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HUL continues to face pressure on the volume growth front. For the quarter ended March, volume growth fell to three per cent, the lowest in two years. In the three preceding quarters, HUL's volume growth was four-five per cent, against six per cent for the quarter ended March 2013.
HUL, analysts say, is determined to raise volume growth to levels seen a year ago. Announcing the company's results for the quarter ended march this year, Chairman Harish Manwani had said, "We will take all the necessary action to see how we can accelerate growth in these challenging times. We will also step up our emphasis on consumer insight, as that will give us clues with regard to consumer behaviour. This will be a critical exercise."
HUL's strategy is evident in its just-released annual report. "Rural continues to be a key area of focus. During the (2013-14) year, we reached out to 8,500 villages across India, with an ambition to improve the health and hygiene of children, through school contact and mohalla (neighbourhood) programmes. Also, we significantly stepped up investment in digital media, which is expected to be the media channel of the future," the report said.
According to the report, HUL primarily enhanced its direct retail presence in rural areas, adding 17,000 Shakti Ammas (female distributors) in 2013-14.
According to estimates, HUL's retail footprint is about two million stores in rural areas; to ensure the right set of products reaches the right set of consumers in these markets, the company directly covers about a half of these stores.
HUL is also driving the 'perfect village' initiative, through which consumers are educated about categories such as conditioners, face-wash, body lotions, fabric conditioners and liquid hand-wash. The initiative, which began in eight key states last year, is expected to be expanded this year.
The company is also focusing on innovation across categories, especially in oral care, personal products and soaps & detergents, which account for about 80 per cent of its business. The annual report says the company will step up innovation in the toothbrush and toothpaste, deodorants, skin care, hair care and liquid detergent segments.
Parent Unilever is setting up a deodorant-manufacturing plant in Khemgaon, Maharashtra, at an investment of Rs 360 crore.
The thrust on innovation comes at a time when HUL is losing share in deodorants and oral care markets. According to a presentation by rival Colgate last week, through the last two years, HUL's share has consistently fallen in the toothpaste market; between January and April this year, it stood at 21.5 per cent, against 22.8 per cent in 2013 and 23.8 per cent in 2012. Colgate, on the other hand, has increased its share in this segment from 54.5 in 2012 to 55.9 per cent in 2013 and 57.1 per cent in January-April this year.
In the deodorant space, Ahmedabad-based Vini Cosmetics' Fogg brand has raced ahead of Axe, emerging as the new leader in this segment, sources say.
It is expected this year, HUL will mount a counteroffensive, through clutter-breaking products (such as a Close-up whitening toothpaste) to regain lost ground, say persons in the know.
CHANGE OF TACK
- HUL continues to face pressure on the volume growth front. For the quarter ended March, volume growth fell to three per cent, the lowest in two years
- According to estimates, HUL's retail footprint is about two million stores in rural areas; to ensure the right set of products reaches the right set of consumers in these markets
- The company is also focusing on innovation across categories, especially in oral care, personal products and soaps & detergents
