With eight consecutive quarters of growth behind it, Hindustan Unilever (HUL) has been able to ride the stress of rising input costs, a falling rupee and changing business environment, with some success. But how does it plan to sustain this growth? By focussing on new products, especially in the premium range, the company’s chairman and parent company Unilever’s chief operating officer Harish Manwani told Hindustan Times. Excerpts:
High input prices, global uncertainty, rupee fall…how do you see them impacting HUL’s performance?
In the global context, there is absolutely no doubt that the economic scenario is uncertain. In the long term, India is a growth story — there is no question about it. Shorter term, are there challenges? Of course, there are challenges in the sense that commodity cost inflation is high. We had some issue on devaluation, (but) now the currency has stabilised.
What are the mega trends that are driving HUL today?
In a country of our size, there are a large number of consumers who are constantly moving up and a large number of consumers who are entering the economy. There is a market emerging for premiumisation — people want to use products that have value-added benefits. Premiumisation of categories is not about perception, it’s about delivering extra benefits for which people are willing to pay because they believe it has better value. Our products at the end of the day are affordable indulgences and a very affordable luxury.
With Starbucks announcing its entry, what is HUL’s strategy for its Bru cafés?
We are not in the business of retail. We are in the business of creating consumer experiences and we are not competing with anybody. We are not going to open thousands of Bru shops because we have suddenly decided we now want to be in the business of opening coffee shops.
What we will do is open as many Bru outlets as necessary to augment customer experience where it makes commercial sense.
How and where does HUL fit into Unilever’s overall growth strategy?
India is important to us because India is a net exporter of talent for us — 240 managers out of 1,400 managers working outside India for Unilever are from HUL.
For FMCG business, we follow people and we follow money. So, where there are consumers and where GDP is growing, the delta is more important than the absolute levels.
India, Brazil, China and Indonesia — these are our fastest-growing markets because they also happen to have very large population base and the scope for market development is high. We are fortunate that 55% of our business comes from developing markets.
Is HUL looking at acquisitions?
We will constantly be tracking opportunities of industry consolidation and movements. If we believe there is an opportunity for us to acquire any business that is a bolt-on to our core category in a core geography, we will go for it.
We have not done any acquisition in this market because frankly there has not been an opportunity of an acquisition which we believe is accretive or gives us anything we can’t do organically. If we get it, we have a strong balance sheet, there’s no issue at all, we can do it tomorrow.