HUL set to Amaze with health foods

HUL set to Amaze with health foods

Hindustan Unilever Ltd (HUL), India’s largest consumer products company by revenues, is set to introduce a range of nutritional drinks and snacks for children in early 2008 under its Amaze Brainfood brand.

Amaze is part of HUL parent Unilever Plc.’s global food portfolio and was first launched in Turkey in 2006. Unilever says it took four years and €40 million to research, develop and test the food.

The Amaze range will be marketed as food good for children’s brains, general health and well being.

According to a senior executive working on the marketing plan for the brand, HUL is likely to launch in key cities in early 2008. The executive didn’t want to be identified as he is not authorized to comment on such planning, and a spokesperson for the company would only say, in an email, that “as a policy, we do not comment on market speculation".

Additional details of what kind of products HUL will launch couldn’t immediately be ascertained.

Unilever’s website describes Amaze Brainfood as the “first specifically designed brain food range for kids" that includes flavoured milk drinks and cereal snacks, which can fit into lunch boxes. These food products, it says, are fortified with iron, iodine and omega-3 oils.

HUL, which owns 35 consu-mer brands across categories such as personal and home care, and foods and beverages, has identified food as a growth segment. The company has previously indicated that it would like to build its food portfolio in India through new launches.

In a recent presentation to investors, Srini Srinivasan, vice-president (mergers and acquisitions), had said: “HUL would implement the foods strategy through use of Unilever know-how to cater to local taste and by entering new exciting markets within the foods space."

HUL’s processed foods business grew at 18.4% during the first nine months through September. Still, the category only contributed an average 4% of HUL’s total revenues of Rs1,0131.9 crore in the last three quarters ended September 2007.

Unilever’s food portfolio, on the other hand, contributed about 35% of sales in fiscal 2006-07.

A few years back, HUL had made concerted efforts in packaged foods by launching wheat flour, soups and sauces. It later scaled back its presence in flour and withdrew from the biscuits segment as it found the business highly commoditized and with low profit margins. The company has continued to make efforts to strengthen its soups and sauces category under the Knnor and Kissan brands in the past two years.

“HUL’s strategy in the foods segment will be to leverage its global skill-sets in the foods business... We expect HUL to reinvest and rebuild its foods portfolio in the value-added segment," wrote Credit Suisse in its 12 December report.

The financial services firm pegged the size of the Indian packaged food industry at Rs56,000 crore, which is around 5% of the total food market in India. The segment, the report said, is expected to grow at least 20% per annum over the next few years.

Some analysts note that HUL will have its work cut out. “Most consumers in India are still sceptical about processed and packaged foods. Amaze seems to be a high-margin and urban focused product. HUL will need to invest aggressively to market the brand," said Sameer Deshmukh, an analyst at IL&FS Investsmart Securities Ltd, a Mumbai-based brokerage.

While lunch box cereals, the food that can fit into childrens’ lunch boxes, are a relatively new phenomenon in India, breakfast cereals are slowly gaining acceptance among urban consumers. Even there, HUL will have to compete with the likes of Kellogg NA Co., PepsiCo Inc.’s Frito-Lay and Bagrry’s India Ltd, which sell cereals and other nutritious foods.