Hindustan Unilever Limited (HUL) is currently evaluating various future options for its ice cream business in India. This decision comes in the wake of Unilever’s global separation plan, which aims to simplify and enhance performance by separating the ice cream business. The company intends to discuss these options with the HUL Board and Unilever management in the coming months. Once the approach is finalised, HUL will communicate further details.
HUL operates in the Indian ice cream market with three prominent brands: Magnum, Kwality Walls, and Cornetto. The ice cream business contributes approximately 3% or Rs 59,144 crore to HUL’s revenue. However, the ice cream segment has an inherently different business model compared to the rest of Unilever’s operations. It involves a cold-chain go-to-market operating model, seasonality, and a distinct innovation rhythm.
While the exact implications of the global separation plan on HUL’s Indian ice cream business are yet to be clarified, industry experts believe that any significant changes in HUL’s operations are unlikely. HUL’s ice cream business accounts for a meagre 3% of its FY2023 sales, unlike its parent company Unilever, which derives over 13% of its revenue from the ice cream segment. HUL’s ice cream business is part of the Food & Refreshment segment, contributing to 25% of its revenue.
RTM Watch’s Take
HUL’s evaluation of future options for its ice cream business in India reflects the company’s proactive approach to adapt to changing market dynamics. The unique operating model of the ice cream segment presents both challenges and opportunities for HUL. By carefully assessing the potential impact of Unilever’s global separation plan and exploring various options, HUL can strategically position its ice cream business for sustained growth in the Indian market.
