1 min read.Updated: 04 Dec 2021, 01:18 PM ISTLivemint
HUL, which has the widest distribution network for an FMCG company in India, is also using its distribution strength to widen the reach of GSKCH’s brands
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NEW DELHI :
Ever since its merger with GlaxoSmithKline Consumer Healthcare Limited (GSKCH) a year ago, Hindustan Unilever Ltd (HUL) has been getting aggressive with newer launches and putting more money in market development, according to a report by brokerage Edelweiss Securities.
In December 2018, HUL had announced that it will buy GSKCH’S business in India, giving it access to brands such as Horlicks, Boost, and Maltova in a ₹31,700-crore deal. As part of the merger, 3,500 employees became a part of the Indian arm of the Anglo-Dutch giant Unilever. Under the deal, HUL also sought to distribute GSK’s brands like Eno, Crocin, Sensodyne etc in the country.
Hindustan Unilever (HUL), which now houses one of the biggest food businesses in India, has completed SAP migration and 85% of go-to-market integration for its nutrition business. HUL has also expanded direct coverage in the nutrition business by 2x compared to pre-acquisition, the brokerage said in its report.
The acquisition of brand Horlicks pits HUL against Nestle and Mondelez India (Bournvita).
GSK operated with a network of 800 distributors, which had become part of HUL distribution network post-merger.
HUL, which has the widest distribution network for an FMCG company in India, is also using its distribution strength to widen the reach of GSKCH’s brands.
“HUL is increasing effective coverage, which is now at 2x pre-GTM integration level. According to the company, all this has helped it in increasing penetration sequentially and delivering double-digit volume growth in the health food drinks business in Q2FY22," the report said.
HUL has also “delayered" the distribution system, wherein now HUL does direct servicing, to a larger rural outlet, and HUL has taken the mid-layer of sub-distributor, the report said.
To be sure, the health food drink category has a low penetration in India.
“HUL has a clear strategy of improving accessibility and reach, landing impactful innovations, increasing profitability through synergies and investing behind the brands to drive growth," the report said.
It also launched a ₹2 Horlicks sachet—as a trial in Andhra Pradesh and Telangana in March this year. And in light of encouraging signals, the company has extended further to Karnataka and Tamil Nadu in the last few months, the report added.
It also helps that consumers are more health-conscious, especially in a post-covid world.
Meanwhile, the company has also been rolling out newer variants. For instance, it launched Horlicks Diabetes Plus.
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