A

fter tapping the premium and popular segments, HUL has entered the lower end of the tea market with its new Brooke Bond Sehatmand.

offering,

More than a hundred years ago, Hindustan Unilever launched a soap called Lifebuoy in India [ Images ]. The brand, which saw unparalleled success, promised to protect users from germs. In the next 114 years, the brand has never moved away from its original positioning and sales pitch. More importantly, it has given the Anglo-Dutch maker of fast-moving consumer goods a strong hold over the rural markets. Then, around four years ago, the company brought out Brooke Bond Natural Care, a tea that used five natural ingredients and promised good health. The success of the product prompted the company to sit up and take notice. Having covered the popular segment with a thrust on health, HUL felt that great potential lay in the vastly untapped economy segment which makes up a whopping 45-50 per cent in terms of volume as well as value. "That's when we realised it is critical for us to be there," says Arun Srinivas, who heads HUL's beverages business. And Lifebuoy's success was just the inspiration Srinivas and his team needed. Thus was born Brooke Bond Sehatmand. The term sehatmand means health-giving in Hindi. At present, HUL has Taj Mahal [ Images ] Tea in the premium segment, Red Label in the popular market and Taaza that covers mid-market price points. However, entering the economy segment wasn't going to be an easy task. One, loose tea makes up 65 per cent of the market, packaged tea accounts for only a third. Two, this is a market dominated by regional brands. HUL and Tata Tea [ Get Quote ], the country's two largest tea companies, cater to just the top 40 per cent of this market - the rest is shared by several regional brands. "While price is an important factor in this segment, we had to have a winning proposition to differentiate ourselves from regional tea makers," explains Srinivas. Rural target Thus began extensive research using the company's internal tracker called Living Standards Measure (LSM) to determine the success of the product. LSM can range anywhere between one and 18 - a higher score shows a higher living standard. For Sehatmand, HUL needed to target LSM 1-4 individuals (those who cannot afford their own mode of transport) the bulk of who reside in rural areas. Research reiterated what HUL felt. India has over 200 million undernourished people, the largest in any country. Nearly 70 per cent of the population is deficient in iron, vitamins and minerals. But with growing awareness, research showed that these people were concerned about their access to supplements. Most of all, they were worried if their children were getting adequate nutrition. "Iron, we were sure, would not be a good fit for tea, hence we decided to take the vitamin route," Srinivas points out.

But given HUL's wide product range, why did the company choose tea as a health supplement? Says Srinivas, "Tea is a widely consumed product with 95 per cent penetration." To ensure differentiation, technology was the key. "Most tea makers today merely blend the product, but with the help of our research & development arm in Bangalore and our Tea Excellence Centre in Kolkata [ Images ], we've ensured that each granule of tea contains vitamins." With this breakthrough technology, vitamins have been fused into each granule of tea. And drinking three cups of Sehatmand, the company promises, will ensure 50 per cent Reference Daily Intake (RDA) of important B vitamins. This is how HUL hopes to differentiate itself from rival Tata Tea which has a brand called Agni in the popular economy segment. Differentiating factors Taste too has been given priority based on geographic preferences. "Taste palates vary across the country, which is why tea has largely been a regional product. So, Sehatmand in Uttar Pradesh [ Images ] will not taste the same as in Maharashtra [ Images ]," Srinivas says. Thus, for each region the company has come out with a unique taste, colour and aroma. For instance, South India has a strong preference for strong and dark tea, while North India is inclined towards taste and aroma rather than colour. HUL has paid close attention to these nuances. A great product may be fine, but it will be a marketing challenge for HUL. Television commercials will air on cable, satellite and state-owned Doordarshan in February. In addition, there will be heavy advertising on All India Radio as well as extensive on-ground activation to reach the target audience (rural consumers). For this, HUL will tie up with non-government organisations. Further, it will launch an awareness campaign called "Sehatmand Parivar - Sehatmand Bharat" in schools. HUL feels that children are an important tool for the company to get its message across. "Parents want to ensure the best for their children, which is why they send them to school in the first place," says Srinivas. As for distribution, Sehatmand is relying on the scale and might of HUL. It will also tap Project Shakti, an initiative HUL started in 2001 to increase the company's distribution and provide rural women with income opportunities. Through this initiative, HUL hires a Shakti Entrepreneur or Shakti Amma who sells the company's products either door-to-door or through shops. Brooke Bond Sehatmand is priced at Rs 20 and Rs 39 for 100 grams and 200 grams, respectively. The prices are at a 15-18 per cent premium when compared to loose tea. To tackle this, HUL has launched smaller packs of Rs 5 and Rs 10 as well. "With Sehatmand, we want to be both affordable and accessible," adds Srinivas. At present it has been launched only in Madhya Pradesh [ Images ], Chhattisgarh and Bihar, but over the next six months it will be rolled out across the country in a phased manner.

