FMCG brand Unilever is committed to defending its market leadership in India. According to a report by The Economic Times, Unilever chief financial officer Fernando Fernandez told investors at the Bernstein Strategic Decisions Conference that the company would not hesitate to invest “hundreds of millions” or make acquisitions as the market turns competitive with the entry of regional rivals, new-age firms, and digital-first brands.
“We have an unblinking commitment to defend India. I will not blink before putting in hundreds of millions to defend a position in India if it has to be defended. We know investors would reward us because we defend positions, whatever it takes,” ET quoted Unilever CFO.
Unilever’s Indian subsidiary Hindustan Unilever (HUL) accounts for more than 11% of the company’s global sales. It is the leader by far in soaps, shampoos, detergents, and skincare, with a 35-50% share, and is also the largest tea and malted food drinks maker. As per the ET report, India is the second-biggest market for Unilever after the US. In fact, Unilever has credited India as a jewel in its crown.
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HUL is facing intense competition as the regional players at the mass end and direct-to-consumer brands at the premium end of the market nibbled away at their share last year.
Unilever’s CFO emphasized that the company would invest in acquisitions, if necessary. The company would also take ‘non-organic’ initiatives to cope with the potential premiumisation of categories and diversification of channels.
On e-commerce growth, Unilever’s Fernandez said, “When we look at the combined potential of market growth due to habit change, penetration increases, up-trading and the kind of competitive positions we have in India, we believe India for Unilever in the last 10 years has been what China has been for some of our competitors in the last 15 years”.
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HUL posted a marginal rise of 2.67% profit in the first quarter of FY2025. The profit after tax (PAT) for June 2024 stood at Rs 2,538 crore compared to Rs 2,472 crore in a year ago period.
The total sales moved 1.72% higher to Rs 15,596 crore from Rs 15,333 crore in the corresponding period last year.
“We continue to focus on building back gross margin through improved price coverage and net productivity measures while stepping up investments behind our brands and future-fit capabilities to win competitively,” HUL said in a press statement after the announcement of the Q1 result.
Over the past decade, HUL more than doubled sales to Rs 59,579 crore, while net profit tripled to Rs 10,114 crore on the back of brands such as Sunsilk, Clinic Plus, Lux, and Rin. However, the company’s premium portfolio’s contribution increased from less than 20% a few years ago to nearly 35% now.