HUL is finally melting its Ice cream (Frozen Dessert)
A note on HUL evaluating a potential sell off of its Ice cream business.
Hindustan Unilever (HUL) has been in the ice cream business for over 30 years through its brand Kwality Walls and the premium Magnum brand.
You’d think that, given HUL’s dominance in home care and personal care, they’d easily crack the Indian ice cream market too. But that hasn’t been the case.
One major reason? The age-old debate over “ice cream” versus “frozen dessert.” Brands like Amul and Havmor proudly claim their ice creams are milk-based. That resonates with Indian consumers, who often prefer ice cream made from milk.
On the other hand, HUL uses vegetable oil in its products, which has led to retailers and consumers labeling Kwality Walls as “Dalda Ice Creams”—a throwback to the old HUL brand, Dalda, which sold hydrogenated vegetable oil.
HUL never even attempted to make milk-based ice cream, possibly because the home care and personal care segments were more lucrative priorities.
The second challenge was distribution. In India, distribution is notoriously tough to master, even for a giant like HUL. Ice cream is often an impulse purchase, something you grab on a whim while shopping. For that to work, it needs to be available everywhere—at arm’s length, really.
But the Indian ice cream market has been dominated by regional players like Amul, and others such as Vadilal, Havmor, and Arun in the south. HUL struggled to crack this distribution code.
Now, it seems HUL might be ready to cash out of the ice cream business. They’re reportedly exploring a sale, and potential bidders could include Nestlé, RJ Corp (which operates Pizza Hut), and MMG Group (which runs McDonald’s in north and east India).
Given that HUL’s ice cream business clocks in around INR 1,800 crores in revenue, they could easily sell it off for 3-5 times that amount.
In the end, this decision makes sense for HUL. They have bigger priorities, and the growing competition from regional players makes the ice cream business a tough nut to crack.
Focusing on its core strengths while potentially selling off the ice cream segment seems aligned with its strategic goals and investor interests.
Source: ET