Urban demand has reached a positive territory and is now in the right direction, said Sanjiv Mehta, Managing Director and Chairman of Hindustan Unilever (HUL) while announcing the December quarter results of the consumer goods major.
It was urban demand that was the hardest hit due to coronavirus outbreak.
"In the last (September) quarter, urban demand was in negative territory but in the last three months, it has turned positive albeit at lower levels. And now it is in the right direction. The urban demand will increase, depending on the mobility which depends on vaccine rollout," said Mehta.
Now that there are no supply-side constraints any stimulus in demand in the upcoming Budget will help.
Talking about rural demand, Mehta said it has proven to be resilient and is seeing double-digit growth as (COVID-19) infection rates have been much lower and rural has not been impacted due to lack of mobility.
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In terms of categories, HUL saw good growth in beauty and personal care as well as foods and refreshment.
Beauty and personal care saw nine percent growth in December quarter in 2020 with revenue at Rs 4,841 crore as compared to the same period in 2019 with the revenue were at Rs 4,412 crore. In the September quarter of 2020, the segment saw revenue of Rs 4,535 crore.
HUL CFO Srinivas Phatak pointed out that the transition of Fair & Lovely to Glow & Lovely has done well.
HUL's advertising expenditure jumped to Rs 1,388 crore from Rs 1,163 during the same period in 2019. The skin cleansing segment saw high double-digit growth led by Lifebuoy. Premium skin cleansing bars like Dove and Pears saw a revival in growth and are growing in double digits. This is why Srinivas Phatak while announcing HUL results said that premiumisation is coming back.
As for oral care, the segment saw double-digit growth led by Close Up. In skincare, it was the winter portfolio which picked up momentum with a strong performance in Vaseline and facial cleansing.
Coming to the foods and refreshment, the category saw 19 percent growth. Ketchup and soups saw double-digit growth. Tea also saw grew in double-digits across brands.
However, analysts said growth trends in personal care and foods was due to price increase in soaps and tea segment.Overall, HUL's health, hygiene and nutrition segment, which forms 80 percent of HUL's portfolio is growing in double digits. This is why Mehta said the worst is over.