With the urban market saturated, FMCG companies are now targeting the rural markets. In spite of the income imbalance between urban and rural India, rural holds great potential since 70% of Indias population lives there. Due to the recent government measures like waiver of loans, national rural employment guarantee scheme and increasing minimum support price, disposable income in rural India has been rapidly increasing. However, rural markets present their own sets of problems. These include poor infrastructure, dispersed settlements, lack of education and a virtually nonexistent medium for communication. Furthermore, retailers cannot be present in all the centres as many of them are so small that it makes them economically unfeasible. Hindustan Unilever Limited (HUL) to tap this market conceived of Project Shakti. This project was started in 2001 with the aim of increasing the companys rural distribution reach as well as providing rural women with income-generating opportunities. This is a case where the social goals are helping achieve business goals. The recruitment of a Shakti Entrepreneur or Shakti Amma (SA) begins with the executives of HUL identifying the uncovered village. The representative of the company meets the panchayat and the village head and identify the woman who they believe will be suitable as a SA. After training she is asked to put up Rs 20,000 as investment which is used to buy products for selling. The products are then sold door-todoor or through petty shops at home. On an average a Shakti Amma makes a 10% margin on the products she sells. An initiative which helps support Project Shakti is the Shakti Vani programme. Under this programme, trained communicators visit schools and village congregations to drive messages on sanitation, good hygiene practices and women empowerment. This serves as a rural communication vehicle and helps the SA in their sales. The main advantage of the Shakti programme for HUL is having more feet on the ground. Shakti Ammas are able to reach far flung areas, which were economically unviable for the company to tap on its own, besides being a brand ambassador for the company. Moreover, the company has ready consumers in the SAs who become users of the products besides selling them. Although the company has been successful in the initiative and has been scaling up, it faces problems from time to time for which it comes up with innovative solutions. For example, a problem faced by HUL was that the SAs were more inclined to stay at home and sell rather than going from door to door since there is a stigma attached to direct selling. Moreover, men were not liable to go to a womans house and buy products. The company countered this problem by hosting Shakti Days. Here an artificial market place was created with music and promotion and the ladies were able to sell their products in a few hours without encountering any stigma or bias. This model has been the growth driver for HUL and presently about half of HULs FMCG sales come from rural markets. The Shakti network at the end of 2008 was 45,000 Ammas covering 100,000+ villages across 15 states reaching 3 m homes. The long term aim of the company is to have 100,000 Ammas covering 500,000 villages and reaching 600 m people. We feel that with this initiative, HUL has been successful in maintaining its distribution reach advantage over its competitors. This programme will help provide HUL with a growing customer base which will benefit the company for years to come.

Surf has been in the market for a long time and has effectively managed its product life cycle with the help of product innovations and great marketing strategy. The recent campaign of surf excel with the base line that says "Dirt is good" comes as a pleasant surprise to the Indian consumers We were associating Dirt with Bad. Advertisers too had established dirt with some thing to avoid at all costs. Even our cricketers seldom dive in the field because it would soil their white dress and we have seen our Cricket players, sorry Cricket models escorting ball to the fence in their spotlessly clean dress. Dag ache nahin hain!!!! I am not sure why HLL tries to shock the public by saying that dirt is good, may be it is to shock the public and we are pleasantly shocked. This campaign has a It is ok to It is ok to It is OK Surf excel hai na! huge significance. It soil your play in the to enjoy says clothes mud life

PENETRATION OF HLL IN RURAL MARKET - September 14th, 2010 HLL has over 36,000 employees, and has created 2 lakhs indirect jobs. Its operations are spread across 70 locations in India. There are over 50 factories, of which 28 are in backward areas. The operations involve 2000 suppliers and associates and 7000 stockists and agents. HLL has emerged as a major Exporter.

Corporate Profile HLL, a 51.6% subsidiary of Unilever Plc, is the largest FMCG Company in the country, with a turnover of Rs. 118 bn. The companys business sprawls from personal and household care products to foods, beverages and specialty chemicals. The company has a dominating market share in most categories that it operates in such as toilet soaps, detergents, skincare, hair care, color cosmetics, etc. It is also the leading player in food products such as packaged tea, coffee, ice cream and other culinary products.

Market Share HLL grew at a fast pace in the mid 90s driven by its aggressive acquisition spree. From Rs. 38 bn turnover (contributed 70% by soaps, detergents and personal products), HLLs turnover has now grown to Rs. 118 bn, with soaps and personal products contributing 57% to turnover and

beverages and food products contributing to 29% of turnover.

Growth during the last few years has largely been driven by the personal products business. However the pace of growth has slackened significantly in the last two years with several key segments registering a degrowth in 2001.

Even as Hindustan Lever is armed with two brands -- Nihar and Cococare -- positioned to take on Parachute, the clear strategy adopted by HLL is to attack Parachute indirectly by targeting the loose oil consumer.

HLL's overall share in the Rs 500-crore coconut hair oil market is about 24 %. Marico leads with a 53 % share. HLL's Nihar has appreciated its market share to 17.2 % in May 2000, from 12 % in end-1999, as per ORG-Marg All-India retail audit. The brand's share in the beginning of 1999 stood at 9.5 %.

Performance of HLL in 2001 Turnover for the year increased by 3.42 % gross and 3.47 % net.

