Hindustan Unilever (HUL) has decided to spin off its ice cream business into an independent listed entity, following the footsteps of its parent company, Unilever Plc. This strategic move aligns with Unilever’s global restructuring efforts to focus on high-growth segments such as premium beauty and markets like India, which contribute 11% of its global sales.
HUL’s exit from the ice cream segment raises critical questions about its future direction. Under CEO Rohit Jawa, the company faces the challenge of rediscovering its pre-liberalisation spirit of independence and innovation. Meanwhile, Unilever’s global CEO, Hein Schumacher, is busy reshaping the multinational giant by streamlining portfolios, optimizing operations, and focusing on premium offerings.
The ice cream business has long been an outlier in HUL’s portfolio. While brands like Ben & Jerry’s have faced political controversies globally, the overall category has delivered sluggish growth, with sales increasing by just 2-3% last year—one of the weakest across Unilever’s product divisions. Challenges such as a fragmented cold chain infrastructure, seasonal demand fluctuations, and low synergy with HUL’s core distribution network have made ice cream a tough segment to scale profitably.
Selling mass-market products like Surf and Lux by the carton is one thing, but building and maintaining a cold chain backbone for ice cream distribution is an entirely different challenge. Moreover, ice cream’s EBITDA margins and returns on capital employed remain among the lowest across HUL’s product categories.
While HUL trims its portfolio, industry rivals like ITC, Marico, Britannia, Dabur, and Godrej have largely stayed away from the complexities of the ice cream market. Nestlé, on the other hand, strategically offloaded its Häagen Dazs business to a joint venture with a private equity firm in Europe and the US.
For HUL, the spin-off represents not just an exit but an opportunity to refocus on its core strengths in personal care and home products. The move also signals the need for bold decisions across its broader portfolio, which spans everything from mayonnaise to premium skincare brands.
As HUL pivots towards a leaner, more agile business model, the onus is on Rohit Jawa to reignite the company’s innovative spirit and strategic agility. The path forward will require a delicate balance between nurturing high-growth categories and maintaining profitability in a challenging market landscape.
While the ice cream exit may melt away from its books, HUL’s next steps will be closely watched by investors and industry stakeholders eager to see if the FMCG giant can reclaim its position as a leader in strategic innovation.