HUL rides e-commerce wave, 30% growth in 3 years: Motilal Oswal
Strategic divestments, such as Pureit and the ice cream business, and digital-led investments (40% of media spending) are expected to enhance operational agility.
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As India undergoes a consumption revolution, driven by a youthful population, rising incomes, and digital connectivity, Hindustan Unilever (HUL) is adapting the preferences of a dynamic India and staying relevant in a rapidly changing landscape while honoring its legacy as a market leader.
With a vast network of 9 million outlets and a growing digital presence through the Shikhar app, HUL reaches over 1.4 million traditional retailers. These channels capture 50% of demand in India’s vast and fragmented market, as per a report by Motilal Oswal.
HUL has also taken some bold steps to streamline its portfolio and focus on its core strengths.
From divesting its Pureit water purifier business to the demerger of it's ice cream business, the company seems to recognize the need to remain nimble in a competitive and highly seasonal market.
Moreover, HUL's significant investment in e-commerce, with a 30% CAGR, contributing 7% of total sales—a number poised to grow further (as per analysts) highlights its focus on digital innovation and future growth.
In beauty and wellness, HUL has aimed to democratize luxury beauty with the launch of masstige brands like Nexxus and Dermalogica bridging the gap between affordability and aspiration by making salon-quality products accessible to everyday consumers.
With 8 out of 10 beauty shoppers discovering products online, HUL’s digital-first strategy ensures it’s always in their line of sight, the report suggests.
Leveraging personal connections
HUL prioritizes meeting consumers where they are while gently nudging them toward higher-value products. Through its WiMI (Winning in Many Indias) strategy, HUL tailors offerings like neem-based cleansers for rural areas and roll-on deodorants for urban youth.
HUL’s focus on emerging categories like body washes—boasting 5x growth over soaps—illustrates its ability to turn small opportunities into massive successes. Here, the company's premiumization strategy ensures these efforts are both profitable and scalable, according to analysts at Motilal Oswal.
The Home Care revolution
The Home Care segment, led by the iconic Surf Excel, has seen massive growth. The transformation is reflected in Surf's journey - from basic detergent powders to liquid detergents with a 4x penetration increase since 2014. Comfort fabric conditioners have redefined laundry care, with turnover growing sevenfold, as per Motilal Oswal.
But there is still untapped potential. Only 17 million households use liquid detergents today—a vast market waiting to be captured. HUL’s partnerships with washing machine manufacturers and channel-specific strategies are paving the way for a cleaner, more profitable future.
Savoring success in Food & Refreshments
HUL's iconic brands, Lipton and Horlicks, have been household names in India. Furthermore, company's journey in innovation is reflected in its enzyme-based flavor enhancements and prebiotic benefits.
Analysts suggest that with under-penetrated categories like condiments and packaged coffee, HUL is poised to unlock significant growth.
Navigating challenges
For HUL, the volatility in tea and palm oil prices might pose a challenge. Yet, the company’s strategy remains steady: volume-led growth, low single-digit price hikes, and cost-saving initiatives.
HUL’s focus on innovation extends to its operations. With 40% of its media spend allocated to digital and a renewed commitment to sustainability, the company is building a foundation for long-term resilience, the Motilal Oswal report suggests.
Analysts imply that HUL’s ambitions are higher and the goal is double-digit EPS growth driven by balanced volume and price growth. Investments in premiumization and sustainability highlight its vision for a brighter, greener future.
