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Aug 08, 2018, 14:24
HUL takes on Amul. Buys Adityaa Milk to strengthen dairy and food products
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On 6th August 2018, Hindustan Unilever Ltd. agreed to buy ‘Adityaa Milk’ ice-cream and frozen desserts business from the Karnataka brand Vijaykant Dairy and Food Products Limited for an undisclosed amount. Industrial experts consider this move as a strategy of expansion and HUL to compete with the national leader Amul. Adityaa Milk is considered as a fastest growing brand and will complement the existing portfolio of Kwality Walls in Goa, Kerala, Maharashtra, and Karnataka. This acquisition is proposed as a strategic intent so that HUL could strengthen its position in ice cream and frozen dessert markets in India.


HUL, which by now sells ice cream under Kwality Walls, Magnum and Cornetto, entered into an agreement with Vijaykant Dairy to purchase ice cream and frozen desserts, where the company already has its presence in Karnataka, Goa, and Maharashtra. Ice cream and frozen desserts is an interesting category and are considered as a potential for growth. The transaction is a focus on the fulfillment of most conditions and parties will work together to complete it in the next few months.


Adityaa Milk will supervise its business until the transaction is accomplished and after that, it will manufacture the products for HUL for an agreed period. Vijaykant Dairy commenced its business in 2004 in Karnataka and it is widely spread in some states and will continue to seek its dairy business after the sell-off is accomplished. The acquisition of strong two players in the field will certainly help in closing the gap with Amul. HUL will soon get its analytics capability and distribution muscle to Adityaa Milk.


Vijaykant Dairy which is known for its ice cream and frozen dessert products sells its products under the flagship of Adityaa Milk, over the last five years. The company in Belgaum was set up by Shivkant Sidnal, the son-in-law of Vijay Shankeshwar of VRL logistics.


Adityaa Milk had an estimated turnover of about Rs. 45-50 crore.  It is a flagship business of approximately Rs. 270 crore of Vijaykant Dairy. Existence in dairy and dairy-based products for over more than five years has profitably expanded into its ice cream and frozen desserts products. HUL and Adityaa Milk both are considered as an operating brand strategy, where the company considers that the two portfolios will match each other.


HUL Company operates in a crowded market where it struggles with Pan-India competitors such as Amul and Mother Dairy. Regional players include Arun, Havmor, Dairy Classic and international players include Baskin- Robbins, Haagen Dazs, and London Dairy.


Ice cream market in India is the fastest growing market across the world. Domestic ice cream market has increased at a compounded annual rate of 13% in the last five years.

 

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