Unilever takes long term approach in India

06 July 2010

MUMBAI: Hindustan Unilever, the FMCG giant, is taking a long term approach to enhancing its position in India, which requires putting its customers ahead of the investment community.

At present, emerging economies deliver half of Unilever's global sales, an increase of 16% when compared with 2004.

Harish Manwani, the chairman of Hindustan Unilever, predicted that by 2020 a majority of the firm's revenues, as well as its "thought leadership and talent", is likely to be drawn from these areas.

This shift is a result of the new priorities observable among many multinational corporations, which are placing a heavy emphasis on nations such as Brazil, Russia, India and China.

This transition would normally be expected to "take place in a lifetime", but is "actually happening faster than we thought," Manwani continued.

In one example of this trend, Unilever has added €5bn ($6.3bn; £4.1bn) in turnover to its balance sheet in less than five years from developing countries alone.

More specifically, India had made a "a significant contribution" to this incremental growth, having generated annual upticks in demand in the range of 50% since 2005.

Although Hindustan Unilever has the biggest market share in India, some 1,500 brands have been rolled out domestically in the last 18 months, meaning it is under constant pressure.

Given this intense competition, manufacturers must offer "a superior product" at every possible price point, according to Manwani.

"I get sleepless nights if a consumer picks up a competitor's product," he said.

"The fact of the matter is that we are able to compete ... In India, we are talking about remaining relevant [for] ten, 15, 20 years to all Indian consumers."

In order to achieve this goal, HUL is "looking at where the consumers are going", a strategy covering everything from advertising to channel management.

"We have an energising growth vision about creating the shift in our growth trajectory," said Manwani.

"We are conscious that with all the legacy assets, great businesses are about creating the gaps between you and your competition."

While Hindustan Unilever has been criticised by analysts for its relatively slow rate of expansion, Manwani suggested its focus was tailored to shoppers rather than the stock market.

"Our proposition is more for medium-to long-term investors," he said.

"We must have the humility to understand that in our business, our report card is written everytime the consumer goes shopping ... HUL is built to last."

Data sourced from Times of India; additional content by Warc staff