HUL Turns To Masala, But Can It Spice Up Its Food Segment?
HUL to enter ready-to-cook segment.
Hindustan Unilever Ltd. (HUL) is currently testing its ready-to-cook product in the market and may launch it under the Knorr brand, the consumer goods major told BloombergQuint in an emailed statement.
The product may be introduced in eight variants – Royal Vegetable Masala, Dal Masala, Chana Masala, Chicken Masala, Meat Masala, Sambar Masala, Pav Bhaji Masala and Biryani Masala.
We are currently test marketing Knorr Chef Masalas which are available in eight variants. Based on market response and learning, we will decide way forward.Company Spokesperson, HUL
So far this year, the size of the ready-to-cook market stands at Rs 1,000-1,100 crore and it is growing at a compounded annual growth rate of 25 percent, according to data provided by retail consultancy firm Technopak Advisors. Branded products have a market share of 80 percent in the ready-to-cook segment.
The key players in this market are MTR with 26 percent market share, ITC with 22 percent, and Gits and Mayia's with 5 percent market share each.
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“We expected the segment to grow faster, however people have taken longer to adapt to ready-to-cook products. Consumers still prefer fresh food compared to packaged food,” said Saloni Nangia, president at Technopak Advisors.
Another reason, according to SageRaj Bariya, vice president and analyst at East India Securities is the diverse Indian palette. “The Indian palette keeps changing every 30-40 kilometers. This product will have a standardised taste which poses a problem. The ready-to-cook category will however, appeal to the younger consumers who may at times look for a quick-fix meal,” he said.
Analysts however, pointed out that the contribution of the food category to HUL’s topline is relatively small. “The food category’s contribution currently is not very significant compared to soaps and detergents and personal care segments. This product launch will therefore not have much bearing on HUL’s overall revenue in the short term,” said Sachin Bobade, senior research analyst at Dolat Capital.
In FY15-16, the packaged food category contributed only 6.5 percent to its total revenue on a consolidated basis, according to HUL’s annual statement.