 "Unilever")
Unilever has acknowledged the challenges posed by commodity cost deflation on its personal wash business in India and Indonesia, leading to declines in major brands such as Lux and Lifebuoy in these markets.
The global consumer giant also noted negative pricing effects in its fabric cleaning segment, particularly driven by unexpected cost deflation in laundry powders, resulting in negative prices in key emerging markets like India and Brazil, Fernando Fernandez, Unilever’s chief financial officer, told investors after announcing its results on Thursday.
Hindustan Unilever (HUL) echoed a similar sentiment, saying that skin cleansing saw a decline due to price cuts and a decrease in volumes in mass and popular segments, while body wash maintained its positive performance.
Regarding fabric cleansing, the Indian subsidiary of the Anglo-Dutch major reported a year-on-year (Y-o-Y) price decline attributed to actions taken throughout the year.
Fernandez also highlighted the success of Horlicks, Unilever’s functional nutritional drinks brand, in India, noting its “extended market leadership with positive volume and price growth in both the kids and adult segments”.
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Rohit Jawa, managing director and chief executive officer of Hindustan Unilever, elaborated on Horlicks’ strengthened position in the market, emphasising improvements in penetration, market share, and brand power Y-o-Y.
Jawa also said that the company’s focus on premiumisation is to tap into increasing affluence and under-indexed fast-moving consumer goods consumption, aiming to build future categories through market-making and premiumisation strategies.
“During the year, we’ve used these levers disproportionately to invest in market-making and premium cells. For instance, more than 75 per cent of incremental media investment was spent on market-making premium cells. Similarly, more than 70 per cent of our innovation turnover also came from these cells. We continue leaning on home-to-home connects to drive trial and usage,” Jawa said.
The maker of Pears soaps is also increasing its assortment in modern trade and e-commerce to ensure that it wins in high-growth channels.
“We’ve elevated our execution excellence by amplifying our in-store activation and through strong partnerships with customers in modern trade and e-commerce. As a result of our focus actions, we’ve increased our on-shelf availability by 200 basis points (bps) in modern trade and online availability by 500 bps in e-commerce. These strategic trusts are underpinned by our distinctive capabilities that we continue to strengthen,” Jawa told investors.
Currently, HUL derives 70 per cent of its revenue from general trade, while modern trade and e-commerce contribute around 20 per cent and 6-7 per cent, respectively.
HUL remains cautiously optimistic about a gradual improvement in consumer demand.
In the January-March quarter, HUL’s revenue saw a marginal increase of 0.6 per cent Y-o-Y to Rs 15,041 crore, with modest volume growth of 2 per cent Y-o-Y. However, its net profit declined by 1.6 per cent Y-o-Y to Rs 2,558 crore.
> Horlicks extends its leadership in India with positive volume growth
> Opportunity for premiumisation in under-indexed FMCG consumption market
> Increased focus on e-commerce channels
> Anticipation of gradual improvement in consumer demand for HUL
