Amul targets premium ice creams in the south, plans to take on rivals

According to R S Sodhi, managing director of GCMMF who is the maker of Amul brand of ice-cream will deploy a state-of-the-art ice cream technology (called extruded technology) in the south

A day after Hindustan Unilever (HUL) announced it was acquiring ‘Adityaa Milk’ ice cream and frozen desserts business, rival Gujarat Co-operative Milk Marketing Federation (GCMMF), the maker of the Amul brand of ice creams, said it would drive more premium products in the south.

GCMMF’s Managing Director R S Sodhi said the plan was to push more innovations (in terms of flavours) under its Epic range of premium ice creams in the south, where local labels such as Arun Ice creams in Tamil Nadu and Heritage in Andhra Pradesh and Telangana are strong. 

According to Sodhi, the cooperative, which is the leader in the Rs 60-billion organised ice cream market, will also deploy a state-of-the-art ice cream technology (called extruded technology) in the south, would allow its products to be softer and creamier. GCMMF has dairy plants in different places in the south, including Bengaluru, Pondicherry, and Bellary in Karnataka.

‘Adityaa Milk’, to be acquired from Bengaluru-based Vijaykant Dairy and Food Products, is strong in Karnataka and has in the past few years expanded to Goa, Maharashtra, and Kerala.

The acquisition, which will be completed later, will give HUL access to Vijaykant’s ice cream distribution network in addition to the flagship brand (Adityaa Milk) and its full range of products. 

While HUL did not disclose the deal size, the company on Monday said that the transaction was in line with its objective of strengthening its position in ice creams and frozen desserts. “Ice creams and frozen desserts is an exciting category and we see great potential for growth. We believe the acquisition will complement our existing portfolio of Kwality Wall’s,” HUL’s CMD Sanjiv Mehta said.

Apart from Kwality Wall’s, HUL also has the Magnum brand of premium ice creams in its portfolio. The latest acquisition, said Abneesh Roy, senior vice-president, research, institutional equities of Edelweiss, would help HUL close the gap with Amul. “HUL is a strong number two player in ice creams,” he said. “And the acquisition will help it get closer to Amul, the leader in the ice cream market. HUL will also bring its distribution muscle and analytics capability to Adityaa, which will be critical in terms of growth,” he said.

The acquisition of ‘Adityaa Milk’ was expected to pave the way for more mergers & acquisitions (M&A) activity in foods by HUL, Roy said. 

In June, HUL announced that it was bringing its foods and refreshment portfolios together in a bid to scale up the business. The move, which was effective in July, saw the combined portfolio that includes packaged food brands Kissan and Knorr, beverage brands Bru, Brooke Bond Red Label, 3 Roses, Lipton Tea, Taaza, and Taj Mahal Tea as well as ice cream and frozen desserts such as Kwality Wall’s and Magnum. 

Roy said the combined business constituted 18 per cent of HUL’s top line and was in keeping with global portfolio alignments.