Hindustan Unilever has agreed to buy Karnataka based ice-cream brand Adityaa from Vijaykant Dairy and Food Products Limited (VDFPL) for an undisclosed amount, seeking a larger slice of the market that is gradually seeing local or family owned brands selling out to multinationals.
The maker of Kwality Walls ice-cream said it will also get the brand’s front end distribution network across geographies and the acquisition is line with the company’s strategic intent to strengthen its position in the category. ““Ice creams and frozen desserts is an exciting category and we see great potential for growth. We believe the acquisition will complement our existing portfolio of Kwality Wall’s,” said Sanjiv Mehta, Chairman at HUL.
Adityaa Milk has its roots in Karnataka and has gradually expanded into Maharashtra, Goa and Kerala. Post the sell-out, VDFPL will continue to pursue its dairy business. HUL said VDFPL will manage the business until the transaction is completed, and will also continue to manufacture for them for an agreed period of time.
Last month, Hindustan Unilever combined its foods and refreshments business into one division in an effort to increase agility, in line with the global category structure of parent Unilever. In the Rs12,000 crore ice-cream market, HUL is the second largest player after Amul with share of over 8% according to Euromonitor.
At present, a handful of national players with big marketing and distribution muscle such as Amul, Mother Dairy, Vadilal’s or HUL’s Walls even Havmore are jostling for retail space countrywide while smaller regional players who collectively still control half the market are clinging onto onto to their different pockets of dominance.
However, the market is fast evolving since HUL took over Kwality ice cream in phases after buying the trademark in 1994 or even after Malaysian PE firm Navis lapped up Nirula’s in 2006 for Rs 90 crore. Many family owned brands including Vadilal and JSF Holdings that sells under the best selling Uncle John, Skei and Lazza are taking a hard look at their prospects in the backdrop of fast changing consumer habits and before facing any meltdown. Late November, Lotte Confectionary scooped up the Havmor – the country’s seventh largest ice cream brand — for Rs 1020 crore in an all cash deal.
Nestle-owned premium ice cream brand Mövenpick and Arizona-based Cold Stone Creamery, both announced their India entry in 2015 to tap into a market, that is expected to grow at a value CAGR of 20% for next 5 years. In 2013, even Unilever’s brought its top grosser from Europe, the premium Magnum ice cream bars.
Source: Economic Times