Innovation key for Hindustan Unilever

10 May 2011

NEW DELHI: Hindustan Unilever used innovation to enhance around half of its Indian portfolio during the last 12 months, a strategy it views as essential to driving growth.

The FMCG group reported a 13.5% sales lift in the most recent quarter, to 4,899 crore rupees ($1.14bn; €767m; £669m).

"It is a growth we haven't seen for a long, long time," Nitin Paranjpe, Hindustan Unilever's chief executive, told Livemint. "Things that have led to this are quite simply the sharp focus on consumers and customers."

As part of this process, the owner of Lifebuoy and Dove boosted adspend levels by 60 basis points year on year, ensuring "competitive support" backing its leading offerings.

"We have been strengthening our brands; we have been making appropriate investments behind the brands," Paranjpe said.

New product development played a vital role in fuelling such progress, either by introducing original products, extensions or modifications to existing ranges.

"We raised the intensity of innovations. During the course of the last one year, 50% of our business has been touched and impacted by some launch or relaunch," Paranjpe said.

Another integral aspect of Hindustan Unilever's approach is augmenting its capabilities in rural regions, adding large numbers of new stores to a rapidly-expanding distribution network.

"That has resulted in our ability to treble our rural coverage," Paranjpe said. "This is a very significant advantage, and it helps us to widen the gap as we move forward."

Hindustan Unilever currently reaches 1.5m outlets throughout India, reasonably evenly divided between cities and the countryside, achieving such a target in a year, rather than the anticipated two.

Looking ahead, Paranjpe suggested rising wealth would yield considerable possibilities.

"The good news in India is that we will see growth everywhere. It is not correct to say that the middle is getting squeezed," he said.

"The beauty in the Indian market is that we will see growth in the top, the middle, and the bottom."

Hindustan Unilever therefore expects each of its core sectors - like personal care, food, soap and detergents - will experience hardening demand.

"What helps us is that, over a period of time, over the many decades that we have been here, we have a portfolio of brands that straddles the pyramid," Paranjpe said.

"It is best placed to address the growing opportunities that exist at all price points, and across all categories. That is why we are so optimistic."

While the middle class carries major potential, high-earning shoppers are likely to prove a profitable demographic.

"Increased affluence and changing attitudes is resulting in premiumisation taking place, and we are rapidly building a portfolio across all categories that is best placed to address these opportunities," said Paranjpe.

Equally, however, the poorer audience at the opposing end of the spectrum also present sizeable, if very different, prospects.

"As India becomes more affluent, more and more people will come out from below the poverty line and get into the consumer class," said Paranjpe.

Data sourced from Livemint; additional content by Warc staff