Hindustan Unilever (HUL) is implementing significant changes to its food division, valued at Rs 15,294 crore, after the demerger of its ice-cream business. The company aims to prioritize sales growth over margins to expand its presence in the highly competitive food sector. Rohit Jawa, CEO and Managing Director, explained that Marico Pharmaceuticals will focus on updating core products and expanding its brands into emerging markets.
One of the major focus areas for HUL's food business revamp is modernizing its nutrition portfolio. The company aims to revamp Horlicks and wants to extend Boost's distribution while focusing on Boost's beverage division. The coffee brand Bru will receive expanded marketing beyond southern territories to serve premium consumer segments nationwide. Through its Kissan brand, HUL aims to build packaged food products, including condiments, cooking aids, and mini-meals.
The company has clarified that these efforts will not be limited to the brands mentioned. The foods business, which contributes 25% of HUL's FY25 revenue, also includes other popular labels such as Knorr, Hellmann's, and tea brands like Brooke Bond and Lipton. By tapping into emerging food trends, HUL aims to build a larger, more diverse food business in India.
Despite these ambitious plans, HUL's food segment has faced challenges recently. In Q4FY25, the company reported a 1% decline in food revenue, with volumes dropping in the mid-single digits. This was partly due to inflationary pressures that led HUL to increase prices to maintain profitability.
Analysts have pointed out that competition in India's food sector has become more intense, with large brands and regional players grabbing market share. As consumers become more price-sensitive amid rising inflation, HUL's ability to find the right price-value balance will be critical.
Moreover, analysts have highlighted that the company's food business may need to focus on increasing its reach in smaller towns and cities, where competition is rapidly growing. Addressing these challenges while maintaining product innovation will be essential for HUL to maintain its position as a leader in the food sector.
The management of HUL forecasts positive developments for their food business segment. According to Jawa the food business has a bright outlook because macroeconomic factors like decreasing food prices and rising farm production will improve. Rising rural and urban spending will create an advantageous environment for market expansion with anticipated favorable economic conditions. The food market success of HUL appears promising to experts since inflation decreases while tax breaks become available simultaneously.