Hindustan Unilever's performance is a blueprint for parent company Unilever to replicate in its emerging markets worldwide, global chief executive Fernando Fernandez said.
“India is a blueprint of what we are doing in emerging markets,” he said at the Barclays Global Consumer Staples Conference in Boston on Tuesday (Wednesday India time). "Emerging markets [account for] 62% of Unilever's revenue, and we believe they will be a key driver of our performance in the future,” he said.
HUL is the second-largest arm of Unilever after the company decided to separate its international foods business. In March, Unilever decided to merge its food business with spice maker McCormick, creating a company worth around $65 billion. The Indian foods business was not included in this transaction.
Following this deal, HUL will contribute about 17% of Unilever’s revenue and will be a key growth driver, according to the company’s global management. “Many companies are discovering where India is on the map. We know the map of every zip code in India,” Fernandez said.
Quick-commerce advantage
Speaking at the conference, Hindustan Unilever chief executive Priya Nair outlined the company’s key growth drivers in India, highlighting bolt-on acquisitions like Minimalist, a sharp focus on quick commerce, and influencer-led marketing initiatives.
Nair highlighted quick commerce as a structural advantage for HUL, noting that its business model favours large, established brands. She added that profitability in quick commerce outpaces both modern and traditional retail channels, creating a favuorable margin profile for the FMCG major.
In February, HUL had set up a dedicated quick-commerce entity to sharpen its focus on the segment. “In this structure, the quick-commerce lead directly reports into the HUL sales head, enabling faster decisions, sharper execution and higher focus on this high-growth channel,” Nair had said during a post-results call with analysts in February. Quick commerce accounted for about 3% of HUL’s total revenue, the company said that month.
At its Capital Markets Day on 4 September, management presented the ‘Winning in New India’ (WINI) strategy to align its portfolio with evolving consumer trends. The company plans to increase capital expenditure to 3% of turnover, up from about 2%, to drive sustained, volume-led profit growth.
HUL stock hit a 52-week low of ₹1,936 on 9 September before closing at ₹1,942. The stock is down 26.38% on NSE over the past year, compared with a 5.78% drop in the benchmark Nifty 50 over the same period. “We expect near-term operating performance to be driven by improved volume momentum and margin at least being maintained at the current level, led by price hikes and savings,” analysts at Yes Securities wrote in a 6 September report.