HUL announced the demerger with KWIL on 10 January 2025, stressing that the this move was a forward-looking measure to ensure the latter would be able to fulfil its potential in India.
“KWIL is a great business with significant growth potential, and this demerger will enable this potential to be maximised,” HUL CFO Ritesh Tiwari told the floor at the company’s most recent investor’s meeting.
“This is because the delisting will establish KWIL as a separately listed entity that has its own focused management, which will then be able to have greater flexibility to deploy strategies suited to ice cream’s distinctive business model.
“Even after the delisting, this new entity will still be equipped with the portfolio, brand and innovation expertise from the largest global ice cream business.”
HUL CEO Rohit Jawa added that this demerger is also considered a major step within the company’s plans for increased focus on key target areas within its portfolio.
“This is part of HUL’s ongoing strategy to make sharper portfolio choices, which will also contribute to more sustained growth overall,” he told the floor.
“It is still a high-growth business especially with iconic brands such as ‘Kwality Wall’s’, ‘Cornetto’ and ‘Magnum’ - so KWIL is operating in an attractive segment.
“What this will add is to unlock fair value for HUL shareholders, and give them the flexibility to stay invested in the growth journey of the ice cream category, which is very important in the long run.”
He added that HUL is looking at portfolio transformation in terms of two aspects - premiumisation and category growth.
“HUL will focus on firstly maintaining a healthy core portfolio of products by stepping up the meaningfulness and relevance of existing brands to consumers, but simultaneously we will also be premiumising our future core so that we can evolve to expand into more high growth spaces.
“Beyond that, we will also be extending the portfolio to address emerging trends and consumer needs along with what consumers want which can change at a fast pace.”
Flat growth, fast out?
That said, statistics from HUL’s most recent financial results have shown that ice cream as a category has not been the most profitable or fast-growing for the company, compared to the many other brands it owns such as Horlicks nutrition drinks or the Lux and Dove personal care products.
“In the last quarter of 2024, the revenue that ice cream brought in was flat year-on-year, [hence the need] for a new strategy to boost its growth,” Tiwari added.
“What we are looking at is a smoother transition for the business and the people, while also securing better talent outcome that can help to push it forward in the best way.”