FMCG companies reducing their food portfolios—a contrast to India, where private capital is pouring into packaged foods. What’s driving the divergence? Are weight-loss drugs a factor? Mint explains.
What were the other major food business spin-offs or sales?
Nestlé spun off its bottled water unit in 2025 and plans to sell its ice-cream business in 2026. Kraft Heinz will split its slow-growth grocery brands (Kraft Singles, Lunchables) from faster-growing ones (Heinz Ketchup and Philadelphia cream cheese). Mars Inc. acquired Kellanova from Kellogg’s, which houses brands Pringles and Pop-Tarts.
The pattern: global food giants are carving up portfolios, often ahead of exits.
How is the global packaged food industry faring?
Global packaged food companies delivered 2.9% shareholder returns, down from 15% a decade earlier, a 2025 Bain & Company report showed. Although food is Unilever’s second-largest global business (25% of revenue), the segment has grown slower than most others since the pandemic (2.5% in 2025), falling short of the company’s targeted 4-6% growth.
Nestle reported a 3.5% organic growth in 2025, led by powdered and liquid beverages (mainly coffee) at 7.5% and confectionery at 8%.
“Global FMCGs are actively reallocating capital away from low-growth, promotion-heavy categories toward structurally higher-growth and higher-margin segments like health, beauty, and pet care, which improves both return on invested capital and valuation multiples,” said Akshat Gupta, principal, food and agriculture, at Praxis Global Alliance. “Portfolio simplification is a key driver, as reducing SKU (stock keeping unit) complexity and non-core geographies allows companies to improve execution speed and organizational focus.”
What are the reasons for this slowdown?
The slowdown is driven by shifting consumer priorities—greater scrutiny of ultra-processed foods, ethical sourcing and climate impact. At the same time, food-tech innovation has outpaced spending by incumbents: over the past five years, venture capital investment in food tech has been 1.7x the combined R&D spend of the top 10 food companies, according to Bain & Company.
With almost 70% of research and development budgets tied up in incremental tweaks and brand extensions, large food companies are falling further behind on breakthrough innovation.
What role are GLP-1 drugs playing in the market?
Health is reshaping demand as consumers balance nutrition, convenience and taste. Companies are addressing GLP-1 weight-loss drug users as a separate market and are innovating.
PepsiCo CEO Ramon Laguarta noted in Q1 of 2025 that users of GLP-1 weight-loss drugs are eating less but sticking to brands in smaller portions, with a tilt toward protein, fibre and hydration—prompting product innovation.
Nestlé launched Vital Pursuit in 2024, designed for GLP-1 users with high-protein, portion-controlled meals. As preferences fragment, markets are shrinking into niches.
“Demand fragmentation is likely permanent and weaker brand loyalty, combined with higher trial rates, reduces the effectiveness of traditional mass-marketing models,” Gupta said.
What is happening in India?
Private equity and venture capital investment in the consumer sector rose to ₹35,800 crore across 309 deals in 2025, up from ₹23,000 crore across 232 deals in 2024. Food companies are attractive for their high growth and export potential, along with multiple exit avenues as large listed consumer companies continue to acquire and scale packaged food brands.
India benefits from low per capita consumption and strong income growth, driven by both old and new companies and products. India’s packaged food market is projected to expand at a compounded annual growth rate of 11% to ₹17.1 trillion by FY29, according to Orkla India Ltd, which specializes in food products including spices, ready-to-eat meals and snacks.
Indian products focus on health, offering millet-based, roasted, or minimally processed snacks.
“The ecosystem has a broader and more active startup base targeting multiple niches—protein, clean-label, regional—which increases innovation intensity relative to global FMCGs,” Gupta said.
While Indian companies have not targeted GLP-1 products yet, the market remains unpredictable with the launch of generic versions of these drugs on 21 March. However, large Indian companies have been on top of trends like protein and fibre till now to remain relevant. If the food and beverage market in India changes, as it did in the US with the GLP-1 wave, it is anyone’s guess.