Unilever’s dominance in India helps it raise prices, pinching rural poor

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HUL last week reported a 16 per cent rise in sales to 149.86 billion rupees ($1.84 billion) in
the quarter ended Dec. 31, powered by demand from wealthier urban shoppers. The increase
was supported by underlying price growth of 11 per cent. All thanks to its dominant market
position and pent-up demand among middle-class shoppers. But industry experts said the
British multinational should take care not to alienate poorer rural consumers – which some
analysts estimate account for nearly half its revenues in India – after some signs they reined
in spending last year as higher inflation took its toll. The nation of 1.4 billion is one of
Unilever’s three priority markets, alongside the United States and China. Globally, Unilever
has raised its prices faster than its biggest rivals P&G and Nestle since the middle of 2021,
partly due to its exposure to emerging market countries and food products – where cost
inflation has been high. Unilever said high energy costs and rising input prices hit the
industry particularly hard in India. Industry experts said Unilever’s strategy was to raise
prices in categories such as laundry soaps where it is dominant, which helped minimize any
negative impact on its market share. In categories like health, food, drinks, they have not
taken similar pricing, because that’s a very competitive market. Even when HUL kept prices
steady for some products, it has shrunk pack sizes, AICPDF data showed – a tactic used by
many consumer goods companies around the world.