Hindustan Unilever (HUL), India’s leading consumer goods firm, announced on Friday that it is forming a committee of independent directors to assess its ice cream business. This development follows Unilever’s decision in March to spin off its $8.6-billion ice cream unit by the end of 2025.
Hindustan Unilever (HUL) said, “Taking a proper consideration, the board has deemed it advisable to determine the fate of its ice cream business by forming a committee of independent directors to study the potential of its ice cream line and advise the board and the audit committee on the best course to take, with regard to all the stakeholders involved.”
Scholars propose that Hindustan Unilever (HUL) might look at ways of unbundle its ice cream operations, just like Unilever, its parent firm recommends. Actually, ice cream segment of the company is relatively a small business in India and contributes only about 3% to the overall company’s income. HUL report that its total turnover for the year ending March 31, 2019, also referred to as FY24 was ₹ 59,575 crore. Ice cream segment is in HUL’s food and refreshment cluster, which contributes to almost 26% of FY ’24 sales of ₹15,292 crore.
Distinct Ice Cream Model
In early March Unilever noted that the ice cream category operates on a different model to most other FMCG packet food categories. It calls for a cold-chain distribution system, a peculiar market approach, and even abrupt change of seasons. This has been done in an effort to lessen the complexity of the company and to allegedly make it more streamlined.
Kwality Wall’s, Cornetto and Magnum ice creams are some of the brands that make up Hindustan Unilever (HUL)’s ice cream segment in India. Both Wall’s and Magnum are world top ten brands with Ben & Jerry’s, another brand owned by Unilever.
The main competitors of Hindustan Unilever (HUL) in the Indian market are the private brands such as Amul, Mother Dairy and other regional and national brands like Havmor, Vadilal, Baskin and Robbins, Haagen-Dazs, Naturals, Arun and Cream-belle. The market size of the Indian Ice Cream industry is ₹16,000 crore out of which 70% of the industry comes under the organized retail segment because of the various co-operatives and dairy players.
When approached by Financial Express, Hindustan Unilever (HUL) said, “We are considering the various directions in view of the world announcement by Unilever.”
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