Adityaa Milk brings in distribution and portfolio synergies to Kwality Wall's across Maharashtra, Goa, Karnataka and Kerala, says Hindustan Unilever
New Delhi:Hindustan Unilever Ltd (HUL) on Monday said it has agreed to buy ‘Adityaa Milk’ ice cream brand from Karnataka-based Vijaykant Dairy and Food Products Ltd for an undisclosed amount aiming a larger slice of the fragmented ice cream market in India. HUL, which already sells ice creams under the Kwality Wall’s, Magnum and Cornetto brands, has signed an agreement with Vijaykant Dairy to buy ice cream and frozen dessert business of the company along with its front-end distribution across Karnataka, Maharashtra, Goa and Kerala where the company has presence.
The proposed acquisition, HUL said in a statement, is in line with its strategic intent to strengthen its position in the rapidly growing ice cream and frozen dessert market in India. “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 HUL chairman Sanjiv Mehta in a statement.
The transaction is subject to fulfilment of certain conditions and the parties will work together to complete this over the next few months, HUL added.
Vijaykant Dairy, which started business in 2004 in Karnataka and gradually spread wings across Maharashtra, Goa and Kerala, will continue to pursue its dairy business after the sell off is complete. “Vijaykant Dairy will manage the business until the transaction is completed, and will also continue to manufacture for HUL for an agreed period of time," HUL said.
“HUL is already a strong number two player in ice cream and this acquisition will help in closing the gap with Amul. HUL will bring its distribution muscle and analytics capability to Adityaa," said Abneesh Roy, analyst with Edelweiss Securities.
Market research firm Euromonitor International, in an April 2015 study, estimated India’s ice cream market to grow to ₹ 6,198 crore in 2019 from ₹ 4,160 crore in 2014. Gujarat Cooperative Milk Marketing Federation’s Amul is the largest selling brand with an estimated 32% share. Besides Amul, other home-grown brands such as Mother Dairy, Vadilal, Kwality Wall’s and Havmor have prominent presence.
This is not the first acquisition by HUL in the ice cream space. It had entered the segment by acquiring Kwality Wall’s in phases starting 1994 when it bought the trademark. Some home-grown ice cream makers have sold to private equity players and foreign companies.
On the other hand, premium ice cream brands have been looking at Indian market. While Nestle-owned Mövenpick and Arizona-based Cold Stone Creamery stepped into the market in 2015, Häagen-Dazs and London Dairy have been present in the market for quite a few years.
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