FMCG bellwether Hindustan Unilever Ltd.'s parent Unilever PLC is extremely bullish on India. The new CEO of the Dutch entity, Fernando Fernandez, is positive on HUL's operational excellence., said chief executive officer Rohit Jawa, in HUL's post-earnings call with analysts.
Fernandez wants to build India as one of his key markets along in the future. "It is true that Fernando sees India as a very important part of his overall strategy. He would like India and U.S. to be his anchor markets," said Jawa.
"I think we are really fortunate to have him lead Unilever at this time," added Jawa. He added that Fernandez has high hopes for HUL, viewing it as a long-term investment in India rather than a quarter-to-quarter play.
"And it's good for us because we've always had the priority from the ex-CEO Hein Schumacher, who said 'double down in India'. Alan Jope, before Schumacher, had put India on his strategy. So we've always been on the top of the table insofar as Unilever is concerned," said the HUL CEO. "What's good for HUL is also good for Unilever."
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India is the second largest market for Unilever, accounting for around 12 percent of its sales. In February, the CEO of the Dutch giant said, "If you are running Unilever, you would not swap our Indian business with any other business."
“Our brands and portfolio remain robust. Over the past three years, we have gained 200 basis points in market share in India", Fernandez stated, in a conversation with Warren Ackerman, Head of European Consumer Staples Research at international financial services firm Barclays.
He also seemed extremely bullish on Indian quick commerce. While quick commerce channels account for around two percent of HUL's revenue, Fernandez believes this particular distribution channel could contribute between 10 and 15 percent in the next few years.
"India is a very special place because richer Indians and poorer Indians live in close proximity that basically provide demand and supply of labour, making quick commerce a logical channel to grow," he stated.
Discussing this, during the earnings call, Rohit Jawa noted that the Indian consumers shop omnichannel, "they shop for different needs at different points at different things."
"We as a company must serve our consumers in all the shopping missions. And Quick Commerce is clearly a shopping mission that certainly in the big cities, top eight cities and even beyond has got a good product market fit. We have a very much of a differentiated assortment and portfolio design on it," stated Jawa.
So the point is that they shop in every place. We as a company must serve our consumers in all the shopping missions. And Quick Commerce is clearly a shopping mission that certainly in the big cities, top eight cities and even beyond has got a good product market fit. We have a very much of a differentiated assortment and portfolio design on it.
At this point, Hindustan Unilever is making sure that it wins that channel too. "So we are investing to serve that consumer shopper need. But it's still a third of our e-commerce business, which in-turn is only about 7-8 percent at this point, although growing fast."
For the quarter ended March, HUL's standalone profit came in at Rs 2,493 crore, up 3.7 percent compared to the same quarter last year. Hindustan Unilever's standalone revenue rose 2.1 per cent to Rs 15,000 crore.
At close HUL shares were quoting Rs 2,324, lower by 4.1 percent on the NSE to emerge as the top loser on the Nifty 50 index.
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