India key for Unilever

14 March 2011

MUMBAI: Unilever, the FMCG giant, is putting India at the heart of efforts to double its revenues by 2020.

The company can trace its history in India back to 1888, but believes local unit Hindustan Unilever (HUL) could now be set to experience an unparalleled expansion in sales.

"India is the second-most populous country after China, and the bulk of our consumers are here," Paul Polman, Unilever's chief executive, said, the Business Standard reported.

"The volume growth in the country has been the best in the last 30 years and we are rolling out bigger and faster innovations."

He added: "We will create another HUL in a short period of time than what we did in last 100 years."

Given the rapid changes occurring in India as a result of rising affluence and infrastructure development, considerable flexibility is necessary on the part of corporations.

"The growth rate in India is so fast that it looks like a different country every six months," said Polman. "Every time I come, I get energised because there are so many things happening.

"If you take a helicopter view, this country is moving fast in the right direction. There are more people coming out of poverty and the standards of living are improving."

Around 75% of Unilever's emerging market sales are generated from its household and personal care products, with food only contributing 25%, and redressing this imbalance could prove a substantial task.

"The penetration of packaged foods in India is just about 4% to 5%," said Polman.

"The cooking environment here is complex. I don't deny the importance of foods in our business. But to be able to double the business, foods would have to grow at 50% per annum."

While launching established brands in new areas has formed a central element of Unilever's strategy, it is also attempting to meet the distinct requirements of local shoppers.

"The mantra here is always been, what is right for India long term, is right for Unilever," said Polman.

"It is with this vision and modus operandi that we have built one of the most successful companies in India."

"The potential here is enormous. We see the potential to continue to grow as well as we are doing now."

Elsewhere, Polman suggested India would be a "feeder of ideas" for R&D across the globe, a trend which applies to Asia as a whole.

"Companies will shift their innovation capabilities and their new introductions to emerging markets," he said.

One example of this is Pureit filters, currently present in 4.5m Indian residences, providing safe drinking water and stimulating revenue growth.

"It will continue to reach more households as consumers realise the need for safe drinking water," Polman said.

"But the key point is that we are taking the learnings derived here to other markets. We are rapidly looking to roll out Pureit in markets such as Indonesia, China Vietnam and Brazil."

Having recently established a wide-ranging sustainability agenda, Polman stated Unilever is not worried about governmental proposals in India which could demand firms set aside 2% of profits for social projects.

"We are on a … sustainable business model, where everything we do is around improving the health nutrition, sustainable growth, ensuring that the total value chain benefits from where we are," Polman said.

"So the 2% is for companies that have to catch up with what we are trying to do."

Data sourced from Business Standard, Economic Times, CNBC-18; additional content by Warc staff