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Hindustan Unilever's new horizons: Beauty, food and water

Last updated on: June 28, 2012 12:28 IST

Hindustan Unilever's new horizons: Beauty, food and water

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Viveat Susan Pinto in Mumbai

The Rs 22,116-crore (Rs 221.16-billion) Hindustan Unilever Ltd (HUL) has said it is keen to focus on the beauty, food and water segments, as it prepares a blueprint for the future.

In its recent annual report for 2011-12, the country's largest fast-moving consumer goods (FMCG) company, the market value of which is about Rs 1,00,000 crore (Rs 1,000 billion), stated these segments were "key capabilities in order to win in the future".

The company also included rural and modern trade in the segments it would build and invest in.

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Photographs: Pawan Kumar/Reuters

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HUL's statement comes against the backdrop of the company ramping up operations in these areas, even as it focuses on its core area of soaps & detergents and personal products, which account for about 48 per cent and 31 per cent of its revenue, respectively.

The company does not specify the contribution of its beauty segment, which includes the Lakme and Elle brands. The details of the company's water business are also not provided.

The revenue under the 'others' category in the annual report stands at 2.9 per cent. Analysts estimate this is largely accounted for by the water segment, in which the company has the Pureit brand of water purifiers.

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Image: Nitin Paranjpe, CEO and managing director, HUL
Photographs: Courtesy, HUL

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The revenue from the food segment, which includes packaged food and ice cream, is 6.2 per cent.

HUL has launched affordable products in the beauty segment. The company has also been developing its portfolio to stand up to the marketing onslaught of brands such as Maybelline, Chambor, Revlon and LOreal.

The launch of Absolute, HUL's range of long-wear make-up, a few months ago, was aimed at wooing consumers drawn to international brands that claim to offer no-fussy products.

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Photographs: Courtesy, Maybelline

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Lakme and Elle 18 rank first and second, respectively, in the beauty categories of lips and nails in traditional trade, according to market research agency Nielsen.

Value shares in 2011 for Lakme and Elle stood at 17.7 per cent and 11.3 per cent, respectively, compared to Revlon's 4.2 per cent and Maybelline's 2.5 per cent. Nielsen does not track modern trade.

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Photographs: Courtesy, Lakme

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In the water segment, HUL has a range of products priced between Rs 900 and Rs 13,500.

Its primary competitors in this segment are the Tata Group's Swach (priced at Rs 899 and Rs 1,199) and Eureka Forbes.

While HUL has not specified the sales of Pureit, people in the know say it is about 4.5 million units. Swach, on the other hand, has sales of about 5,00,000 units.

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Photographs: Darren Staples/Reuters

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HUL exports Pureit to seven countries and plans to take the purifier to more international markets, as it seeks to expand Pureit's footprint, identified by parent Unilever as a key India innovation.

In the food segment, HUL has been somewhat laggard compared to companies such as ITC Foods, which crossed the Rs 3,000-crore (Rs 30-billion) turnover mark in 2011-12, cut its losses significantly and retained growth levels of about 25 per cent. The revenue of HUL's food business stands at only about Rs 1,400 crore (Rs 14 billion).

The company had recently announced it was integrating its food services business Unilever Food Solutions with its out-of-home division to boost sales of its food brands, including Knorr, Kissan and Annapurna.

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Photographs: Vivek Prakash/Reuters

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An HUL spokesperson had said, "Out-of-home (OOH) foods and beverages consumption is a large and growing opportunity in India.

We operate in the B2B (business-to-business) space through two separate divisions---out-of-home division for beverages and Unilever Food Solutions for foods.

These are being integrated into one OOH services organisation to leverage the synergies and efficiencies of a 'one Unilever' face for customers and a consolidated 'go to market' organisation."

The integration, according to the spokesperson, would help the company scale up operations and have an aligned portfolio and innovation pipeline across its retail and institutional businesses.


Image: Unilever R&D Center in Bangalore
Photographs: Courtesy, Wikimedia Commons

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