Cycle of local players entering market almost over, says HUL's Rohit Jawa

CEO Rohit Jawa said HUL has already taken price corrections wherever needed on price volume optimisation of its brands and now it is almost at the end of the transition cycle

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26 Aug, 2025 12:21

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The cycle of local players returning to the market is over by and large, said Rohit Jawa, chief executive officer of Hindustan Unilever (HUL) on January 19.

The fast-moving consumer goods company (FMCG) was facing competition from small and regional players after commodity inflation eased. This was seen mostly in the tea category, where consumers were downgrading to low-priced products.

"We have already taken price corrections wherever needed on price volume optimisation of our brands and now we are almost at the end of the transition cycle," said Jawa after HUL announced Q3 results.

The company's food and beverage category saw a low-single-digit volume growth because inflation in coffee prices made them take price increases in the portfolio.

The management also said that if commodity prices remain where they are, they expect a negative pricing growth from here. FMCG market's value growth in Q2FY24 was around 3 percent which fell to around -1 percent in Q3FY24, as per HUL's investor presentation. While value growth will be negative due to price cuts, the management did not share any outlook on volume growth.

The management said that urban demand has been resilient and leading the overall growth but rural demand is expected to come back in the next few quarters due to better Rabi sowing and strong government support. "We see a sustained but gradual improvement in rural demand," said Jawa. Urban volumes for the FMCG market increased three percent at two-year CAGR basis in the October-to-December quarter, while rural volumes increased one percent in the same period.

HUL said that they revamped their margin model to benefit distributors, which aims to be a 'win-win', ensuring distributors earn more for their efforts while the company sees increased growth. “So there's not just a high earning potential but a high earning realized and that's the reason why we have now scaled it to the top 100 cities over the last three months” said Jawa.

Earlier this month, the All India Consumer Products Distributors Federation had said that they are halting stocking of HUL's products after it changed its margin structure. HUL has cut its distributor margins by 3.9 percent to 3.3 percent in early January.

The company said that 60 percent of their business is gaining market share, down from 70-75 percent due to inflation in the mass segment in categories like laundry detergent. “60 percent plus is a very healthy level of competitiveness from a business perspective, given the amount of continued investment,” said Ritesh Tiwari, CFO, Hindustan Unilever.

HUL said that it is seeing a double-digit volume growth in its new premium products launched recently. "We are seeing response to the premium portfolio and we are stepping up innovation and leaning more to expansion in that space," said Tiwari.

HUL reported a standalone net profit of Rs 2,519 crore for the December quarter of FY24, registering an increase of just 0.55 percent YoY. While the revenue of the company was at Rs 14,928 crore, falling 0.38 percent YoY.

The stock on January 19 closed 0.78 percent higher at Rs 2567.8 apiece on the NSE ahead of earnings.