Unilever PLC's (LSE:ULVR) investors have had little to shout about in recent years, but Barclays reckons 2026 could finally mark a turning point.
The bank believes the consumer goods giant is on course to combine steady growth with rising profitability, arguing that margins of around 20% need not be viewed as a ceiling.
The catalyst is the long-awaited deconsolidation of Magnum, its ice-cream brand, which has often been seen as a drag on group performance.
Freed from its slower-growing cold chain business, Unilever should deliver around 2% volume growth next year, Barclays said, supported by stronger demand across key emerging markets and a sharper focus in North America.
India is expected to accelerate to mid-single-digit organic sales growth, while Latin America should benefit from easier comparisons.
The US business, which has been quietly reshaped, is also gathering pace and now looks capable of contributing above-average volumes. Europe remains a tough market, but the bank argues Unilever’s competitive position there has improved meaningfully.
Barclays’ analysts see scope for margins to climb further even after hitting 20%, a level once treated as an upper limit following the aborted $140 billion approach from Kraft Heinz in 2017.
They note that brand and marketing investment has risen by €2.5 billion since 2021, lifting spend to 15–16% of sales, higher than rivals such as Procter & Gamble.
Gross margins, meanwhile, are forecast to expand to 47% from pre-2019 levels of 44%, helped by a portfolio tilt toward higher-margin categories like prestige cosmetics and wellbeing products, and away from lower-return brands such as Suave and Elida Beauty.
The company’s premium lines are expected to account for half of sales in future, up from about a third today, and Barclays highlights that new volumes are already coming in at gross margins above 60%.
Incentives have also shifted: 80% of executive pay is now linked to absolute profit rather than margin percentage, encouraging growth in hard currency earnings rather than just ratio management.
Latin America remains a weak spot, with Unilever having pushed through price rises too aggressively during a fragile macroeconomic spell. But Barclays views this as a temporary misstep rather than a structural flaw.
With a refocused portfolio, deeper marketing investment and a leaner cost base, the bank believes Unilever is evolving into what it calls a “higher growth, higher margin company”.
At 4,581p, the shares trade at a discount to Barclays’ 5,500p price target, implying nearly 20% potential upside. For investors weary of Unilever’s years of drift, that could make 2026 a more appetising vintage.