HUL: A Household Name For Decades

The jewel in Anglo-Dutch company Unilever’s crown, Hindustan Unilever’s (HUL) journey this year has been rather eventful for more reasons than one. From making a comeback in the hair oil segment which it had exited in 2006 to devising strategy to counter regional competition and taking on rival companies, it has been in the news for a plethora of reasons.

Only a few days back in December, it acquired oil brand ‘Indulekha’ from Mosons Group. So, on one hand, where it decided to adopt measures to go in for inorganic growth and take the acquisition route to expand its operations in the domestic market, what is noteworthy is that the FMCG behemoth also undertook certain steps to part with some of its non-core businesses. For instance, earlier this year, it sold its bread and bakery business under the brand ‘Modern’ to Nimman Foods, the investee company of the private equity firm Everstone Group.

Today, HUL is the market leader in the consumer products category in India with over 35 brands spanning 20 distinct categories under homecare and personal care brands such as soaps, detergents, shampoos, skin care, among others. What’s more, it also has food brands and water purifiers.

Recently, the company grabbed all eyeballs when it set up kiosks at retail outlets across the country where customers could test the effects of its personal care brand Dove against any other soap. Analysts reckon that this was in a bid to take on a rival company’s soap brand and show how Dove soap is different from the ones available in the market. This also reminds us of one of the FMCG company’s most controversial advertisements a few years ago where it had shown its laundry brand Rin to be better than P&G’s Tide. While these moves, prima facie, seem somewhat unethical, market watchers opine that such campaigns or advertisements can actually help create excitement galore in the minds of consumers. What’s more, toeing Prime Minister Narendra Modi’s clean India initiative, the company launched a Swachh Bharat drive to bring about a change in consumer behaviour as it believes that the programme may lead to higher sales of soaps and cleaners.

Well, this was on the product and marketing side. On the people side too, the company saw some high profile movements this year when Unilever elevated Leena Nair as its chief human resource officer from HUL, signalling blue chip MNCs’ growing confidence in the new breed of Indians for top jobs worldwide. Last time the company had seen a change in top management was in 2013, when it appointed Sanjiv Mehta as the managing director and chief executive officer of HUL after its then CEO Nitin Paranjpe, had been elevated as the president at the parent company.

It is HUL’s constant emphasis on market research and innovation and product development that makes it the largest fast-moving consumer goods company in the country. It clocked a revenue of Rs 30,805.62 crore for the financial year ended 2015. Most recently, in the second quarter of the current fiscal, HUL showed an expected volume growth of 7 per cent, which was the highest in three years, and a sales growth of 5 per cent. The company said in a statement that its sales at its domestic consumer business were, however, impacted by phasing out of excise duty incentives and price de-growth, as it passed on the benefit of lower commodity costs to consumers through price cuts. The company’s headcount stands at over 16,000 employees.

In terms of corporate social responsibility, the company has scored well. In 2009, the company launched The Compass — its strategy for sustainable growth. It set out with a compelling vision to double its business and expand its operations, while reducing its environmental footprint. This is captured in the Unilever Sustainable Living Plan. By combining its multinational expertise with its deep roots in diverse local cultures, it is continuing to provide a range of products to suit a wealth of consumers. It is also strengthening its strong relationships in the emerging markets, which are the growth drivers of the future. HUL has consistently spent 2.1 per cent of average net profit on CSR activities, above the mandatory 2 per cent.

Besides the numbers and the pedigree, there are three reasons why this multinational giant consistently finds a place in the ranks of most respected companies. First, it has a bouquet of brands that have been household names for decades, much before rivals like P&G came into the picture. Brands like Surf, Rin, Wheel, Liril and Lifebuoy are testimony to the company’s hold over consumer mind space. Then again, unlike many other counterparts, HUL has successfully stayed away from ugly controversies, whether related to quality and safety of products or over the ethics of its corporate actions. Industry rivals grudgingly admit that while its marketing strategies are ruthless, one can hardly point any fingers at the company. The third key reason is Project Shakti. There can be no doubt that Project Shakti is ultimately a smart marketing strategy positioned as a “welfare” activity. At the same time, there can also be no doubt that Project Shakti has made a positive impact on the lives of hundreds and thousands of women in rural areas. The scheme has encouraged numerous women in otherwise patriarchal societies to become independent entrepreneurs. When you touch so many lives at the grassroot level, you are bound to be admired, and respected.

paramita@businessworld.in@paramitachat

(This story was published in BW | Businessworld Issue Dated 11-01-2016)