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REPORT ON HUL IN INDIA

This report is regarding the ice-cream business of Unilever. The company started its business of

ice-cream in 1994. The company was facing losses every year and looking at these figures it was decided

by J.H. Mehta, Executive Director, to revive the loss making ice-cream business. HLL sold ice creams in

40,000 outlets countrywide. But seven cities -Mumbai, Delhi, Kolkata, Hyderabad, Bangalore, Chennai

and Pune-represented two-thirds of the organized 80 million litres ice cream market. So the majority of

the sale was been generated from this portion. Therefore HLL decided to concentrate only on these seven

cities for its Kwality Walls brand. The number of manufacturing units was cut down to six from 40 that

were present in 1995. This was the major decision taken by the company to come out of the losses. It also

decided to launch a range of new products backed by advertisements and innovative promotional offers.

The company decided to promote Kwality Walls as an umbrella brand. The ice cream division madeprofits of Rs. 9.74 crores for the first time during January June 2003, compared to losses of Rs. 2.86

crores and Rs. 9 crores in the first six months of 2002 and 2001. But with this success the company also

realized that the sustainability was hard to maintain as there were other players in the market, so as such

the company had to plan right move at the right amount of time.

In the late 1990s and early 2000s, with the liberalization of the Indian ice cream market,

multinational companies with their premium ice cream brands started coming into the picture. The new

players included Baskin Robbins from the US based Allied Domecq International, Haagen-Dazs (owned

by the Pillsbury Company), the Iowa based Blue Bunny and the Swiss major Movenpick. Despite the

international premium brands had entered India but they could not make much success out of their

ventures. Baskin Robbins, which operated in India through a joint venture with Maharashtra Dairy

Products Manufacturing Company Pvt. Ltd., managed to capture a market share of just fewer than 5% of

the Rs 600-crore organized ice-cream market, growing at only 3% in volume terms and showing a

negligible value growth. 30 Baskin Robbins outlets were closed down across the country. The $600-

million Iowa-based Wells Dairy Inc-owned Blue Bunny ice-cream, which commenced operations in 2000

through distribution and marketing company ZZAz Shack Frozen Foods, withdrew from India in 2002.

Nestle SA acquired Swiss ice-cream player Movenpick, in January 2003. Movenpick had parted ways

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with its local franchisee, Ravi Jaipuria, in mid-2002. Steep operating costs coupled with high prices, were

the roadblocks which Movenpick faced in the Indian market. There were many reasons for the failure of

global brands in India. The high import duties on ice cream was certainly the most crucial among them,

most of these new brands targeted the premium ice cream segment, which accounted for only the top 3-

4% of the population. Not only were these brands expensive, but many flavors were such about which the

Indians had no taste. Given that local ice-cream options were much cheaper and extensively distributed,global brands obviously did not generate the required volumes.

In 2003, HLL was famous as Indias largest Fast Moving Consumer Goods (FMCG) Company

having a turnover of over Rs. 10,000 crores, employee strength of 40,000 and more than 110 brands. In

2004, the Indian ice-cream market was valued at around Rs 1,000 crore of which the organized sector

accounted for Rs 600 crore.

The main competition in the ice cream market was between Kwality Walls and Amul, owned by

GCMMF. GCMMF had startled the industry by claiming that it had become the country's leading ice-

cream seller in both value and volume terms. HLL disputed this by quoting A.C. Nielsen data, which

reported Kwality Wall's overall market share at 38.3% in 2002, against Amul's 16.7%. In individualcities, HLLs share was 36.9% in Mumbai (against 35% for Amul), 36.3% in Delhi (Amul at 9.7%),

30.5% in Bangalore (15.2%) and 54.1% in Hyderabad (13.2%). GCMMF however, contested the data on

the grounds that it was limited to seven cities. Besides, ice cream was sold through exclusive Deep

Freezer Outlets (DFOs).

Glanceatthe different productrange

Feast

The Feast range of ice creams and frozen desserts, launched in 1995, was positioned as a 'youth ice cream

brand with an attitude'. Over the years, Feast expanded its 'chocolate only' portfolio by including

refreshment products like Mango Zap, Calypso Punch and Jaljeera Blast. In 2001, Kwality Walls

launched the Feast Snacko priced at Rs. 15. It was a three-layered chocolate product available in the stick

format.

Cornetto

Launched in 1996, with the tag line Bite bite main pyar, Cornetto targeted young adults and was

positioned as the product for romantic and special moments. In 2002, to the range of Chocolate,

Butterscotch and Strawberry Cornettos, HLL added the Super Cornetto range, which came in two

combinations - Jamaican Magic and Hawaiian Bliss. Jamaican Magic was a combination of Rum &

Raisin and Coffee, with a core of chocolate sauce cone topped with nuts. Hawaiian Bliss was a

combination of the black currant and strawberry flavors with a strawberry sauce cone and a cherry

topping. Both the Super Cornettos, which were substantially larger than the ordinary Cornetto, were

priced at Rs 30.

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Max

Targeted solely at children, Max was launched in the year 1999 as the 'masti'ice cream. Maxs punch line

said, 'Masti kar Befikar'and encouraged all kids to go ahead and have lots of fun (Exhibit: III). All Max

products were fortified with extra vitamins. Max Cups and Max 123 had Vitamin A while Max Orangeand Max Juice had real fruit juices and Vitamin C. HLL claimed that a single Max Orange candy offered

a child 15% of his daily requirement of Vitamin C.

Sundaes

Kwality Walls Sundaes were launched in 2001 in India in Chocolate, Strawberry and Mango flavors.

Later, HLL added a Black Currant8 sauce and Black Currant Dry Fruit pieces. Kwality Walls positioned

Sundaes as an offering, which helped bring families together for fun and enjoyment, in an age when

families hardly found time to spend together. It was called the 10 PM ice cream to symbolize the coming

together of family members to have ice cream at night after dinner (Exhibit: I).

Softies

HLL had been a pioneer in tapping the softy cone segment (soft ice-cream dispensed into a cone from a

machine), whose size was estimated at Rs. 30 - 40 crore. After six months of test marketing in Chennai,

HLL announced the launch of Softy kiosks for selling softy ice creams in 2000. Investment in each outlet,

including the vending machine, worked out to Rs 7 lakh. The product was priced at Rs 5 per cone. When

Kwality Walls launched its softy cones in Chennai for Rs 5, players like the Bangalore-based MTR foods

and fast food chains like McDonalds were already operating in the market. Also, there were other local

parlors selling softy cones. In 2003, the softy ice creams business accounted for less than 5% of HLLs

ice cream segment revenues.

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Market Competition:-

HLL had a tough competition from Amul India. The competition was a price based competition.

Yet HLL manage to maintain itself at a stagnant position. It compete Amul on the base on the base of

quality & verity. Introducing new product range & lowering down the price, it had a competitive

advantage. Concept of home delivery & a communication channel with a tagline, HO JAE DIL KACONNECTION were two new concepts in the Ice-cream market.

Here, Amul has a bigger Volume Share; HLL is playing with a greater Value Share. Now, HLL

has planned to launch its International products in India with modified Indian Tests. HLL hops that it will

help getting a bigger Volume Share also.