Hindustan Unilever to merge food, refreshment units from July 1

The move will bring operational efficiencies besides spurring growth

Two years after splitting its foods and refreshment business into two divisions, Hindustan Unilever (HUL), the country’s largest consumer goods company, is now bringing it back together again, citing global portfolio alignments.

In a statement on Tuesday, HUL said the integration of foods and refreshment would be effective from July 1 and would increase organisational agility apart from bringing the advantages of scale to the business.

“Foods and refreshment lend significant scale to Unilever in the region and will continue to be a strategic priority for the company. The integration will help drive synergies and help the company in being more consumer-centric,” HUL said.

The combined foods and refreshment portfolio, which 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 Walls and Magnum, would contribute around 18 per cent to HUL’s top line, Abneesh Roy, senior vice-president, research, institutional equities, Edelweiss, said.

Sachin Bobade, senior research analyst at Mumbai-based brokerage Dolat Capital, said the move would help spur growth at a time when peers such as Nestlé, ITC and Britannia have pushed the peddle on investment in food & beverages. 

On Monday, HUL said it was entering the traditional Indian breakfast market under the Lever Ayush brand, with single-serve packs priced at Rs 15 and multi-serve packs priced at Rs 49, respectively. 

The company would directly compete with the likes of Nestlé, Marico, MTR and Kellogg’s with breakfast options such as poha, upma and Pongal, riding on the health and wellness to deliver good-for-you benefits, Roy said.

HUL has also made management changes to reflect the integration of business announced on Tuesday. Sudhir Sitapati, currently executive director (ED), refreshments would be re-designated ED, foods & refreshment, in charge of the combined portfolio. 

While Geetu Verma, currently ED, foods, would move to Unilever’s headquarters in Rotterdam as global vice-president, nutrition and naturals platform, a newly created position to drive the company’s presence in health and wellness.

In the past few years, HUL has been reorganising categories to reflect market realities. In 2014, the company split its home and personal care segment into two divisions, putting detergents in home care and soaps in personal care. 

Home care also included dish-washer Vim and HUL’s range of water purifiers Pureit. Personal care, on the other hand, includes skincare, hair care, oral care, colour cosmetics and deodorants apart from soaps.