India's fast pace transformation reflects changing consumer trends: HUL MD

With increasing affluence, the new India is spearheaded by aspiration for better quality of life, he says

India is going through a significant transformation at a fast pace, which shows in changing consumer trends, Rohit Jawa, managing director and chief executive office, Hindustan Unilever (HUL), told investors after announcing its earnings.

He said: “With increasing affluence, the new India is spearheaded by aspiration for a better quality of life. Consumers have become increasingly discerning, seeking higher-order benefits and making holistic buying decisions. This has also translated into premium segments performing better than mass (segments), not just in FMCG (fast-moving consumer goods) but across industries.”

Information consumption and decision-making are shifting with consumers turning to digital sources, supported by the country’s focus on building digital ecosystems, he said.

While talking of HUL responding to new consumer trends, Jawa said the makers of Lux soaps had studied this to drive growth in volumes, strengthen competitiveness, and maintain healthy margins.

During the April-June quarter, HUL’s growth in volumes was 4 per cent and its Ebitda (earnings before interest, tax, depreciation and amortisation) margin, at 23.8 per cent, was up 20 basis points year-on-year. Its gross margin, at 50.9 per cent, was up 170 basis points versus the same quarter last year.

During the press conference after its earnings, Jawa had said while talking about green shoots in consumption: “The closest signal we get is in market growth. And market growth in the recent past has been in volumes ... Although if you look at two years’ compound annual growth rate (CAGR), rural growth is still lagging urban but we see that changing.”

Ritesh Tiwari, chief financial officer, said rural-demand recovery continued to be gradual while in the past few months it had superseded urban growth. 

While talking about the market shares of HUL’s products, he said “in this quarter, we continue to hold on to most of the circa 200 basis points of market share gain that we gained during inflation. While there has been a slight dip in recency, this is on expected lines as you navigate the inflation-deflation cycle.”

“Our last three-month metric (moving annual turnover) is already at circa 55 per cent levels, providing compelling evidence that our strategic actions are driving the desired results for us.”

He told investors the company remained committed to stepping up action on food, specifically international cuisines.

Sales via e-commerce continue to be a strong growth driver for HUL and are growing ahead of the market. They are three times its modern trade growth. 

While talking about advertising spend, Tiwari said the company continued to invest competitively in its brands.