FMCG major HUL is aspiring to be a market leader in the fast-growing ice creams and frozen desserts category in the next few years and it would continue to invest in infrastructure and physical expansion, a top company official said.
According to a PTI report: HUL expects a deeper penetration in the category in the coming year led by several factors such as creation of more cold chain capabilities, improvement in the availability of electricity in rural areas coupled with reasons as evolving food habits and rising discretionary incomes in Tier I & II cities.
HUL, which had last month announced to acquire Karnataka-based ice cream brand Adityaa, would also continue to pursue such inorganic growth opportunities to expand its reach deep further, the official said.
“We are very bullish on this product category in India. We are targeting market leadership here in the next few years,” Sudhir Sitapati, Executive Director, Foods & Refreshment, HUL told PTI.
“For this, we are willing to invest for growth; to see it continue to grow at high double-digit volumes for us in the coming years,” he was further quoted by PTI as saying.
However, the company did not share the amount it would invest in the segment.
According to him, the segment is very competitive and needs significant capital to invest upfront in building production and cold chain capabilities before realising a profit and sustain that in the long run.
“Unilever, being the global leader in the ice creams and frozen desserts business understands the subtleties well. We will continue to invest for growth behind building infrastructure and physical expansion and building stronger brands,” Sitapati told PTI.
According to Sitapati, ice creams and frozen desserts segment is a “very fast developing product category” and has “massive headroom” for growth over the next many years in India as penetration and consumption is significantly lower than the comparable global benchmarks.
“In our estimates, the Indian market is growing at 10-15 percent annually, and with the right inputs, it will continue growing at this pace,” he was quoted by PTI as saying.
HUL, which has now brands — Kwality Wall’s, Magnum and Cornetto to cater at different price points. Moreover, regional brands like Adityaa would synergise in both distribution and portfolio in its fold, Sitapati added.
“Each brand fulfils the needs of a specific consumer segment. India is such a large, developing market that we see an opportunity for growth across all segments,” he told PTI adding “we are seeing growth across various segments and brands.
While Magnum would continue to cater the premium ice cream segment, Cornetto and Feast from Kwality Wall’s portfolio would continue to play in the high growth mid-segment.
“Interestingly, wherever we introduce Magnum across the country, we see demand for it, which shows the strength of the brand and the increasing willingness of Indian consumers to pay for premium products,” Sitapati was quoted by PTI as saying.
On being asked whether HUL is still looking for more such acquisition opportunities, he said it “will look at all forms of expansion opportunities.
” We are always evaluating viable options. HUL evaluates proposals for Mergers and Acquisitions from time to time as part of its strategy to grow its businesses. Any such proposal that has a strategic fit in our portfolio is considered for evaluation,” Sitapati told PTI.