WINNING WITH THE INDIAN CONSUMER Evolving India Perspectives & the HUL Experience The Goldman Sachs CIO Conference, 31-Oct-2012
Introducing Hindustan Unilever Limited (HUL) FY 2011 - 12 Get more INR / USD = 54 out of life Segments % Revenue % Results Soaps & Detergents 48.1 36.9 Personal Products 31.0 52.1 Beverages 11.8 11.0 Packaged Foods 6.2 0.7 Others 2.9 -0.7 • More than 75 years of experience in India with products that touch the lives of 2 out of 3 Indians everyday • No.1 and strong No.2 in more than 95% of the business • 17 out of top 100 most trusted brands in India^ • Direct distribution reach of > 2 Mn stores • 15,000 employees, 70 Manufacturing locations, 40+Depots, 2700+ Distributors ^Brand Equity Survey, 2011 2
1 Opportunity in the evolving India 2 Winning in India – The HUL experience
Growing incomes amidst continued disparity 2015 2009 2004 251 mn households 219 mn households 196 mn households LSM 8+ 9 23 3 15 48 125 LSM 5-7 178 162 104 LSM 1-4 BOP will remain large Affluence will keep rising New categories New consumers New benefits Extending reach
Rising incomes to favor Personal Care and Foods Demand elasticity Personal Care / Foods explosion 7.7 x LSM 8+ (new categories) 4.9 x LSM 8+ 3.1 x LSM 5-7 LSM 2-4 1.7 x LSM 1 1x LSM 1 LSM 2-4 LSM 5-7 LSM 8+ 0 5000 10000 Laundry, Skin Cleansing Pers Prod Foods Exp per HH / year (INR) *Source : Family Budget Survey, Consumer Panel *HUL Participating Categories; HH: Households 5
Head room for growth Consumption Penetration € per capita consumption All India penetration Skin Care Skin Care 79 5.9 63 45 3.2 0.6 China Indonesia India Annual DQ Dec Shampoo Hair Care 1.7 89 1.6 79 63 0.5 Annual DQ Dec China Indonesia India Oral Care Ice cream 91 80 2.4 63 1.2 0.3 China Indonesia India Annual DQ Dec Data Source: IMRB Factbook Data Source: Euromonitor 6
The changing landscape of Urban India Hybrid Trade Structure The emerging Urban Poor Rapid Urbanization Co-existence of GT & MT Growing at 2.4% > 20% of Urban live in slums Source : CIA world fact book Source : Census 2001 & 2011 projections
Rural whilst evolving will continue to remain large Sizable Rising Diversifying Consumption and Footprint Income income uptrading Majority of >3x increase in Significant Strong growth India will government diversification in in emerging continue to live expenditure* Rural income categories in Rural * Over the last 5 years Source : NREGA Implementation Status Report
Large consumption opportunity FMCG - $ bln 137 62 87 50 28 FY 10 E FY 15 P FY 20 P Base Case High Case CAGR of 12% in base case; 17% with high estimates Source: FMCG roadmap to 2020 – CII Report, 2010 9
1 Opportunity in the evolving India 2 Winning in India – The HUL experience
Hindustan Unilever Limited : Winning in India Driven by a clear and compelling strategy Strategic framework Sustainable Living Plan Our Goals Winning Today, Winning Tomorrow • Consistent Growth • Competitive Growth • Profitable Growth • Responsible Growth
WINNING IN THE INDIA OF COMPASS INTO ACTION CLSA Investors’ Forum, Hong Kong, 11-Sept-2012 TODAY & TOMORROW Strategy on Course
Compass Into Action : Strategy on Course Delivering on goals
Our approach to Winning
Our approach to Winning
Portfolio which straddles the pyramid
Better products, stronger brands, stepped up innovation Stepped up innovation Stronger Brands Superior Products 3X 2011 2X 2010 3/4 th of portfolio X holding/gaining * 2009 Blind Product Wins Brand Equity Scores* Innovation touching 60%+ of portfolio Measured for the top 25 brands; *Exit 2011 Vs second half 2009
Driving premiumization SKIN CLEANSING LAUNDRY SKIN CARE (FACE) P R E M I U M
Leveraging global portfolio might to win locally
Building today to win with the aspiring consumer Building Capabilities in Beauty Investing in Segments of the Future
Our approach to Winning
Stepping up front end execution 93% 90% 2011 YTD 12 * CCFOT (Customer Case Fill on Time)
Winning in the Channel of Tomorrow : Modern Trade
Winning in the Geography of Tomorrow : Gateway to Rural Project Express Project Shakti Khushiyon Ki Doli Leveraging partnerships Expanding presence Increasing consumer awareness 45,000 Shaktiammas 70,000 Villages HUL - TTSL Alliance > 20,000 markets across India 30,000 Shaktimaans 25 mln Consumers Rolled out in 4 states, 4 more WIP 100,000 Villages 400,000 Retailers
Building differentiated capabilities to win in the market • Mumbai Customer Insight & Innovation Centre (CiiC) : First CiiC for Traditional Trade • Building competitive edge through Customer Collaboration • Enabled by Superior Shopper Understanding and Leading Edge Technology
Our approach to Winning
Driving savings and leverage CEPs - Cost effectiveness programmes
Driving Return on Marketing Investments (ROMI) Getting more out of advertising & promotional spends
Our approach to Winning
Building a talent powerhouse # 1 Employer of choice by Nielsen Step up in employee engagement Campus track scores # 1 Best employer in India, 2011 awarded by Aon Hewitt # 1 Dream employer across campuses 2009 2010 2011 Survey by Nielsen A team which is consumer & customer centric
Strengthening Performance culture Performance culture index is up by 14% in 2011
At the heart of our strategy is doing business responsibly Sustainable Living Plan with ambitious goals
And we are making steady progress 30 million people touched by Lifebuoy handwashing programs in 2010-11 30 million people have gained access to safe drinking water through Pureit since 2005 ~60% of our major food and beverage brands comply with the ‘Healthy Choice’ guidelines’ Reduced CO 2 emissions by 14.7%, water use by 21.5%, waste by 52.8%* Improved CO 2 efficiency by 17.8% in transportation 60% of tomatoes in Kissan Ketchup are sourced sustainably *in our factories, over 2008 baseline
And taking decisive action on securing India’s water resources
Looking Ahead HUL : Driven by a clear & compelling strategy Medium-Long Term • India Growth Potential • Consumer demand drivers intact • Opportunities from emerging trends Near Term • Challenging market environment Consistent Growth Competitive Growth • Inflationary pressure on consumers Profitable Growth Responsible Growth
WINNING WITH THE INDIAN CONSUMER Evolving India Perspectives & the HUL Experience The Goldman Sachs CIO Conference, 31-Oct-2012
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