Hindustan Unilever (HUL) is looking to revitalise its Rs 15,294-crore foods business, its second-largest segment after home care, CEO & MD Rohit Jawa told FE.
The move comes as the country’s largest consumer goods company sets out on the path of putting sales growth first over margins. It is also in the process of listing the Rs 1,800-crore ice-cream business, whose demerger was approved by the board in January, in line with Unilever’s strategy on the same. This is likely to be completed by the end of FY26.
On the cards as far as foods is concerned is a rejig of the nutrition portfolio by modernising Horlicks and taking Boost into more beverage spaces. Coffee, led by Bru, will be expanded geographically beyond the south and will be made more premium. Packaged food labels such as Kissan will be extended into the larger Indian cuisine space covering condiments, cooking aids and mini meals, Jawa said.
Apart from Bru coffee, Horlicks, Boost and Kissan, HUL’s foods business, which contributes a quarter of the company’s FY25 revenue of Rs 61,469 crore, includes Knorr (soups, noodles, seasonings), Hellmann’s (mayonnaise) and tea brands Brooke Bond and Lipton.
Jawa said HUL was keen to tap into emerging food trends in India and make the business even larger than it currently is here. The company would look at both organic and inorganic opportunities to make this happen, leveraging its portfolio of brands, R&D capabilities in Bengaluru and reach out to parent Unilever globally, especially, in the Netherlands, where it has operations in food technology and innovation.
“Foods is a massive opportunity in India. It is two-third of the consumer basket here. People are going from unbranded to branded, unpackaged to packaged, convenient, out-of-home and healthier food options. We have a strong portfolio of brands in foods, with good reach and a dedicated R&D capability in Bengaluru. We would like to take these brands into more areas and believe the conditions are set for the business to be successful and big in India,” Jawa said.
Sector analysts believe that while HUL has big ambitions in food, inflation challenges, the need to find the right price-value equation in foods, and expanding reach into smaller towns and cities are areas the company would need to focus its attention in the future. Competition in foods has also grown over the last few years in India, coming from both organised players as well as regional and small brands, who have taken share from the big boys, according to market researchers such as Nielsen and Kantar, as consumers tighten their purse strings and look at cheaper options to tide over inflation.
In Q4FY25, for instance, the revenue of HUL’s foods business declined 1%, with volumes declining in mid-single digits as the company sought to mitigate inflationary pressures with price hikes, Motilal Oswal said in its latest update on the company.
“Tea witnessed low single-digit growth, led by pricing. Coffee reported double-digit growth, while nutrition drinks saw a decline,” the brokerage house said.
HUL’s overall Ebitda margins also contracted in part due to inflationary pressures in tea, coffee and palm oil.
However, with the macro outlook set to improve in the near-to-medium term, aided by strong agricultural output, easing food inflation, and potential tax reliefs—supporting both rural and urban consumption – food business prospects for HUL are likely to get better in the future, experts added.
Rival Nestle India, too, said it saw volume growth improving on the back of better macro trends, though volatility in commodities was a key monitorable for the company.