The maker of Rin and Lux plans to use India’s distribution reach, category-building capabilities and experience in serving sharply different consumer segments to accelerate growth in these underpenetrated markets.
“We will not defend the market in India. We will attack the market in India,” Unilever chief executive Fernando Fernandez said at the company’s capital markets day.
“India will be for Unilever in the next decade what China has been for some of our competitors in the previous decade,” he added.
Emerging markets account for 62% of Unilever’s revenue, while India alone contributes $6.3 billion, or about 16%, of the company’s revenue. The company expects the number of new middle-class households in these markets to double by 2035 to about 300 million. Africa and Asia are projected to account for 90% of global urban population growth until 2050.
The Anglo-Dutch consumer firm described India’s distribution network and portfolio breadth as a competitive moat. “India is our blueprint for emerging markets. We have a wider portfolio covering practically all price points in a very significant number of categories, and we have four times the share of our main competitor,” Fernandez said.
In India, Unilever has a 55% share in haircare, close to 50% in laundry, 80% in functional tea, 35% in skin cleansing and more than 30% in sun care. It also has an 80% share in functional nutrition.The scale of its distribution is another advantage. Unilever reaches more than 9 million retail outlets in India and sells close to 85 billion packs annually, or roughly 60 packs per person. Its India business has quadrupled cash flow over the past decade.
Hindustan Unilever chief executive Priya Nair said HUL has a relative market share of three to five times that of its nearest competitor in every category where it operates. But the opportunity is not limited to defending these positions. Unilever sees substantial headroom to expand consumption in categories where penetration remains low.
Nair said India’s consumer base required different approaches across geographies and income groups. About 70% of the population lives in rural villages and smaller cities, 20% in small towns and 10% in the country’s 100 largest cities, each with distinct consumption patterns. HUL has structured its frontline teams to serve rural markets, specialist stores in smaller towns and online consumers in larger cities.
Africa, Vietnam, Pakistan and Bangladesh together account for about 9% of Unilever’s revenue and have a combined population of roughly two billion. The company sees an opportunity to apply India’s experience in building distribution, creating categories and reaching consumers across income levels in these markets.
The company is also looking to transfer learnings from India’s quick-commerce ecosystem and its experience in market-making to other frontier markets, while drawing on China for social commerce capabilities. Premium products, digital capabilities and omnichannel retail partnerships in developed markets are other sources of expertise it plans to use.
Source: m.economictimes.com
