Despite volumes taking a hit in the second quarter thanks to a slowdown in discretionary categories, Hindustan Unilever's MD & CEO Nitin Paranjpe says that the company can withstand these pressures. In a conversation with Viveat Susan Pinto, he speaks of the way ahead for HUL. Edited Excerpts:
Given that consumers are opting to defer purchases in those areas which they do not consider essential to their existence, will you then at least in the interim choose to go slow on your premiumisation agenda?
The heart of this company's strategy has been to have a portfolio of offerings that straddle the pyramid. This means we have products at the centre of the market, at the bottom of the pyramid and at the top-end of the market. This approach is a very powerful one because it allows us to benefit from short-term trends that we see in consumer behaviour, such as downtrading or uptrading. And the reality is that in a country like India there will always be people who will come into the consuming class seeking value-for-money products. There is no denying that. However, please don't forget that income and aspiration levels are rising in India. The result is that people are seeking a better standard of living, which means they want better products. As a consumer products company, we have to address this need too.
In which categories are you seeing uptrading?
In personal wash, for instance, we are seeing the top end of the market growing faster than the centre or the bottom end. If that is not uptrading then what is? Bodywash is another areas that is doing well. So is liquid handwash. All these are signs of uptrading. In laundry, machine-wash products are growing faster than non-machine wash products, again a sign that consumers are looking for better benefits as they get affluent. This is happening on a small base, yes. But it is happening and the trend has to be addressed. Same goes for fabric conditioners. Who would have thought that consumers would be willing to pay for an additional benefit such as fabric conditioning, but they are. So to answer your question certainly there is uptrading that is happening.
What has been the response to Tresemme, which you recently launched. You are stepping into an area dominated by the likes of LÓreal and Procter & Gamble? Your views on this?
It has been a few weeks since we launched the range in India and the initial response has been good. The best part is wherever Tresemme has been taken whether Brazil or the United Kingdom, consumers have appreciated it. So we remain optimistic about its prospects in India.
Packaged foods saw almost a 44 per cent drop in profit before tax and interest for the second quarter. What was the cause for this?
Packaged foods is an area where we are looking at developing the market. Packaged foods comprises ice-creams, our Knorr brand of savouries, Kissan brand of jams and ketchups etc. Our focus here is to build the market. So profit on a quarter on quarter basis is not the right lens to look at the business. We will remain in investment phase as far as packaged foods is concerned.
You recently announced that you were integrating your food services business with out-of-home to boost sales of your food brands. Has it helped?
The two have come together, but it is something we are looking at from a long term point of view. The food solutions business is nascent at this stage, out-of-home is something we are experimenting with. We started with one Bru World Cafe, now we have eight. The number of Swirl's ice-cream parlours too has increased over time. It is almost 200 now from 100 earlier. So we are taking the necessary steps.
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