‘Premiumization now drives growth at HUL’s home care’

Deepak Subramanian, executive director, home care, at the FMCG major, who has been heading the division in India for over a year now, said that the company has been growing ahead of the market and improving its competitiveness.

The home care segment has grown at a CAGR of 10.1% over the last seven years, compared to an 8.5% CAGR of HUL overall. The home care segment’s contribution also increased from 32.3% in FY16 to HUL’s standalone revenue to 36% in the last fiscal year, when it contributed ₹21,230 crore to HUL’s total revenue.

While HUL’s overall sales grew by 16% in FY23, the home care division, led by the popular brand Surf Excel, achieved a growth rate of 28%. Surf Excel has already surpassed the milestone of being a $1 billion brand for HUL. Additionally, home care liquids crossed ₹3,000 crore in sales in FY23. Other brands within the Home Care portfolio, such as Wheel, Rin and Vim, have crossed the ₹2,000 crore mark in revenue, while the fabric softener brand Comfort has exceeded ₹1,000 crore in business.

“The growth of home care has been pretty significant in the last two-three years, and one of the main growth drivers has been the significant premiumization that is happening even in this category," Subramanian said in an interview.

The company is focussing on driving premiumization in detergents by giving compelling offerings to improve what it calls the “price per wash". “We have been fortunate enough to lead a large part of that premiumization with our portfolio. The market has been growing, and we have been, of course, growing ahead of the market and improving our competitiveness," he added.

HUL’s home care business is the largest such business globally, he said. Subramanian said the company is focused on improving per capita consumption of the category. “India is a large market in terms of size, and HUL’s Home Care business is the largest home care business globally. But if you look at it from a per capita consumption point of view, we are one of the lowest in the world. In many Southeast Asian countries like the Philippines and Indonesia, the per capita consumption is almost 3-4 times of India," he added.

For instance, within detergents, 60% of households in the country still use mass-market detergents like Wheel, and penetration of formats like liquids is less than 15%. “So, the headroom for growth is quite significant," he said.

Driving the growth for the sector are a few mega themes, the first being that India is premiumizing. “Consumers are becoming richer, and what it means for my categories is we’re gonna have a lot more washing machines. Currently, 50-60 million households in India have washing machines, which is expected to go upwards of 100-120 million in a few years. Typically, the washing machine is an inflexion point in my category because that’s typically the point in time when consumers question their current choices and typically washing liquids come in," he explained.

Additionally, the overall size of the wardrobe is also increasing, with consumers buying into a greater variety of fabrics; those need to be taken care of differently. “In the same way, things are changing in our homes. All of us are modernizing our homes, more ovens, more granite tops, more marble floors, more wooden floors, all of that requires very, very specialized products to take care of," Subramanian added.

Despite the focus on premiumization, the fact is that the Indian economic recovery is a K-shaped one, and there is still a mass market, he said, adding that HUL is lucky to have a portfolio that is able to talk to all the different consumers in all their different contexts. Despite short-term pressure on demand, HUL will continue to drive growth across mass and premium price points. “What is interesting, however, is that the search for value is eternal, and just because there is a K-shaped recovery happening on the macro side doesn’t mean that you cannot premiumize. And that has been a big learning. But for that, you have to really understand the pain points and craft good value and teach the consumer how to use that. So, despite the K-shaped recovery, between technology, our branding strategy and our pack price channel play, we have been able to still drive premiumization," he added.