Goodbye, Choco Taco. Hello, Expensive Household Goods - How Unilver Is Handling Inflation

Zinger Key Points
  • "We're working hard to find a way to bring Choco Taco back to ice cream trucks," Klondike said in a tweet.
  • Unilever expects high input cost inflation to remain elevated in the second half of 2022.

Chaco Taco has gone the way of Jell-O Pudding Pops and Flintstone Push-Ups.

Household item conglomerate Unilever PLC UL is discontinuing the beloved ice cream snack, first invented in Philadelphia in 1983.

What Happened: The news, first reported by The Takeout and later confirmed via Twitter TWTR under the company's Klondike handle, drew the ire of fans of the frozen treat, known for its taco shell-shaped cone filled with vanilla ice cream, fudge, peanuts and milk chocolate.

Reddit co-founder Alexis Ohanian even offered to bring it back, although whether he was serious remains to be seen:

Klondike responded a number of times to Twitter users, even ensuring that the ice cream truck staple would perhaps return in the future.

"We know Choco Taco is a huge fan favorite and a top seller for our out-of-home business, so this is particularly painful," the company stated. "We're working hard to find a way to bring Choco Taco back to ice cream trucks in the coming years."

Why It Matters: Companies big and small are making adjustments to offset the effects of inflation. Whether they're cutting back the production of certain items, or jacking up the price of others, consumers are feeling the sting.

Unilever, which owns more than 400 brands around the world including Dove soap, finds itself navigating a “truly unprecedented cost landscape," according to chief financial officer Graeme Pitkethly (h/t Financial Times).

The London-based company expects slower economic growth, and opted to increase prices for its products by 11%.

See Also: Unilever Reports 8.1% Underlying Sales Growth In H1
Still, sales are up across various segments. The first-half (H1) of 2022 showed:

  • Underlying operating profit for the half-year period increased 4.1% Y/Y to €5 billion (US$5.1 billion). Underlying operating margin declined 180 basis points to 17%.
  • Net cash flow from operating activities was €4.3 billion in H1, with a free cash flow of €2.2 billion.
  • Cash and equivalents totaled €5.4 billion, and net debt amounted to €27.1 billion as of June 30, 2022.
  • Turnover growth of 14.9% year-on-year
  • 8.1% Y/Y underlying sales growth
  • Underlying sales for Beauty & Personal Care grew 7.5%
  • Home Care increased 10.7%
  • Foods & Refreshment rose 7.3%.

What's Next: Unilever expects high input cost inflation, widespread across the markets, to remain elevated in the second half of 2022. The company also plans to up advertising and expects underlying sales growth in 2022 to be above the 4.5% - 6.5% range, driven by price with further pressure on volume.

It expects net material inflation for FY22 to remain high at around €4.6 billion. Unilever's full-year underlying operating margin expectation remains at 16%, within its guided range of 16% to 17%.

Unilever opened Tuesday at $48.24 a share. By 12 p.m., the stock was up 2.66%  at $48.38.

See Also: Unilever Recalls 553 Cases Of Knorr Soup Mix Citing Undeclared Milk

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