Hindustan Unilever Limited

FMCG Industry
FMCG products are products that have quick shelf turnover, at relatively low cost and dont require a lot of thought, time and financial investment to purchase FMCG Industry mainly deals with production, distribution & marketing of packaged goods to all consumers

FMCG Industry in India

Present Fourth largest sector in the economy Size - US$13.1 billion Strong MNC Presence Well established distribution network Competition between organized and unorganized sector Low Costs of labour and Easy availability of key raw materials

FMCG Industry in India

Future Set to reach a size US$ 33.4 billion in 2015 Penetration levels in several products categories low India one of the largest economies in terms of purchasing power with a middle class of 300mn Rural India a huge market still to be tapped
Urban Population 2001-02 (mn) Population 2009 -10 (mn) % Distribution Markets (Towns/ Villages) 53 69 28 3768 Rural 135 153 72 627000 Source: SOI, NCAER

FMCG Major Domestic Players

Domestic Players
Britannia India Ltd (BIL) Dabur India Ltd Indian Tobacco Corporation Ltd (ITCL) Marico Nirma Limited

FMCG Major Foreign Players

Foreign Players
Cadbury India Ltd (CIL) Cargill Coca Cola Colgate-Palmolive India H J Heinz Co Hindustan Unilever Ltd (HUL) Nestle India Ltd (NIL) PepsiCo Procter & Gamble Hygiene and Health Care Limited

Hindustan Unilever Ltd

HUL touches the lives of two out of every three Indians everyday Part of the 40 billion Unilever Group. The Group has more than 400 brands spanning 14 categories of home, personal care and food products Presence in over 100 countries and employs more than 174,000 people worldwide The Company was incorporated in 1933 but its products have been sold in India since 1888

Hindustan Unilever Ltd

Indias largest FMCG Company Headquartered in Mumbai Over 700 million consumers More than 15,000 employees, including 1,300 managers More than 200 highly qualified scientists and technologists Shares listed at BSE (Stock code - 500696) and NSE (Stock code HINDUNILVR) Shareholder base of over 3.5 lakh

HUL Mission
Mission Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life.

HUL The Journey so far

1931: HUL set up its first subsidiary 1956: HUL offered 10% of its equity to the Indian public 1972: Lipton Acquisition 1984: Brooke Bond Acquisition 1986: Ponds Acquisition 2000: Modern Foods Acquisition
A little bit of the History of HUL formation

HUL Geographic Presence

Production More than 35 manufacturing locations across India, with major hubs being Assam, Uttaranchal, Himachal Pradesh, Pondicherry and Dadra & Nagar Haveli Marketing All States in India, Project Shakti

Critical Success Factors

Clear Brand Identity Visible elements of a brand (colours, design, logotype, name, symbol) that together identify and distinguish the brand in the consumers' mind) Market Reach Estimated number of the potential customers it is possible to reach through a an advertising medium or a promotional campaign Tangible and intangible benefits of the brand Unique Selling Proposition - Differentiation

Critical Success Factors

Operational Effectiveness Contain low cost competition: Focus on achieving cost competitiveness to counter low cost competition Right goods, Right time, Right quality @ Right cost Innovate aggressively: Innovate, Growth, Mature, Innovate Ensure the future of business

Critical Success Factors

Winning Through People Attract and retain top quality talent: Business leadership programme or new category organisation structure Success will only be achieved through highly motivated and effective people Customer and Supplier Management Satisfying customers Management of the total supply chain

Critical Success Factors

Commitment at all levels Allowing each unit to develop initiatives Providing Budgetary Support to sub groups Strategic Level Successful implementation of the strategic objectives Power brand to expand profitably to grow the business (eg: Restructure in HLL 2001) IT Systems Excellence in IT systems

