South Korea's Lotte Confectionery to buy Havmor's ice cream business for Rs 1,020 crore

AHMEDABAD: Lotte Confectionery of South Korea made a foray into the Rs 5,000-crore ice cream market in India on Thursday by signing a deal to buy 100% of homegrown ice cream brand Havmor for Rs 1,020 crore in an all-cash deal.

“Lotte will acquire the plants, machinery and the staff of the company,” said Ankit Chona, managing director at Ahmedabad-based Havmor Ice Cream (HIL). The deal values Havmor Ice Cream at more than 2.5 times its 2016-17 turnover of Rs 400 crore.

The brand has been growing at compounded annual growth rate of 23-25%, Chona told ET. He will continue as CEO-advisor to the brand to see through its merger with the maker of Lotte Choco Pie.


With this deal, Lotte plans to expand its market power from the north west region to all across India, the South Korean company said in statement. Founded by Satish Chandra Chona in Karachi in 1944, Havmor had to wind up and cross the border within three years following the partition. Chona moved to Ahmedabad and started Havmor in 1951.

Today, Havmor boasts a product portfolio comprising 150 kinds of ice creams retailed through a parlour network operating across 14 states. It has two plants, in Ahmedabad and Faridabad, manufacturing 2.5 lakh litres of ice cream per day. Management consultant Harminder Sahni of Wazir Advisors said valuation in multiples of two or three has become a routine for consumer brands.

“Unlike other regional brands that do not have the bandwidth to expand beyond their core markets, Havmor did expand to the north,” he said.

“Lotte will now take it national.” Havmor chairman Pradeep Chona said it was a difficult decision to sell the brand. “It’s a brand that we have nurtured with our team for over 73 years. But we believe that Lotte Confectionery is the right brand to take the company to the next level,” he said.

The entire deal will be concluded in a week, officials said. Promoters of Havmor will continue to operate its signature chain of restaurants and eateries across Gujarat as well as its signature brand and concept café Huber & Holly.

“We will have a licensing agreement with Lotte to use Havmor brand for our restaurant business,” Ankit Chona said.

The 100% promoter-run restaurant business has a turnover of Rs 75 crore. The Chonas will also continue to own about 40 Hav Funn ice-cream parlours run by Havmor Restaurants, while 115 franchise owned outlets will go to Lotte.

Lotte Confectionery was one of the first Korean food and beverage companies to enter the Indian market in 2004. Since then, the $80-billion multinational has dominated the Indian choco pie market through significant investments and localisation. Last year, market share of Lotte Confectionery, which has choco pie factories in Chennai and Delhi, reached 90%.