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Hindustan Unilever (India)

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Hindustan Unilever (or HUL) is Unilever's main operating business in India. It is the country's biggest consumer goods company, and far and away the leading advertiser. HUL inhabits virtually every sector of the consumer goods market, including several not occupied by Unilever in other countries, such as preserves, coffee and water filters. International brands such as Ponds, Dove and Surf are supported by local jewels Lakme, Fair & Lovely and Kissan. In addition to FMCG products it is the country's biggest exporter of tea. HUL is widely considered to be one of India's best-run businesses, although performance slowed dramatically between 2000 and 2004, prior to restructuring. Unilever controls a majority stake in the company, but the remaining shares are publicly quoted in India. In 2018, the company agreed to acquire malted drink Horlicks and other nutritional brands owned by GlaxoSmithKline.

Advertising

Who handles Hindustan Unilever's advertising? Click here for agency account assignments. The group declared advertising & sales promotion costs of Rs 4,526 Rs crores ($690m) in ye 2016.

Competitors

See Personal Care and Household Care Sector indexes for other companies

Brands & Activities

Hindustan Unilever dominates the packaged goods sector in India, almost certainly the country's most widely known business, with an unrivalled presence right across this vast country from urban centres to rural villages. Its sales network covers some 6.4m outlets across this vast country, served by more than 35 manufacturing facilities. However HUL's traditional lead has come under increasing pressure in recent years from both rival multinationals and niche local suppliers. The group reorganised in 2005, and successfully regained some of the momentum it had lost since the 1990s.

Publicly quoted in India, the company is controlled by Unilever, historically through a 52% stake. In 2013, Unilever announced a public offer to increase that holding, reaching 67%. Unlike any of the group's other local units it has retained a version of its original name, and in fact only changed its name from Hindustan Lever to Hindustan Unilever in the summer of 2007, long after the Lever name had been abandoned elsewhere.

It is the country's leading packaged goods business, with the #1 position in home and personal care products. HUL has refined its portfolio over the past decade or so, boiling down its collection from more than 110 brands to around 35. Although most of these are local versions of the group's top international brands, they also include several "local jewels", such as top selling facial cream Fair & Lovely, Kissan foods and sauces and the Lakme make-up and cosmetics brand. Six brands now have sales in excess of the local 2,000 Rs crores (approx $300m) benchmark: laundry detergents Rin and Wheel, top-selling soap Lifebuoy, skincare range Fair & Lovely, and Brooke Bond tea. The group's top-seller overall is another detergent, Surf Excel, sales of which touched 3,000 Rs crores ($450m) for the first time in 2015.

In household care the group has a commanding 34% share of the laundry market, with India's best-selling laundry detergents budget-priced Wheel and premium Surf Excel, supported by laundry bar Rin. The Sunlight laundry brand is still marketed in some regional areas. India is one of the few major markets where Unilever still leads in the laundry sector, well ahead of Procter & Gamble (with only around 18% in 2015) and local competitor Ghari, the #2 with around 23%. Other household care products include dishwashing brand Vim, and Domex bleach.

HUL has an estimated 60% share of the Indian soap and shampoo markets. Its key brands include the country's best-selling soap, Lifebuoy, as well as Liril, Lux and Breeze. Together HUL's personal wash brands account for more than half of the local market, although they have come under intense pressure from local competitors such as Godrej (now #2 with more than 10%). Dove is its biggest brand in both personal wash and hair. However its Lakme cosmetics range has also expanded successfully into cleansing and facial wash products. The group is the leading haircare manufacturer in India with around 46% share (to P&G's 27%). Its best-selling brand is Clinic Plus, also the country's #1 with around 29% share of the market. It is supported by brands including Sunsilk and Lux. Tresemme was introduced for the first time during 2012. The group is credited with having single-handedly establishing the deodorant market in India with the local launch of Axe in 1999. This is now the leading brand in that sector, with around 25% share. However penetration is still low by Western standards, with only around 2% to 3% of Indian men using deodorant products. Other local deodorant brands include Rexona (marketed here as a soap bar) and Pond's.

Skin care brands including Fair & Lovely, Pear's, Vaseline and Pond's together contribute a 54% share of that sector. Fairness cream Fair & Lovely has enjoyed an extraordinary resurgence since the early 2000s as a result of the introduction of small sample sachets at the ultra-low price of just Rs 5 (less than $1). As a result, it became the company's biggest selling beauty product in 2014, and the first to top total sales of 2,000 Rs crores.

