Hindustan Unilever bets on quick commerce for ice creams

HUL bets on Quick Commerce model for ice creams
HUL bets on Quick Commerce model for ice creams

by 5paisa Research Team Last Updated: Dec 11, 2022 - 03:27 pm 24.1k Views
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When Zomato recently took over Blinkit, the biggest objection to the deal was that a loss making company was acquiring another loss making company and the result would only be more losses. The other objection was that Quick Commerce (what Blinkit specializes in) was great on paper, but in practice it was not a viable business proposition. It almost hinted that in buying Blinkit, Zomato had acquired a white elephant that will take years to even get closer to delivering results. However, there may be hope for the likes of Blinkit.

Hope comes from a very different quarter and that is from FMCG giant Hindustan Unilever. The executive director of Hindustan Unilever, who handles the food and refreshment business, has a different take on quick commerce. In the light of the sharp business recovery, the head of the food and refreshments business of Hindustan Unilever has spoken at length about the merits of home delivery of ice creams and why Hindustan Unilever plans to sharpen focus on the use of quick commerce home delivery channels. 

In the product basket of Hindustan Unilever, foods and refreshment encompasses tea, coffee, malted drinks, jams, soups and the ice cream businesses. He referred to the quick commerce channel specifically with respect to ice creams due to its round the year demand and also due to its extremely perishable nature. Already, ice cream demand for Hindustan Unilever has gone beyond pre-pandemic levels. A prolonged summer has meant demand for ice-creams stretching well beyond the summer months, opening quick commerce outlets.

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Hindustan Unilever has ice creams that cater to every pocket and choice of flavours. For instance, the Magnum is the premium brand, while the Cornetto and Feast are actually positioned in the middle range. Hindustan Unilever also focusses on the in-home dining model through Wall’s party packs. In terms of brands, Kwality was acquired  in 1995 and Kwality Wall’s became the umbrella brand. Recently, Hindustan Unilever also bought Adityaa Milk (Vijaykant Dairy and Foods) ice cream business. So it has been investing.

The big opportunity for ice creams in India also comes from the low per capita usage. If one were to benchmark per capita consumption of ice cream in India, it is among the lowest across the markets where Unilever does business. For example, at 400 ML per capita per year, it is abysmally low and that is also due to a huge variety of desserts available in India and that is where Hindustan Unilever sees the opportunity. Quick commerce opens up the gates for a huge push to in-home consumption of ice-creams as desserts.

 Hindustan Unilever is already partnering heavily with Swiggy and Zomato for its latest project called “Ice Cream Now”. That also means the need to strengthen their portfolio, ensure round the clock availability and ensure that their brands appear on top in digital searches. While premium brands like Magnum and premium tubs are being lapped up online, the general home consumption of ice creams is lagging. That is where Hindustan Unilever wants to leverage quick commerce to deliver the compelling experience.

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