Hindustan Lever (HLL), the country’s largest consumer products company, has restructured its foods business.
After betting big on the foods business for driving growth, HLL has not got satisfactory results. It had invested a lot on research and development in terms of launching innovative products to treat the platter of the Indian consumer.
“We had some unsuccessful innovations and are reworking in terms of product mix portfolio, D Sundaram, director finance of Hindustan Lever said.
As part of new ventures, the company entered the confectionery business two years ago under the Max brand. Today, the company announced that it is pulling out of this business, as its product could not provide much of a product differentiation as compared to other brands. So, we decided against further investment in this business, it was a well-calaculated move, M S Banga, non-executive chairman of Hindustan Lever said.
The exit costs relating to confectionery business stood at Rs 30.45 crore. Other products that has been withdrawn are biscuits(Kissan Bistix), Knorr Soupy Snax and Annapurna 4’0 clock tiffin and Annapurna ready-to-eat chappatis.
In the beverages business, Brooke Bond accounts for more than 90 per cent of tea sales, grew by 16 per cent. It restructured the tea brands portfolio and has Brooke Bond and Lipton. Under Brooke Bond, it has three sub-brands Taj Mahal, Red Label and Taaza.
The overall beverage business declined by 7 per cent due to the phasing out of the A1 tea brand. Its Bru instant coffee had performed well for the quarter.
In the atta business, it has exited unviable geographies and is focusing on the south and west regions as the margins are better in these markets, Lever executives explained. In the ice cream business, it focusing on key cities and not at a mass market segment.
Unsatisfied with the performance of its confectionery business, Hindustan Lever company is the confectionery business being run under the Max brand. It has also withdrawn Kissan Bistix, Soupy Snacks among others.
The company is reviewing the marketing mix and the product portfolio of Ayush as the Ayush range of ayurvedic products has not done well. However, the products sold through the direct selling route and the ayurvedic spas has performed well, said D Sundaram, director -finance said.
The home and personal care business, the largest contributor to HLL’s turnover reported sales of Rs 1825.73 crore, a growth of 4.9 per cent. Price cuts in laundry and shampoos helped the company gaining volume growth.
In soaps category, Lux share declined while its over 100 year old brand Lifebuoy grew strongly. In toothpaste, it maintained its volume share.
The foods business has declined for the quarter to Rs 399.53 crore because of the phased trade stock reduction in salt and culinary products, de-focusing of atta in unviable geographies and withdrawal of innovations launched in 2003.