Production facilities for Bulgarian-made ice cream seem to be melting away. With the announced closure of its Bulgarian plant near Veliko Tarnovo, Unilever, which is reportedly the second biggest presence in the ice cream market, follows Nestle in becoming merely an importer of goods.
Unilever has not offered concrete reasons for its decision. Unofficially, however, there seem to be three key drivers - staffing issues, hemorrhaging losses at the factory, and an international restructuring of the British-owned corporation's ice cream business.
This exit also marks the second time Unilever has scrapped its Bulgarian production. The first time was in 2007, when it closed its oil production base in Dobrich and then pivoted to being an importer.
Who and what?
Unilever's plant in Debelets, Veliko Tarnovo, will officially cease production on the 30th of April 2025, while its warehouses will continue to operate until late August of the same year. Production for the Bulgarian market will be transferred to other facilities, outside the country, with the most likely destination being its Romanian plant in Suchaeva. With the accession of both countries to the Schengen zone this makes cross-border transport easier and cost-efficient.
Operations within the country have been handled up to this point by the locally established Unilever Ice Cream Bulgaria, after in 2018 it acquired the family-owned Ice cream factory company in Veliko Tarnovo, who were the producers of the local Denny brand. This investment, however, seems to have gone bust, because seven years later the plant is closing. Currently, no information is available about the fate of the plant's assets such as machinery and buildings.
Why?
Unilever responded to questions from Capital by saying their decision follows a "strategic business analysis" and "comes with a plan to ease production interactions and secure stable development of operations of the subsection over a long-term period". Unfortunately, the global corporation's answers do little to explain in detail why they have decided to abandon production in Bulgaria.
Unofficial information says that the company, similarly to a lot of enterprises in Bulgaria, is having difficulties securing enough trained employees.
Financial statements from Unilever Ice Cream Bulgaria show that in 2023 the corporation had 29 mln. levs in income, which is only a million-and-a-half less than the previous year. However, both years showed an operational loss totaling 8 mln. levs split evenly between them and a total operational loss of 14 mln. levs by the end of 2023.
Perhaps unsurprisingly, the decision for the plant closure in Bulgaria comes a little over ten months after Unilever announced a global plan for growth, which entails a decrease of 7500 personnel globally by the end of 2025, or about 6% in total of its global operations. By comparison, the company has about 11 000 employees in Europe and 128 000 globally. Market shifts over the past couple of years have forced Unilever to focus on its top 30 brands, which include its Hellmann's mayonnaise and Dove cosmetics, while also offloading its less profitable business branches.
Hence, in March 2024, the British owned corporation announced that its ice cream business arm, which includes Ben and Jerry's, Wall's and Magnum, would be operating as a separate business with its HQ in the Netherlands. With a total turnover of about 15 billion euros, representing 16% of total sales for the corporation, the ice cream business is slower than other sectors, which is also due to its different operation model, as explained by Unilever. As a result, the main focus for the future of the British international company will be Beauty & Wellbeing, Personal Care, Home Care and Nutrition.
What's next?
About 95 people will be directly affected by the closure of the Debelets plant. "All employees will be aided by the company with a compensation package, as well as consultations and reorientations on the job market, so that they can find their new role and professional realization," Unilever told Capital.
The company's responses indicate that the withdrawal process has already begun and will continue for another couple of months. "It entails reorganization of the operations, due to a decrease in volume and optimization of the portfolio with a goal of focusing on the growing segments. All tendencies will be taken into account, customer preferences, consolidation and optimization of different segments," stated Unilever in their official response to Capital.
All spaces within the factory will be "emptied out and reorganized, with the production of favorite brands of ice cream for Bulgarians being taken over by factories that are part of Unilever's portfolio. The Bulgarian brands and licensed products will continue to be developed with an emphasis towards the local market," the company added.
The ice cream market
Estimates of the iced dessert market vary in the country due to differing criteria and small businesses who are producers and don't even figure in statistics. According to unofficial data, the overall sector is valued as high as 200 mln. levs per annum.
In the top 3 spots for 2023 were Froneri Bulgaria, Unilever Ice Cream Bulgaria and Izida - Dobritch.
Of them Froneri Bulgaria has 93 mln. levs in sales, which equates to a growth of 21% compared to the previous year, with a profit of 6.9 mln. levs. According to a report from the company it is a leader in the sector with a 59% market share.
Izida - Dobritch was established in 1991 as a small family business owned by Mladen and Temenuga Mateevi. From 2013 to 2021 the company was the official distributor of ice creams under the Mars brand for Bulgaria. In 2016 it became the official distributor of Häagen-Dazs in Bulgaria, a position it still holds. In 2023 Izida had 14.6 mln. levs income, which is a growth of 31.8% on 2022, with a profit of 3.36 mln. levs.
Production facilities for Bulgarian-made ice cream seem to be melting away. With the announced closure of its Bulgarian plant near Veliko Tarnovo, Unilever, which is reportedly the second biggest presence in the ice cream market, follows Nestle in becoming merely an importer of goods.
Unilever has not offered concrete reasons for its decision. Unofficially, however, there seem to be three key drivers - staffing issues, hemorrhaging losses at the factory, and an international restructuring of the British-owned corporation's ice cream business.
