PLANS AND STRATEGIES
HUL's performance in the past two years has been below expectations,when Asia, Africa and central and eastern Europe have contributed 36per cent to Unilever's global revenues, and 3 8 per cent of the profits.HUL has lost market share across categories year on year. The declinehas been visible in all its businesses: soaps and detergents, whichaccount for 48 per cent of revenues, personal care products, beverages,food and ice creams, though there are signs that the fall has hit a plateau.A number of factors contributed to the loss.1.
First, there were price cuts taken in the battle for market share withProcter & Gamble (P&G).2.
Second, there was the commodity price inflation of 2008. Inresponse, HUL raised prices relatively steeply on soaps anddetergents. Inflation-conscious consumers turned to cheaperproducts from Godrej Consumer Products, Wipro and other playerswhose price hikes were much smaller. Sure enough, commodityprices softened again. "But HUL was unable to drop its pricesimmediately, as it had contracted a large part of its raw material for5-6 months,"3.
Third, analysts say HUL ignored its strong local soap anddetergent brands (Rexona, Liril and Hamam, for example). It lostmarket share to self-help groups targeting rural markets that madeand sold much cheaper brands such as Akhruti and Winner Turbo.4.
Finally, there is the story of high food inflation (16 per cent plus inJanuary). It impacts HUL's food and beverages business, whichaccounts for 17 per cent of its revenues.In the past decade, owing to constant changes in the environment, HULhas adopted new strategies as per the environment.