Unilever ready to defend India’s top spot with millions

Mumbai: Unilever will do “whatever it takes” to defend its market leadership in India and will not hesitate to invest “hundreds of millions” or make acquisitions as competition intensifies on several fronts – from regional rivals to a new era of brand digitality.

“We have established positions that we think are very, very strong. We remain unwaveringly committed to defending India,” Unilever CFO Fernando Fernandez told investors at a strategic decision-making conference at Bernstein. “Therefore, I will not blink before investing hundreds of millions to defend India’s position if the need arises. We know investors will reward us because we defend our position no matter what.”

The dominance of Hindustan Unilever (HUL), the local arm of the Anglo-Dutch consumer giant, over most home and personal care categories is at risk.

Unilever said it still considers India to be the jewel in its crown. HUL, India’s largest consumer goods company, accounts for over 11% of Unilever’s global sales. The country is the second largest market after the USA in terms of revenue. It is the clear leader in the market of soaps, shampoos, detergents and skin care products with a 35-50% share, as well as the largest producer of teas and malt drinks.

In the oral care and coffee categories, HUL has the second largest share. However, regional mass market players and premium direct-to-consumer brands took away their share last year. “If necessary, we will invest in acquisitions to complete what is already a very comprehensive and very strong position,” Fernandez said.

The goal is to increase volume by 4-5%.

“But if inorganic initiatives are necessary in India, we will do so to deal with potential category premiumization and channel diversification,” Fernandez said.

The maker of Rin detergent, Dove shampoo and Lux ​​soap said it had gained about 200 basis points of market share since the Covid pandemic, despite temporarily losing the pie to regional and local players who cut their prices after commodity prices fell.

In fact, Unilever reported that it has a 55% share in hair care products and every time this segment grows by 7%, HUL’s portfolio expands to the size of the main European competitor in this category in India. This was a possible reference to the French L’Oreal.

“We are growing 11% (in the hair care industry). Basically, in one year, we are 1.5 times the size of one of our main competitors in India,” Fernandez said.

The CFO said e-commerce is growing three times faster than modern brick-and-mortar retail channels – albeit from a lower base. “When we look at the total market growth potential from changing habits, increased penetration, up-trading and the type of competitive position we have in India, we believe India has been to Unilever over the last 10 years what China has been to some of our competitors in over the last 15 years,” Fernandez said.

Over the last decade, HUL has more than doubled its sales to ₹ 59,579 crore and its net profit has tripled to ₹ 10,114 crore, mainly driven by mass-priced brands such as Sunsilk, Clinic Plus, Lux and Rin.

However, the share of the premium wallet has increased from less than 20% a few years ago to almost 35% today.

Unilever has stated that it aims to grow volumes in India by 4-5% in an economy that is expected to grow by 5-6%. “So we’re really totally focused on that. Results are improving,” Fernandez added.