Hindustan Unilever Ltd’s (HUL) ice cream business under the umbrella brand Kwality Wall’s is back to pre-pandemic levels, thanks to the prolonged summer this year. In an interview, Srinandan Sundaram, executive director, foods and refreshment, HUL, spoke about the surprise business recovery, increased focus on home delivery channels and an eye on viable acquisitions. Edited excerpts:
Have the sales of your foods and refreshment portfolio returned to pre-pandemic levels?
Foods and refreshment has the tea, coffee, Horlicks and Boost, Kissan and Knorr and the ice cream businesses. Specifically in the context of ice creams, we are now seeing us move ahead of pre-pandemic levels. We assumed a certain set of growth but the growth rates far surpassed it. We got probably a good 10% to 12% higher growth than what we thought we will get. For two years, all the covid disruptions happened in March, April and May—peak season for ice cream.
The fact is that covid has not disrupted businesses this season, ice creams have been able to come back quite strongly. It was a combination of weather becoming hotter and hotter, little bit of a delay in monsoon and this whole bit of when everything around us is expensive, it’s probably the smallest cost celebration a family can have.
Any numbers you could share?
We are reaching our closed period. But our ice cream portfolio has Magnum as the premium brand, then Cornetto and Feast which really sit in the middle and you’ve got the in-home through Wall’s which is the party packs. Kwality was acquired in 1995 and Kwality Wall’s became the umbrella brand. We’ve also had an acquisition a couple of years back of Adityaa Milk (Vijaykant Dairy and Foods Products Ltd) for its ice cream business.
The journey has been largely one of developing this market. If you benchmark per capita consumption of ice cream in India, it’s among the lowest across the Unilever countries in which we operate. It’s close to 400ml per capita per year. It’s a country which has very little ice cream, very infrequently but has a hell of a lot of dessert.
This market is still seeing a lot more outside-the-home consumption. But with quick commerce coming in, they are also now beginning to see if people are ordering home. That will help the industry to grow because if you want to have an ice cream and somebody can deliver it to you within half an hour, 40 minutes, for sure, it’s something that drives up the adoption.
So are you working towards home delivery?
Yes, it’s called Ice cream Now—a platform within our company, where we partner with pure quick commerce which is the food commerce kind of players of which Swiggy and Zomato is a very large part. We have made a compelling case that ice cream can add to their wallet.
We’re making sure that our brands have consistent presence of portfolio online, which is just availability in terms of physical stock. Then there’s performance marketing to ensure that when you are looking for ice creams, our brand features right on top. Third is to really strengthen the portfolio.
Currently, the channel is small and we’ve put a lot of premium products. Our premium portfolio is over-indexed in contribution because it’s being picked up a lot more by affluent consumers. So, it’s doing a world of wonders for brands like Magnum and premium tubs. Designing exclusively for this channel is still some time away. But that may come sooner than later the way it is going.
What’s your share of online business?
It’s upwards of 7% right now. It has coincided with the rise of the investments coming in quick commerce. In fact, it could have been higher had we had planned this season better. The entire industry didn’t expect ice cream to come through the way it has come through. We’ve had issues of availability of stock… we could have done better if we had estimated how soon this industry will bounce back.
Did you expand your distribution during this period?
We did invest in (ice cream) cabinets which is one of the critical things. During covid, we went to a lot of chemist stores because they were allowed to open. More importantly, the chemists are very entrepreneurial. 12% is the incremental cabinets that we’ve invested in.
Is your Adityaa Milk acquisition complete? Are you expanding the brand?
Yes, the acquisition is complete. What we learned from Adityaa Milk is how to do low-cost ice cream since we were bringing in innovations only in the premium end of the market.
In this business, ₹10 and ₹20 price points are very crucial. We do sell the brand which is very strong in and around Belgaon. But for us, it is a manufacturing capacity. It’s not that Adityaa acquisition will only make Adityaa products.
Any other acquisitions that you may be eyeing?
Will we eye an acquisition? Yes; if something comes our way. But we can’t discuss it right now.
Source : HT Mint July 3rd 2022 by Shuchi Bansal only title edited by Team dairynews7x7