The rest of the world may be talking about an uncertain future and a weak consumer sentiment, but the head of the country’s largest consumer goods company says he “hasn’t seen a slowdown” and the secular trend in the long term will be growth.
The sheer audacity of that statement may surprise many, but Nitin Paranjpe, Hindustan Unilever’s (HUL) 49-year-old MD & CEO, attributes his confidence to the bricks Leverites have laid out over the past few years to “delight consumers”.
“The situation looks challenging, no doubt, but we simply have to get accustomed to dealing with these headwinds. What gives us hope is that the Indian consumer is aspiring for a better life,” Paranjpe says. That’s the reason why HUL has been posting high single-digit or double-digit sales volume growth quarter after quarter.
It’s difficult to dismiss these claims. For, HUL’s numbers in the first quarter of this financial year and quite a few preceding ones are evidence Paranjpe and his team are indeed walking the talk. Adjusted net profit growth in the June quarter was 48 per cent on the back of a healthy nine per cent growth in the domestic consumer business in volume terms.
HUL’s focus on volume-led growth is quite a shift from a forgettable period around 2009, when it lost market share. Paranjpe, who in 2008 became the youngest chief executive to head HUL and has just got a second five-year stint, avoids answering the question, but says, “people often talk about the choice between top line and bottom line. To me, that is a false choice. It is always both”.
What explains the not-so-impressive seven per cent growth in the foods and beverages business — a segment HUL has still not been able to get its grips on despite the success of brands such as Knorr and Kissan? Though analysts have expressed concerns, Paranjpe chooses to explain it away by saying the potential is huge as packaged foods are only five per cent of the overall opportunity and are sure to take off in the changing demographic and societal context.
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One of the pillars of HUL’s strategy, Paranjpe says, is technology. The first phase of this drive was to find out the buying behaviour and patterns of customers — every outlet was covered to figure what a shopkeeper bought, at what frequency, etc. But, time has come for HUL to move to the next stage — building what Paranjpe calls predictive intelligence into the software. He explains, “It’s like Amazon, which figures out your profile from the choices you have made in the past. We are seeking that kind of predictive intelligence at the millions of retail stores.”
That’s a necessity, Paranjpe says, to understand the psyche of customers who live in many Indias. HUL is perhaps the only company to have made changes in products in line with consumer preferences in different regions and different pricing for the same brand. For example, Brooke Bond tea tastes differently and is priced differently in many parts of the country to suit local tastes and purchasing power. Wheel detergent has a hard water mix for north India and a soft water mix for the south. Similarly, Rin is priced differently in southern and northern India as its equity is different in the two parts. Going ahead, HUL will do this more aggressively to cater to the consumers of many Indias.