The group's Close-Up toothpaste brand, launched in 1970, reduced Colgate's dominance of that sector in India from 80% to around 54%. The company's best-selling oral brand is now Pepsodent. The group launched cosmetics brand Aviance in 2001, sold through a national network of direct-sale beauty consultants. The group moved into the healthcare market in 2002 with the launch of a range of OTC pharmaceutical products made from traditional Indian ayurvedic ingredients. In 2016, it relaunched this line as a mainstream personal care range including soaps, shampoos and toothpaste under the Lever Ayush banner.

Hindustan Unilever's food business is dominated by beverages, and especially tea. The company's portfolio is led by Brooke Bond and its sub-brands Taj Mahal, Taaza and 3 Roses. Lipton is also available. The two tea portfolios are partnered by instant and fresh roast coffee brand Bru, which now claims to be the country's top-selling coffee, ahead of Nestlé's Nescafe. Bru, used for making both hot and chilled coffee, tends to be more popular in Southern India; Nescafe in the north. Several of the group's various international ice cream products are marketed in India under the Kwality Wall's brand, alongside existing local desserts. However, none of these products are strictly speaking "ice cream", because they are made in India using vegetable fat rather than milk fats. The company also markets a range of branded staples, such as Annapurna wheat flour and salt, now part of the Knorr portfolio; Rozana rice; and Kissan, the market-leader in jams, ketchup, spreads and soft-drink squashes. After 2006 the group became a leading player in sales and distribution of fresh-baked bread through acquired subsidiary Modern Foods. That business was sold in 2016. In 2005, the group moved into the water business with the launch of Pureit, which claims to be the world's most advanced in-home water purifier, requiring no electricity or boiling. Lipton Ice Tea was introduced in India for the first time in 2011.

In 2018, the group triumphed in a bidding war for malted drink Horlicks, Boost and other nutritional beverages owned by GlaxoSmithKline. It saw off a rival bid from Nestle. Though Horlicks has only a marginal presence nowadays in Europe, it remains a mammoth brand in India and neighbouring countries with annual sales of around €550m. Under the deal with GSK, Hindustan Unilever will acquire the former's publicly listed local subsidiary GSK Consumer Healthcare India as well as various other operations in India for a combined total consideration of €4.6bn, mostly to be paid in HUL shares.

Until 2017, the group also operated a joint venture with Kimberly-Clark to market its Huggies and Kotex brands in India. The company's exports division trades in a wide variety of different products in addition to HUL own-brands. It supplies, for example, 30% of the world supply of castor oil, as well as huge quantities of fresh fish and shellfish, and even shoes and other leather goods.

In the past, one of the keys to the company's success has been its readiness to serve the local community. Unlike rival multinationals who tend to target their products at wealthier urban customers in India, HUL has always made a point of marketing to rural village communities with as much vigour as it targets the Indian middle classes. It does this via the Hindustan Unilever Network, a patchwork of some 400,000 self-employed direct sales agents, covering over 1,400 towns nationwide, and linked by satellite communications. The company uses the same satellite system to beam down evening music and films to TV sets mounted on HUL vans in village squares throughout this huge company. Interspersed with plenty of ads for HUL products, of course. In 2002 the group teamed up with India’s largest general insurance company, New India Assurance, to offer free dental insurance worth up to the equivalent of $21 (around half the average annual household income in rural India) to consumers who buy a 100g pack of Pepsodent toothpaste (the equivalent of 62 cents).

Another initiative, the Shakti project, is an important scheme to improve standards of living in rural India by empowering local women and encouraging them to earn their own livelihoods. By 2014, the company had signed up more than 65,000 women entrepreneurs, reaching out to some 160,000 villages and a potential audience of around 150m rural consumers. It was expanded with the launch of Project Shaktimaan in 2010, which focused development on unemployed men (usually the husbands or brothers of its Shakti partners). There are now more than 50,000 male Shaktimaans. The Shakti system has since been rolled out in Bangladesh and also Nigeria.

A key focus has been different initiatives to improve health, especially in rural areas. Unilever Swachh Aadat, Swachh Bharat ("Clean Habits, Clean India") is a health programme to encourage the adoption of better hygiene in rural villages, and especially regular handwashing and good toilet habits. Domex Toilet Academy funds training and development of local sanitation systems.

Increasingly however, HUL's strongest competition comes not from rival multinationals but from much smaller regional companies who have been able to chip away at the company's market share with lower cost local products. HUL's revenues were flat between 2000 and 2004, and market share came under significant pressure. HUL responded in 2004 by transferring management control of the business to a four-man executive committee, designed to improve performance in individual units and speed up decision-making.