HUL Product Portfolio

Segment

Brand Comment Surf Patented Technology, Premium Segment Rin Largest Selling detergent bar Sunlight Unilevers oldest, first brand WB, Kerala Fabric Wash Largest Selling Indian detergent Market Share: 38% Wheel Dish Wash First & largest selling dish washer bar Market Share: 58% Vim Surface Cleaning Domex Lifebuoy Worlds largest selling Soap Lux Global brand Dove Global Brand: Premium, Skin friendly Pears Premium Segment Breeze Basic Segment Focuses on young female population Household Personal Wash Liril Care South Indian Regional Brand TN Market Share: 52% Hamam Clinic Shampoo Indias largest selling shampoo (D,ND) Dove Global Brand: Premium, Hair friendly Sunsilk Largest beauty shampoo brand Hair care Herbal - Doing well in South India Market Share: 47% Ayush Ponds Global brand, First mover (1947) Fair & Lovely Patented Formulation, Asian brand Lakme Skin Care Bought from Tatas, Salon Business Vaseline Global brand, Monopoly in Indian Petro-Jelly Personal Skincare Products Market Share: 52% Aviance Customized Personal care Solutions

Sub-Segment

HUL Product Portfolio

Segment

Sub-Segment Toothpaste

HUL Product Portfolio

Personal Products

Brand Close-up Market Share: 30% Pepsodent Toothbrush Deodorants Market Share: 32% Axe, Rexona Colour Cosmetics Lakme Infant Care Huggies Feminine Care Kortex Kissan Knorr Processed Foods Annapurna Tea Coffee Beverages Ice Cream & Bakery Products Brain Food

Comment Indias first Gel, Youth brand Second largest selling toothpaste

Clear leader in deodorant segment Natural Colorants Late entrant - Smaller Player Jam Squeeze, Ketchup Soups & Ready to Cook Salt, Flour 3 Roses Mindsharp, Taj, Brooke Bond, Lipton Bru

Market Share: 23% Market Share: 45%

Food & Beverages Pure-it

Gelato, Quality Walls Amaze Lakme Beauty Salons Ayush Therapy Centres

Beauty and Wellness

Demographic advantage of India Creating new markets Moving from products to Services in Premium segments Moving from products to Services in Premium segments

HUL Product Portfolio

Revenue Share
Other Operations 8% Foods (Bakery) 1% Exports 4% Beverages 11% Personal Products 26% Ice Creams 2%
Soaps and Detergents Personal Products

Beverages

Soaps and Detergents 48%

Exports

Foods (Bakery)

Other Operations ( Water etc.)

Ice Creams

HUL Financials

HUL Financials

HUL Porters Five Forces

Porter's Five Forces
Buyer Power 5 4 3 2 1 0

Degree of Rivalry

Supplier Power

Substitutes

New Entrants

HUL Porters Five Forces

Buyer Power
Buyer Size 5 Product 4 Oligopsony Threat 3 2 Buyer Cost of Switching 1 0 Backward Financial Muscle Differentiated Product Loyalty

Price Sensitivity

HUL Porters Five Forces

Supplier Power
Supplier Size 5 Forward Oligopoly Threat 4 Integration 3 2 Differentiated 1 Switching Costs Input 0 Importance of Quality/Cost No Substitute Inputs Player Independence Player Dispensability

HUL Porters Five Forces

New Entrants
Low-cost Switching 5 Undifferentiated Market Growth 4 Product 3 2 Weak Brands Scale Unimportant 1 0 Little IP Involved Suppliers Accessible Distribution Accessible Low fixed costs Little Regulation

HUL Porters Five Forces

Substitutes
Low-cost Switching 5 4 3 2 1 0 Beneficial Alternative Cheap Alternative

HUL Porters Five Forces

Degree of Rivalry
Competitor Size 5 Zero-sum Game Number of Players 4 3 Storages Cost Low-cost Switching 2 1 0 Similarity of Undifferentiated Players Lack of Diversity Hard to Exit Products Low fixed costs Easy to expand

SWOT Analysis
Strong parentage and R&D, healthy cash coffers to support innovation Strong position in most of the categories of its presence Unmatched distribution network , a must to cater rural markets Presence across price points to straddle across entire income pyramid Healthy Shareholder Returns in the form of RoE and dividend yield Native Know How

STRENGTHS

SWOT Analysis
49% of HUVR's sales come from detergents and personal wash
WEAKNESSES

