Kwality Wall’s drops palm oil entirely and moves to dairy, and India's ice cream market shifts structurally

Kwality Wall's, India's leading ice cream maker, has announced plans to eliminate palm oil (vegetable fat) from all its products and switch entirely to a dairy-based formulation. Peter ter Kulve, global CEO of parent company Magnum Ice Cream Company (formerly Unilever's ice cream division), revealed the plan in late May 2026. The company aims to convert about 50% of its portfolio to a dairy base within 2026, with 100% completion targeted during 2027.

Kwality Wall's shift from palm oil to dairy - the details of the full switch

Kwality Wall's has until now sold "frozen desserts" made mainly with vegetable fat (primarily palm oil) as its core product line. Under regulations from the Food Safety and Standards Authority of India (FSSAI), only products containing a certain minimum proportion of milk fat may be labeled "ice cream"; products made with vegetable fat are classified as "frozen desserts."

CEO Peter ter Kulve stated, "In every market in the world, we are not a frozen dessert company - we are an ice cream company." He positioned India as "the most important strategic market following the demerger" and explained the background behind the decision to fully shift to dairy.

The switch will proceed in stages. About 50% of the existing portfolio will be reformulated to a dairy base within 2026, with the remaining 50% completed during 2027. At the same time, the company is developing India-specific flavors such as kulfi and kesar bhog.

Background - Unilever's ice cream business separation and a return to "real ice cream"

This move traces back to the completion of Unilever's global ice cream business separation on December 1, 2025. The business became independent as Magnum Ice Cream Company, headquartered in Amsterdam, Netherlands, bringing brands such as Kwality Wall's, Magnum, and Cornetto under its umbrella.

Before independence, Kwality Wall's, in its pursuit of cost advantage, had leaned toward palm-oil-based "frozen desserts" and had been losing share to dairy-based Amul and local manufacturers. Amul holds an estimated 40% share of India's organized ice cream market, while Kwality Wall's (under HUL) stood at only about 9.8%.

With the business separation, Kwality Wall's is now aiming to shift from "quantity to quality." It has also cut prices by up to 30% in some categories, a strategy aimed at broadening its consumer base.

India's ice cream market - key players and share

India's ice cream market is worth about 3.07 billion dollars (about 460 billion yen) as of 2026, and is projected to grow at a CAGR of 16% to reach INR 1,192.4 billion (about 2.1 trillion yen) by 2034. Per-capita consumption remains a fraction of that in developed countries, leaving substantial room for growth.

Industry and consumer reaction - some call it "a decision that came too late"

The announcement has drawn numerous reactions from industry insiders and on social media.

Consumer group assessment: Indian consumer rights groups commented that "manufacturers have finally addressed the problem of frozen desserts made with palm oil being confused with ice cream." However, some also noted that "responsibility remains for having sold vegetable-fat-based products to consumers for years."

Expectations from the dairy industry: A representative from Amul, India's largest dairy cooperative, praised the major player's return to dairy as something that "will raise quality standards across the industry." Growing demand for dairy products is a tailwind for India's roughly 80 million dairy farming households.

The view from distribution and retail: Cold chain operators expressed hope that "the plan to deploy 1 million cold cabinets will help upgrade India's cold chain infrastructure as a whole." The company currently operates 350,000 cold cabinets in Turkey and aims for roughly three times that scale in India.

Impact on Japanese companies - an opportunity to enter India's dairy market

Kwality Wall's shift to dairy carries several implications for Japanese companies entering the Indian market.

A surge in demand for dairy raw materials: As domestic demand for dairy products in India expands, opportunities will emerge for Japanese companies with dairy processing technology and quality control know-how to offer technology licensing or joint ventures. This could be an entry point in particular for dairy manufacturers in Hokkaido and Kyushu, as India's dairy supply chain is upgraded.

Expanding cold chain investment: The deployment of an estimated 1 million cold cabinets represents a large market for refrigeration and freezer equipment makers. For Japanese companies such as Daikin and Panasonic that operate refrigeration and air conditioning businesses in India, this is a direct business opportunity.

Food safety and quality control: As FSSAI regulations tighten, demand is also rising for food safety consulting and quality inspection equipment. Japan's food hygiene technology is highly regarded internationally, and there is broad scope to contribute during this phase of quality upgrading in India's food industry.

Ripple effects on the industry - the end of the "frozen dessert" category?

Kwality Wall's decision could bring about a structural shift across India's entire ice cream industry.

Until now, frozen desserts have held a share of the market thanks to price competitiveness built on the low cost of palm oil. But with the largest player exiting the category, small and mid-sized manufacturers will also face pressure to shift to a dairy base. There is speculation that FSSAI may further tighten labeling rules distinguishing "ice cream" from "frozen dessert" going forward.

Declining demand for palm oil will also affect the structure of India's edible oil imports. India is the world's largest importer of palm oil, and the ice cream industry's shift in direction will ripple through the supply-demand balance of the edible oil market as a whole.

At the same time, the shift to a dairy base comes with higher costs. How much of the increase in raw material costs is passed on to prices, versus absorbed through economies of scale, will be the dividing line for each company's competitiveness.

Practical information - overview of Kwality Wall's dairy transition

Conclusion

Kwality Wall's full elimination of palm oil will accelerate the structural shift from "frozen dessert to ice cream" in India's ice cream industry. Having pivoted from a cost-first to a quality-first approach following its separation from Unilever, the company's move signals its readiness to compete head-on with dairy-based rivals such as Amul.

For Japanese companies, this opens up broader points of contact with the Indian market across dairy supply chains, cold chain equipment, and food safety consulting. Japanese food and equipment makers should watch closely as a market worth about 3 billion dollars is reshaped by this shift to dairy.

Related article:

• Lululemon partners with Tata CLiQ for first entry into India in H2 2026
• SK-II lands in India for the first time - entering the prestige market with Nykaa stores in 4 cities plus AI skin diagnostics
• Apple preparing second store in Bengaluru's eastern IT corridor

Source:
Business Standard – Palm oil to milk: What Kwality Wall’s move means for the ice cream market
Sunday Guardian Live – Why Kwality Wall’s Wants to Replace Palm Oil With Dairy