New Delhi Hindustan Unilever Limited (HUL)’s ice cream business, under the brand name Kwality Walls, has returned to pre-pandemic levels this year due to the prolonged summer. In an interview, Srinandan Sundaram, Executive Director, Food & Refreshment, HUL, talks about the amazing business reforms, increased focus on home delivery channels and an eye on viable acquisitions. Edited excerpt:
Have sales of your foods and refreshments portfolio returned to pre-pandemic levels?
Food and refreshments have tea, coffee, Horlicks and Boost, Farmers and Knorr and ice cream businesses. In terms of ice cream in particular, we are now seeing us move beyond pre-pandemic levels. We assumed a fixed set of growth but the growth rate went far beyond that. We probably got 10% to 12% higher growth than we thought. For two years, all the Covid disruptions happened in March, April and May – the peak season for ice cream.
The truth is that this season Covid hasn’t disrupted business, ice cream has been able to make a strong comeback. It was a combination of the weather getting hotter and hotter, a slight delay in monsoon and this totally when everything around us is expensive, what could possibly be the smallest expense celebration of a family.
Any numbers you can share?
We are reaching our closed phase. But we have Magnum as the premium brand in our ice cream portfolio, then Cornetto and Feast that really sit in the middle and you’ve got the In-Home Through Walls that is the party pack. Kwality was acquired in 1995 and became Kwality Wall’s umbrella brand. We had acquired Aditya Milk (Vijayakant Dairy & Foods Products Ltd.) a few years back for the ice cream business.
How do you plan to grow the business?
The journey has largely been to grow this market. If you benchmark the per capita consumption of ice cream in India, it is the lowest among the Unilever countries we operate in. It is closer to 400 ml per person per year. This is a country with very little ice cream, very few but lots of sweets.
This market is still seeing a lot of consumption outside the home. But with commerce booming, they’re also now starting to see if people are placing orders at home. It will help the industry grow because if you want to have an ice cream and someone can deliver it to you within half an hour, 40 minutes, of course, that is something that drives 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 Instant Commerce which are the food commerce type players of which Swiggy and Zomato are a huge part. We’ve made a compelling case that ice cream can add to their wallet.
We are ensuring that our brands maintain a consistent presence of the online portfolio, which is the only availability in case of physical stocks. Then there’s the performance marketing to make sure that when you’re looking for ice cream, our brand is top-notch. The third is to really strengthen the portfolio.
Currently, the channel is small and we have put up a lot of premium products. Our premium portfolio is highly indexed in contribution as it is being heavily picked up by affluent consumers. So, it’s doing worlds of wonders for brands like Magnum and Premium Tubs. There is still some time left to design specially for this channel. But the way it is going, that may come sooner rather than later.
How much do you have in your online business?
Right now it is above 7%. This coincides with the rise of investing coming in quick commerce. In fact, it could have been more if we had planned this season better. The entire industry didn’t expect ice cream to come through the way it did. We have stock availability issues… we could have done better if we had anticipated how quickly this industry would bounce back.
Did you expand your distribution during this period?
We invested in the (ice cream) cabinet which is one of the important things. During Covid, we went to a lot of chemist stores as they were allowed to open. More importantly, chemists are very enterprising. 12% is the incremental cabinet that we have invested in.
Is your Aditya Milk acquisition complete? Are you expanding the brand?
Yes, the acquisition is complete. From Aditya Milk we learned how to make low cost ice cream as we were only bringing innovation to the premium end of the market.
in this business, 10 more 20 price points is very important. We sell the brand which is very strong in and around Belgaum. But for us it is a manufacturing capability. It’s not like Aditya’s acquisition will lead to Aditya products alone.
Any other acquisitions you might be eyeing?
Will we keep an eye on the acquisition? Yes; If something comes in our way. But we cannot discuss it now.