Financials

Net consolidated sales for the year to March 2015 topped Rs 30,000 crores for the first time, rising to Rs 32,488 crores (US$5.0bn) for the year to 2016. Net profits slipped 5% to 4,082 Rs crores ($625m). The previous year had included a large gain from divested businesses. Soaps & detergents generated 47% of sales, followed by personal products (30%), beverages (12%) and food (7%).

Background

Unilever's business in India dates back well over 100 years. It was one of the first markets targeted in the late 19th century by William Hesketh Lever, after the formation of Lever Brothers. He appointed several agents to handle the company's products, among the biggest of whom was what became known as the North West Soap Company. The company's first soap brand, Sunlight, was imported from 1888, and was followed by Lifebuoy (from 1895), Pears, Lux and Vim. Later, in 1918, a group of Dutch manufacturers began distribution of Vanaspati, a form of margarine, manufactured locally under license.

In 1925, Lever Brothers took control of the North West Soap Company. Following Lever Brothers' subsequent merger with Margarine Unie in 1930, the company set up its first local subsidiary, Hindustan Vanaspati Manufacturing Company to make margarine. Lever Brothers India was formed two years later for soaps and detergents, followed by United Traders Ltd in 1935 to market personal care products. As Lever Brothers' various subsidiaries developed their business in India, other British and American companies were also active in the country. Among them were Brooke Bond & Co, Thomas J Lipton and Pond's, all of which subsequently came under the Unilever umbrella. Lipton was harvesting tea in India from the end of the 19th century, and Brooke Bond & Co was marketing Red Label in the country from 1903, setting up a local business in 1912. Pond's established an Indian business in 1947.

Unilever's global portfolio continued to swell during the 1940s and 1950s. In 1956, it merged its three Indian subsidiaries to form Hindustan Lever (HLL), and floated 10% of the business on the Indian stock exchange. The group later floated additional equity to comply with new Indian regulations which limited foreign ownership of local companies to 40%. Unilever was granted special dispensation by the Indian government to retain a 51% stake in the business.

Deregulation of the Indian market allowed HLL to acquire not only Western-owned companies but also to become directly involved in Indian-owned businesses. Unilever acquired the local interests of Lipton and Brooke Bond in 1972 and 1984 respectively. In 1993, HLL merged with rival Indian detergents business Tata Oil Mills Company, at the time the biggest takeover in Indian corporate history. In 1995, the group formed a joint venture with another Tata company to market its Lakme cosmetic products. Three years later, HLL acquired Tata's 50% stake and took over full ownership of the brands.

Unilever's other subsidiaries were also actively consolidating their local business through acquisition. Brooke Bond acquired instant coffee company Kothari General Foods in 1992, followed by Dollops Ice Cream (from Cadbury) a year later. Also in 1993, the group merged all its tea interests, including Lipton and two plantations, under the Brooke Bond umbrella. The new Brooke Bond Lipton India went on to form strategic alliances with two other leading ice cream manufacturers, Kwality and Milkfoods, before the whole business was absorbed into HLL in 1996. Pond's India was folded into HLL two years later. Industrial Perfumes, which had been jointly owned by HLL and the Dutch half of parent Unilever, was consolidated into HLL in 1999.

At the end of 1999, parent Unilever agreed to acquire a 65% stake in leading Indian tea producer Rossell Industries, while HLL would acquire an additional shareholding in Rossell itself. Under laws established in the 1970s, foreign companies with wholly owned subsidiaries in India were obliged to sell 24% of their equity to local partners, and were prohibited from buying more than 24% of Indian-owned companies. Unilever, which has a 60% share of the huge Indian tea market, initially attempted to reduce its reliance on tea auctions by acquiring more plantations. These and other commodities businesses were sold off in 2004 and 2005 to allow the company to concentrate on sales and marketing rather than production. Early in 2000, HLL acquired from the Indian government a 74% stake in its Modern Foods Industries, which makes and distributes bread nationally.

Reflecting the slowdown in performance, the group reorganised its management structure in 2005, following the appointment of HLL chairman Vindi Banga to the position of global director of Unilever Foods. Zimbabwe-born Doug Baillie was appointed as CEO, becoming the group's first non-Asian head since the 1950s. Baillie was in turn succeeded three years later by Nitin Paranjpe.

Last full revision 21st March 2017

* Archive page for historical reference only. This profile is no longer being actively updated. See active page here *


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