HLL eyes a big bite into food retailing business

Our Marketing Bureau in New Delhi

THE fast moving consumer goods (FMCG) major Hindustan Lever Ltd (HLL) is mulling entry into food retailing by piggybacking on its ice cream business.

The company, which has opened two exclusive Kwality Walls ice cream parlours in Bangalore last month, is toying with the idea of expanding the product mix at these parlours by including its range of confectionery and other offerings, as well.

Indicating this, executive director and head of HLL’s ice cream business JH Mehta said that the company is currently evaluating various options and may include other food items at these parlours.

“The concept of ice cream parlours is at a very nascent stage and we’re considering various other options,” Mr Mehta said while announcing the launch of softy kiosks in Delhi.

HLL, which is taking the franchisee route to open the ice cream parlours, plans to take the concept to other cities as well provided it takes off well.

The outlets are likely to be of around 400-500 sq ft and depending on the location, these could be bigger, Mr Mehta said.

Strategically, the company plans to use the parlour route to fuel growth in the stagnant ice cream business. According to Mr Mehta, the industry has witnessed a volume growth of mere 2 per cent in the current year while per capita consumption remains amongst the world’s lowest at 250 m-litre per person as compared to 22 litre per person in markets like the US.

Even as HLL claims a leadership position—55 per cent market share followed by 35 per cent captured by Amul and Mother Dairy together—the fact remains that it has not been able to turn around its ice cream business after an investment of Rs 100 crore since the year 1996 when it entered the business. Reacting, Mr Mehta said: “We are still in the investment mode.”

The company also hopes to trigger overall ice cream sales through the launch of low priced softy—soft ice cream dispensed into a cone from a machine—segment by pricing it at an affordable Rs 5. The company claims to have sold 10-million cones so far since the launch of its softies in the three cities of Chennai, Mumbai and Delhi.

The total ice-cream market is estimated to be worth Rs 1,000 crore, 60 per cent of which is organised. The softy segment—hitherto a domain of small time operators—is estimated to be less than 10 per cent of the Rs 600 crore organised ice cream market.