Mumbai: The economic slowdown in India has impacted discretionary spending by consumers. The 2.18 trillion consumer packaged goods market saw its volume growth halt in the March quarter as consumers faced with slowing growth and high inflation cut back on consumption. Likewise, volume growth for Hindustan Unilever Ltd (HUL), India’s largest consumer packaged goods company, in the March quarter, was at 3%, and even for the full year ended 31 March was hardly any better at 4%. Given that the slowdown is unlikely to go away soon, the Indian arm of the Anglo-Dutch consumer goods firm is back to focusing on core business channels and brands like Fair & Lovely.

People tend to stick to trusted brands when money is tight, Harish Manwani, chairman, HUL, and chief operating officer, Unilever Plc, said in an interview. Manwani was in India to discuss the company’s earnings. Edited excerpts:

India’s economic growth has slowed down and this has impacted discretionary spending. Where is growth coming from?

It is not as simplistic as saying all the growth is now coming from the bottom. Even in today’s somewhat stressed environment there are segments of the market that are there in the premium-segment, take hair care or the skin care segments. These categories are seeing higher growth taking place in the more premium offerings and not in the middle of the market. As a result of that we have taken initiatives to address this opportunity. We have launched a premium range in Pond’s and our TRESemmé shampoo which within a year of launch has done business of 100 crore.

Hasn’t premiumization come to a halt given the slowdown, with people buying more low-unit price packs?

Yes, consumers may be buying low unit price packs. But they still want to buy these low unit price packs of our premium brands.

What about growth coming from new consumers coming into the consumption cycle for the first time, or from people trading up to buy more expensive products. Has that slowed down?

We have in the past spoken of the opportunity of 1.8 billion consumers moving up the socioeconomic ladder, mostly in the developing world. Out of these, we estimate that as many as one billion will enter into the consumption cycle for the first time.

That migration of consumers into better standards of living is irreversible. Maybe, there will be a lull for a year or two, but if you take the long term trend, it’s a big opportunity.

The volatility and uncertainty has been persistent for a while now. How are you dealing with it?

It’s a fact that volatility and uncertainty is the new normal. It’s not going to go away. There will always be some new event that will disrupt the equilibrium. Businesses have to make one important change, they have to become more agile. Agility, is going to be critical in this volatile world. The ability to manage your business more dynamically. The ability to reset your business, the ability to change course at short notice is very critical now. For us, the speed at which we respond in the market has vastly improved.

Can you explain what agility means for your business?

Lower inventory is one example, which allows us to make changes to our portfolio faster. Another example is the speed to market. Our innovations are now bigger, better and faster. Agility and simplification are absolutely the need of the hour.

It is going to take some time for the economic growth to get back to the 8-9% pace seen in the past years. Will these low volumes growth continue to follow the economic slowdown?

We don’t expect a magical uplift from low growth to high growth. But we do expect that at some stage the markets will come back.

There has been a global recession but there are some signs of economic recovery in Europe and the US, though in our categories we are still not seeing this translate into increased consumer spending.

About four years ago, you had relaunched your entire portfolio and trebled your reach as volumes growth had slowed down. How are you dealing with the slowdown in volumes growth now?

We have several priorities. First, we would like to focus on strengthening our core business.

The second is execution. Our execution in the market place is now much sharper. An example of strengthening our core is the recent relaunch of Fair & Lovely multi-vitamin. In execution, our emphasis is to drive micro-marketing and fill white spaces. We have significantly enhanced our rural coverage in the last few years. And not just by putting more feet on the ground, but by a combination of using our unique model of Shakti Ammas and great analytics to support our rural drive.

Why focus on the core?

The most important thing when consumers are stressed and when money is tight is that people want trusted brands. During tough time, people don’t easily try new brands that they haven’t experienced in the past, unless they offer substantially differentiated benefits.

Does that mean you are no longer investing on new categories or launching new brands?

We are also investing in the categories of the future. For instance, we are making tremendous progress on fabric conditioners and hair conditioners, both nascent but fast growing categories, where we are now market leaders. But, the first priority, when things are volatile, is to ensure that we remain focused on feeding the core, investing in the core and innovating in the core.

How does micro-marketing change your approach to go to market?

We are trying to find opportunities through micro-marketing. Instead of looking at India as one market, we are finding ways of differentiating our marketing effort in different part of the country. We are looking to win differently in different parts of India. We are looking at every state, every brand and seeing where we are under represented. The definition of white spaces is not where we are not present. For us it is where we are under represented.

For example if we have less than national share in Bihar for a particular brand or category, then we have to make sure that we get at least to our fair share. The fair share is our national average share for the brand or category.

Can you explain what this means?

Our plans are based on micro-marketing, like what is the plan for Bihar for personal wash. Or what is the plan for Kerala for Lux (soap). When people say that personal wash market in India is saturated, we should be de-averaging. For instance, the per capita consumption in personal wash is higher in Punjab as compared to Uttar Pradesh and hence there is an opportunity for market development in UP. Again, in Punjab, the penetration of liquid soap is not as high as soap bars and that is an opportunity to grow.

Close