Increase in Ad Spending, which may affect the margins

SWOT Analysis
OPPORTUNITIES

Change in Rural Indias source of income Government Focus Futures Market Increase in MSP Massive Election Spending

Favorable Demographics Increasing Consumer aspirations Buoyant topline for FMCG companies

Consumer expenditure in food sector rose by 13% Valued at USD240mn packaged foods 5%, 14%(g) Modern retailing gaining coverage

Growing opportunitie s in Rural India

Consumer sector on a secular growth trend

Opportunity in Food Sector

SWOT Analysis
Losing market Stiff competition share in most of from local as well the categories , as MNC players Matured and Growing THREATS Receding pricing power
- Rural income is yet dependant on agriculture and in turn monsoon - Spurious Products

Ansoff matrix: Products & Brand Strategic Framework

Existing Products New Products
PRODUCT DEVELOPMENT Knorr, Kisan , Annapurna, Pepsodent, Fair & Lovely, Lifebuoy, Rexona, Sunsilk, Vaseline, Lux, Wheel, Dove, Lakme, Surf Excel, Peers, Clinic all clear, Rin, Liril

Existing markets New markets

PENETRATION Sunlight , Lipton , Hamam, Close Up, Breeze , Ponds

MARKET DEVELOPMENT

DIVERSIFICATION

BCG Matrix-HUL
Hair Care Skin Care Premium Soaps & Laundry Deodorants Water (PureIt) Processed foods Colour Cosmetics

Mass Soaps Beverages Oral care Laundry

Sea-food exports

Structure
Board at the apex-Headed by Chairman, comprising 5 whole time Directors and 5 independent non-executive Directors. Divisions: Each division is self-sufficient with dedicated resources and assets in sales, marketing, commercial, and manufacturing. Each category and each function - Sales, Commercial, Manufacturing - is headed by a Vice President.

For managing sales operations, HUL divides the country into four regions, with regional branches in Delhi, Kolkata, Chennai and Mumbai. In Marketing, each category has a Marketing Manager who heads a team of Brand Managers dedicated to each or a group of brands. Each Division has a nationwide manufacturing base, with each factory peopled by teams of Production, Engineering, Quality Assurance, Commercial and Personnel Managers.

Systems
Substantial investments in IT-based sales system Every salesman now books orders on a palmtop All orders are fed into a central database from the distributor point. This extensive network is installed at all 3,500 distributor pointswhich makes for accurate onthe-fly demand projections and helps avoid stockout losses.

Style
Nitin Paranjpe- Youngest CEO & MD 'CEO Factory-Produced many business leaders HUL's leadership development model has groomed managers by providing a well-rounded view of the business through job rotation and various new assignments. The system was designed to identify fast-trackers, who were called the Lever listers and groom them for handling greater responsibilities. For every position, typically three people competed.

Shared values
Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life. Unilever has earned a reputation for conducting its business with integrity and with respect for all those whom our activities affect. Singular belief that what is good for India is good for HUL. It has strategically introduced new products on think global and act local concept Deep roots in local cultures and markets around the world give it a strong relationship with consumers.

Staff
15,000 employees, including 1200 managers, 200 scientists. HUL has a strong management bandwidth having a team of professionals for each SBU. At HUL, career paths are designed such that they will build employees into business leaders. Employees would start from a managerial level in any of the following functions: commercial , technical, sales & marketing, IT, HR The objective of each path is however the same: to give the employee a strong foundation so that she would be in a position to take on complete ownership for a brand or a unit.

Skills
Has in-house manufacturing as well as outsourcing R&D support from parent company Large distribution network Strong management Has the best marketing talent in the industry

HUL Strategy
1. Leverage brand portfolio and consumer understanding by 2. Winning with consumers, channels, segments/markets of tomorrow
Straddling the pyramid & deploying full portfolio Driving consumption & penetration opportunity Build markets and capabilities for the future Leverage Unilever scale and know how

3. Drive increased execution rigour 4. Step-up in cost efficiency initiatives 5. Integrate economic, environment & social objectives with business agenda

Leverage brand portfolio and consumer understanding by

Changing Pyramid Changing Income Pattern

Leverage brand portfolio and consumer understanding by

Identifying the opportunity and filling it is important

Although HUL is market leader in most of the category, its loosing its market share.

