 "Good rains should help improve rural demand: Sanjiv Mehta")
Hindustan Unilever (HUL) reported a decline in volume growth for the September quarter after seven years. In an interaction with media, managing director & chief executive Sanjiv Mehta spelt out his priorities. Edited excerpts:
Clearly, the focus on volume growth has not yielded results for HUL, as the demand environment remains challenged and the commodity inflation is setting in.
This quarter was challenging because we increased prices in personal wash (soaps). But, that does not mean we will take our eyes off volume growth. In an inflationary environment, price hikes in a sense is inevitable. But, pricing action only happens after taking into account all factors. Commodity deflation is behind us and we have to face market realities. But, the outlook for us remains positive with a good monsoon in rural and improved consumer sentiment in general. In the mid to long term, this should have a positive rub-off on the business.
What is your sense of the fast-moving consumer goods market? How fast do you think it can get back to the growth path, given that there is a consensus the second half will be better than the first half this year?
The virtuous cycle will set in. Our business works when there is money in the hands of more people. The signs suggest that it will kick in after two successive droughts because of the good rain that happened this year. While monsoons have to be consistent and one year’s rain might not be enough, there are other triggers, too, such as the government’s rural and overall infrastructure push. That should help in improving the demand environment in rural areas.
Apart from personal care, foods was also weak this quarter. Will you get out of branded commodities altogether and focus on processed foods alone where Knorr and Kissan have been doing well?
Our Annapurna salt business did get impacted because of rains in the September quarter. While Kissan and Knorr are doing well, we will not get out of the Annapurna business. We will look at how we can get into the value-added game with Annapurna. That will be the focus for us.:
Clearly, the focus on volume growth has not yielded results for HUL, as the demand environment remains challenged and the commodity inflation is setting in.
This quarter was challenging because we increased prices in personal wash (soaps). But, that does not mean we will take our eyes off volume growth. In an inflationary environment, price hikes in a sense is inevitable. But, pricing action only happens after taking into account all factors. Commodity deflation is behind us and we have to face market realities. But, the outlook for us remains positive with a good monsoon in rural and improved consumer sentiment in general. In the mid to long term, this should have a positive rub-off on the business.
What is your sense of the fast-moving consumer goods market? How fast do you think it can get back to the growth path, given that there is a consensus the second half will be better than the first half this year?
The virtuous cycle will set in. Our business works when there is money in the hands of more people. The signs suggest that it will kick in after two successive droughts because of the good rain that happened this year. While monsoons have to be consistent and one year’s rain might not be enough, there are other triggers, too, such as the government’s rural and overall infrastructure push. That should help in improving the demand environment in rural areas.
Apart from personal care, foods was also weak this quarter. Will you get out of branded commodities altogether and focus on processed foods alone where Knorr and Kissan have been doing well?
Our Annapurna salt business did get impacted because of rains in the September quarter. While Kissan and Knorr are doing well, we will not get out of the Annapurna business. We will look at how we can get into the value-added game with Annapurna. That will be the focus for us.:
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