Dive Brief:
- Unilever is discontinuing its Choco Taco ice cream treat, which is part of its Klondike brand.
- According to a company statement, the decision to cut the taco-shaped treat came after an “unprecedented spike in demand” across Unilever’s portfolio during the last two years. The company said it had to make “very tough decisions to ensure availability of our full portfolio nationwide.”
- While ice cream was once one of Unilever’s top priorities, the company has recently been focusing its energies away from food, reorganizing its entire portfolio to prioritize its more profitable health and beauty sector.
Dive Insight:
The news of Choco Taco’s demise trended on social media, as thousands of people tweeted their love (and disdain) for the ice cream treat in a waffle cone-like shell.
But as parent company Unilever is zeroing in on areas where it can find the most profit — especially as inflation and supply chain issues are roiling manufacturing — it has been significantly paring its food portfolio. Most of the company’s actions have been divestments, like selling the vast majority of its tea business last year, but discontinuing a smaller brand doesn’t seem too far fetched. Unilever CEO and Executive Director Alan Jope told reporters in January that the company may divest more of its lower-growth food brands.
As a company, Unilever is keeping its head above water. According to its earnings report for the first half of 2022, the company had 8.1% sales growth compared to last year — though much of that came from price increases.
Ice cream didn’t merit much mention, but the report noted sales saw “high single-digit” growth. In the company’s second-quarter earnings call on Tuesday, CFO and Executive Director Graeme Pitkethly said the ice cream growth was mainly due to more people buying the treats outside of the home. Unilever is looking to increase its capacity for premium ice cream in the U.S., Pitkethly said. But the U.S. “mass ice cream business,” Jope said, is a “particularly unprofitable part of our portfolio.”
It’s not clear if Choco Taco was considered a “mass ice cream” novelty, but the Klondike brand, known for its thick ice cream squares coated in chocolate, branched out into sundae cones and squeeze pouch milkshakes last year. Unilever may have chosen to focus the brand on these newer products, instead of a 1983 innovation that came to the brand through other acquisitions.
A beloved product being discontinued doesn’t mean it’s gone for good. After Hostess went bankrupt in 2012 and ceased production of its beloved Twinkies, the company was bought soon afterward by Apollo Global Management and Metropoulos & Co — which took it public in 2016. Necco Wafers went out of production in 2018 as the New England Confectionery Co. went bankrupt, but they returned in 2020, manufactured by Spangler Candy.
On Monday, Reddit co-founder Alexis Ohanian tweeted at Unilever that he would like to buy the rights to Choco Taco. Ohanian has experience investing in the food business, both personally and through his venture capital firm Seven Seven Six, so he could easily find the connections to bring Choco Taco back — and maybe even in a slightly different format. After all, he is also an investor in plant-based ice cream maker Eclipse Foods.
