HUL On Buyout Hunt To Boost Food Category Share In Business
Parent Unilever Plc’s acquisition of GlaxoSmithKline Plc’s nutrition business brought Horlicks, India’s No. 1 malted-milk drink, to Hindustan Unilever Ltd.’s fold. That’s just the start.
India’s largest consumer goods maker hinted that it will keep exploring more deals as it plans to increase the share of food category in its business.
“We’ve got to pivot our business to higher growth categories like the kind of stuff we did yesterday (HUL-GSK Consumer merger),” said Sudhir Sitapati, executive director of foods and refreshments business at HUL, at the parent’s investor meet in Mumbai. Unilever Plc’s leadership team led by its Chief Executive Officer Paul Polman is in India for a two-day investor roadshow.
The maker of Taj Mahal tea is also looking to strengthen its play in the category as it operates only in 15 percent of the market which is heavily penetrated and growing at 9 percent, according to Sitapati. HUL now looks to strengthen its position in the rest of the market that is growing at 17 percent, he said.
Unilever acquired GlaxoSmithKline’s business and will merge its Indian unit with HUL in a deal worth $3.8 billion. In August, HUL agreed to acquire Adityaa Ice cream from Vijaykant Dairy and Food Products Ltd. The company is betting on growing consumption of everything from staples to shampoos in India on rising incomes and as the economy formalises after the rollout of the goods and services tax.
The Anglo-Dutch consumer company expects modern trade to keep evolving, more so after demonetisation spurred digital payments. About 25 percent of HUL’s revenue comes from modern trade—3 percent from e-commerce, 7 percent from Canteen Stores Department and 15 percent from supermarkets and hypermarkets, Sanjiv Mehta, chairman and managing director of HUL, told investors. Still, general trade through neighbourhood stores will continue to be its biggest sales channel, he said.