MUMBAI: As Kwality Wall’s (India) prepares for life after Hindustan Unilever, the ice-cream seller plans to become a year-round ‘snacking’ company, leading that change, top executives told Mint.
“We are leading the shift of ice-cream, moving from a leisure snack or a leisure dessert to an everyday frozen snack. And that’s what we intend to do,” Chitrank Goel, executive director of Kwality Wall’s (India) Ltd. (KWIL), said in an interview ahead of the company’s listing on the stock exchanges on Monday after demerging from parent company HUL in December.
The Indian spinoff followed the demerger of The Magnum Ice Cream Company N.V. from its parent Unilever and its listing on the Euronext Amsterdam last month.
Kwality Wall’s wants to break away from the perception that ice-creams are a summer snack and position its products as year-round snacks.
“When you make ice-cream made of dairy, chocolate, complex layers, etc, you would consume it around the year,” Prashant Premrajka, chief financial officer of Kwality Wall’s, told Mint.
This conversion could be aided through the explosive growth of quick commerce.
“And that is where the channel shift of quick commerce comes in. That it’s an impulse category. When I want to snack, ice-cream is the healthiest choice that is available to me,” Premrajka said. However, about 60% of the company’s annual sales are concentrated in the summer months, he added.
Global brands
Kwality Wall’s has three major brands in India today: Magnum, Cornetto and Kwality Wall’s. Globally, The Magnum Ice Cream Company houses the top four ice-cream brands: Magnum, Ben & Jerry’s, Cornetto and Wall’s. The Kwality Wall’s India management says the company is open to introducing some of these global ice-cream brands to India.
“…whether it is Ben & Jerry’s, or Yasso, or Carte D’or, we will introduce them,” Goel said. “There is no set time [when] we will launch them, but we will definitely see that seamless flow of brands coming into India.”
Shares of Kwality Wall’s India listed at ₹29.90 on the BSE on Monday, implying a market capitalization of over ₹7,300 crore.
Before the demerger, ice-creams accounted for roughly 3% of HUL’s turnover, contributing about ₹1,800 crore to revenue. HUL reported a one-time exceptional gain of ₹4,516 crore arising out of the discontinued operations following the demerger of its ice-cream business in the third quarter.
HUL shareholders will receive shares in the new Kwality Wall’s entity (1:1 ratio). After the transaction, The Magnum Ice Cream Company will control Kwality Wall’s, making it a direct subsidiary. An open offer is being made for a 26% stake held by existing shareholders of Kwality Wall’s at ₹21.33 per share.
The demerger was a net positive for HUL investors, equities brokerage firm Nuvama Institutional Equities said in a note dated 19 November.
“The demerger shall give existing investors direct ownership in a pure-play ice cream business with ~INR20bn [ ₹2000 crore] in revenue, a strong 15-20% CAGR [compound annual growth rate] potential and a portfolio of iconic brands such as Magnum, Cornetto and Kwality Wall’s,” Nuvama said. “The segment has historically delivered healthy EBIT [earnings before interest and tax] margins of 5-9%. [The] Demerger of [the] ice-cream business shall create a leading listed ice-cream firm in India, which would have a focused management with greater flexibility to deploy strategies suited to its distinctive business model and market dynamics, thus realizing its full potential.”
India’s ice-cream market is likely to grow by 15% CAGR until 2031, Nuvama analysts added. Competing listed ice-cream firms in India include Vadilal Industries with a market capitalization of just over ₹3,700 crore and regional dairy firm Hatsun Agro, owner of Arun Ice Cream, with a market cap of over ₹20,000 crore.