Product Categories: Soap and Detergent The overall market growth for Soap & Detergent was sluggish during the year with a sharp decline in the Popular & Premium segment of the market. In particular, rural market where the business had a traditionally strong presence performed poorly following decline in the agricultural growth. The discount segment continued to face severe price led competition.

Against this background, the business registered a relatively better performance in term of growth. Major investment were made behind quality enhancement of key brand like vim, Lux, Surf and Wheel during the year with clear consumer benefit.

These were backed by some strong consumer promotion during the year including multi pack. Lifebuoy Active was launched during the year and in short time, the brand grew handsomely with a 3.7 % share of the segment. This helped offset the decline of Lifebuoy Carbolic. Major investment had been planned to retain and grow the Lifebuoy franchise in 2002.

Overall, Power Brand grew significantly ahead of the market and are poised well for a strong performance once the market turn around with the impending economic revival. Innovation will continue to drive growth in the following year, with several projects in the pipeline.

Major initiative to improve distribution reach, particularly in the rural market, were undertaken during the year to build upon the competitive advantage that the business currently hold in sales and distribution. Significant investment were also made in networking and Information Technology IT to manage supply chain more efficiently and make a quantum improvement in the customer service level.

Project LEAP which bring together the combined strength of IT, Sales and Commercial to deliver better customer service and make the entire supply chain including the back end system connected with supplier of material respond faster to the short term change in the market place, had been implemented toward the end of the year in the Soap Business and the initial result were encouraging.

The focus in 2002 will be to stabilize the system and prepare for rolling it out to other businesses. A few highlight of the 2001 brand performance are: With Wheel and Rin, the business not only recorded brand leadership again after a decade but also captured No 2 in Laundry. Lux recorded it highest ever share in the last 24 month. Wheel Green Powder share are at their highest in 24 month. Surf Excel had recorded it highest value share ever. The business also created new benchmark in capacity creation with 4 new plants 2 for NSD Bar, 1 for Soap for NSD Powder being commissioned in record time. These factories had stabilised very quickly giving significant supply chain and tax benefit to the business.

Superior Technology in the business repertoire will be leveraged to deliver improved quality at lower cost to achieve profitable growth.

The Business sees a big opportunity in market growth in the medium to long term, particularly in the rural area, and had initiated programme to drive consumption of soap in the context of the increased awareness of health and hygiene. For the year 2002, market growth, which is linked to the turnaround of the economy, remains the major risk factor.

Personal Product: Personal Product had led a good year in 2001, with double-digit growth. This was achieved by focusing on the core brand and investing in building their equity. In spite of slow market growth, your Company increased it investment in innovation, research and advertising on it big brand resulting in growth ahead of the market.

The Hair Category had another year of growth, with high quality relaunches of Clinic Plus, Clinic All Clear bottle were changed in line with international development, while a new stand up pack was launched in the mid price segment.

Your Company entered the nascent category of hair colourant, with the launch of Sunsilk hair colour in the metro. In order to address the opportunity at the low price end of sachet, Lux sachet were launched at price of Re1 and Re0.50, and these had met expectation.

The Skincare Category had a very good year, with Fair & Lovely as star performer in 2001. In Fair & Lovely, the launches in 2001 included a fairness soap, a dark circle under eye cream, and sachet with a recloseable cap. The main Fair & Lovely cream brand was also relaunched with improved packaging and communication.

All these initiative, along with investment in advertising and rural penetration, led to high growth for the franchise through the year.

The Pond brand returned to double-digit growth after a slowdown for 2 year, with comprehensive relaunches to it talc as well as skincare range. The growth was achieved by improvement in the functionally of product, packaging and impactful market activity.

A new talc variant, pond Light n Fresh, and a new mini Clod Cream jar priced at Rs5 were successfully launched in 2001. The skin range of Lakme was renovated and strengthened and a premium new product, Lakme Fair Perfect, was introduced toward the end of 2001.

In the Oral Category, Pepsodent was relaunched and emerged much stronger in 2001 as a result of innovation, advertising and marketplace activation. The introduction of value pack as well as new advertising helped increase market share of Pepsodent.

Your Company decided to deprioritize the toothpaste brand Aim, in order to focus all effort on Pepsodent and Close Up this strategy had been successful as demonstrated by the growth and brand building that had been achieved in the second half of 2001.

In the Deodorant business, Axe continued on a high growth plan, with many imaginative market activities and new introduction in 2001. Rexona was relaunched with international packaging and had achieved salience on the 24 hours delivery of deo benefit.

Colour cosmetics saw many innovation on both Lakme and Elle 18 including a new range of colour based on the Lakme India Fashion Week.

HLL acquired the asset and liabilities of it colour cosmetics, fragrances and personal care business from Lakme Lever Ltd at net book value, with effect from 31/3/2001. Post merger, Aviance business continued to focus on direct marketing of personal care product to gain better understanding of this channel .

Supply chain and souring efficiencies led to significant cost reduction, whilst quality improvement came through technologies and innovation. Your Company continues to focus on low unit price pack, which provide the consumer with quality product at low put down price.

A new Personal Product factory was commissioned in Doom Dooma in Assam, to cater to the growing market demand. to other businesses.