Increasing consumption: Lifebuoy Hand wash Programme

Since 2002, the project has touched 50,676 villages and 120 million people. Campaign Impact Awareness of germs - 52% to 83% Association of germs with disease 35% to 57%

Context Barriers to Soap Usage very high Insight : Visible clean is safe clean

Method Raise concern on the consequence of invisible germs

Challenge Low literacy Low reach of conventional media

Consumers of tomorrow: Dove

Lipton Tea & Taj Mahal Tea Bags

Channels of Tomorrow

Pioneering new channels

In March 2009, HUL adapted go-to-market programme First tried out in Mumbai, it was than implemented across all towns and cities with a population above eight lakh, starting with Chennai. Earlier, HUL had different distributors for its home and personal care division and food division in the same area. Now, all the products would be sold by the same distributor in any one area. The Go-to-Market model also helps to remove the enormous logistics hitherto faced by the distributors in their back-end operations, thus removing significant costs from the system. More importantly, enabling them to focus on the front-end to deliver better services to end-retail,

Pioneering new channels

Project Shakti : HUL's partnership with Self Help Groups of rural women. Hindustan Unilever Network (HUN): Direct Selling Channel - Home & Personal Care and Foods. Out-of-Home : Alliance with Pepsi Co. Vending machine for hot beverages like tea and coffee. Health and Beauty services :
Lakme Salons provide specialised beauty services and solutions. Ayush Therapy Centres easy access to authentic Ayurvedic treatments and products.

HULs distribution system

7,000 redistribution stockists covering about one million retail outlets. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores. Hindustan Unilever provide tailor made services to each of its channel partners. HUL is using the point of purchase method for much higher level of direct contact, through in-store facilitators, sampling, education and experience.

Distribution Strategy - Harnessing Information Technology

An IT-powered system has been implemented to supply stocks to redistribution stockists. The objective is to make the product available at the right place and right time in the most cost effective manner. For this, stockists have been connected through an Internet-based network, called RS Net, for online interaction. RS Net is part of Project Leap, HUL's end-to-end supply chain.

Distribution Strategy
Distribution at the Villages The company has brought all markets with populations of below 50,000 under one rural sales organisation. The team comprises an exclusive sales force and exclusive redistribution stockists. The team focuses on building superior availability of products. In rural India, the network directly covers about 50,000 villages, reaching 250 million consumers, through 6000 sub-stockists. Distribution at the Supermarkets HUL has set up a full-scale sales organisation, for this channel to serve modern retailing outlets. Product tests and in-store sampling is provided to consumers.

Segments of tomorrow: Hair Conditioners

Building New Market : Pure it

Progress Volume market leadership in South India >700 towns, 20 states covered Increasing penetration through retail presence in <10 L population towns More than 400 safe water zones established Growing consistently @ > 50% More than 7 million lives protected Complete protection `as safe as boiled water Meets US EPA standards Works without electricity, pressurized piped water Affordable: Device Rs 2000 ( $40) Germkill Battery Rs 350 ($7) Rs 0.35 per litre ( < 1 $ cent) (incl. initial price)

Unique Promotional Campaign

Unilever Research and Development Strengths

Location Trumbull, US Port Sunlight, UK Expertise Skin Care, Deos, Shampoos, etc. Fabric Wash, Hair Care, Deos, Oral Care, Surface Cleaners, etc. Beverages, Processed Foods, etc. Vlaardingen, NL Shanghai, China Bangalore, India Fabric Wash, Beverages, Processed Foods, etc. Shampoos, Skin Care, Ice Creams, Beverages, Processed Foods, etc. Skin Care, Fabric Wash, Beverages, Ice Creams, Processed Foods, Water etc.

Drive increased execution rigor

Enhanced Customer Service

Driving cost efficiencies

Integrate economic, environment & social objectives with business agenda

Thank You