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India growth is competitive in dynamic market, says Unilever CFO

In the Q1FY24 results announced last week, HUL reported a volume growth of 3 per cent

Unilever headquarters in Rotterdam, Netherlands

Sharleen Dsouza Mumbai

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Unilever, one of the world's largest consumer goods companies, said on Tuesday that the Indian market continued to grow in value, and volumes were also recovering with rural volume growth moderately positive over the past three months. 

Hindustan Unilever Ltd (HUL), India’s largest fast-moving consumer goods (FMCG) company, is a subsidiary of Unilever.

“We expect Southeast Asia to put up a good balance between price and volume -- South Asia and India in particular,” Graeme Pitkethly, chief financial officer at Unilever, told investors in a conference call after the company announced the April-June quarter results.

Unilever beat underlying sales growth forecasts after again raising prices to offset higher costs. The British company reported a 7.9 per cent rise in underlying June-quarter sales, beating analysts' average forecast of 6.4 per cent, a company-provided consensus showed. The company said it expects underlying sales growth for the full year to be above 5 per cent, ahead of its multi-year range, Reuters reported. Pitkethly pointed out that consumers were “trading down” a bit. “They [Indian consumers] are buying a little bit less, but what does that mean for Unilever?...I think we have managed this inflation price-volume competitiveness dynamic reasonably well so far,” he said. 
 

“There are two particular categories in our Indian business – fabric cleaning and skin cleansing – that make up about 40 per cent of the Indian business,” he added.

In the Q1FY24 results announced last week, HUL reported a volume growth of 3 per cent.  “India growth remains competitive in a dynamic market. While all business groups grew, we saw particularly strong performance from home care in India,” he said. The global consumer major pointed out to investors that in India there is a lot of local competition, and pricing is directly connected to commodity pricing and as commodity falls it expects pricing to adjust downwards and it may go flat and may even go negative.  “In India, you can see some reasons for positivity. I think in many parts of the very broad Unilever footprint, we’re getting through the hump of the inflationary dynamics and consumer pressures. Now, things are starting to uptick,” he said. 

However, Pitkethly noted that the company was witnessing pressures in the country’s tea market.  The Indian consumer has moved into the unbranded category because of pricing, he explained. All evidence, however, suggests that as soon as the consumer has a little bit more money to spend, they will move back into the branded space, he added. “There is a trend to value, as consumers look to balance the household budget. This can be seen in the growth of unbranded loose tea in India and the growth of very low-priced laundry brands in Brazil. These are very low profitability segments where we choose either not to play or are typically very selective,” Pitkethly said.


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First Published: Jul 25 2023 | 9:34 PM IST

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