Unilever in India: Building the Ice Creams Business

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Case Details:

Case Code : MKTA004
Case Length : 14 Pages
Period : 1994-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Unilever, Hindustan Lever Limited (HLL)
Industry : FMCG
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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If you remain with the same strategy for a long time and it doesn't deliver, there is no risk in changing the strategy, as long as you are doing some sensible thing. This is a major shift from the last five/six years. What we used to do was change flavours in the Max range, as we were looking at the mass market. This year, we are trying to bring innovation in a different plane. In the past we were afraid of charging a price, now we are saying that the product is so good that people will see a value for their money. What we are trying to bring is more excitement around the category. We did a lot of packaging change, for a more harmonized look.

- J. H. Mehta, Executive Director (Ice Creams), HLL¹

Introduction

In January 2000, in one of the profit center review meetings, the board of Hindustan Lever Ltd, Unilever's Indian subsidiary, gave an ultimatum to the Ice Cream Executive Committee (ICEX) to break even by the end of 2001. It had been six years since the company had entered the ice cream business. During this period, despite its best efforts the division continued to be in the red. Responding to the board's directive, J.H. Mehta, Executive Director, Ice Creams with his core ICEX team, embarked on a new business strategy to revive the loss making ice-cream business.

HLL sold ice creams in 40,000 outlets countrywide. But seven cities -Mumbai, Delhi, Kolkata, Hyderabad, Bangalore, Chennai and Pune - represented two-thirds of the organized 80 million litres ice cream market.

HLL decided to concentrate only on these seven cities for its 'Kwality Wall's' brand. The number of manufacturing units was cut down to six from 40 that were present in 1995.

HLL also decided to launch a range of new products backed by advertisements and innovative promotional offers. The company decided to promote Kwality Wall's as an umbrella brand.

The ice cream division made profits of Rs. 9.74 crores for the first time during January - June 2003, compared to losses of Rs. 2.86 crores and Rs. 9 crores in the first six months of 2002 and 2001. But HLL realized there were formidable challenges ahead in a fragmented market, where competition was intensifying.

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1] "Kwality Wall's hopes to make the 'right connection' now," The Hindu Business Line, 3rd April 2002.


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