Consumers spending 50% time on digital media, says HUL's Rohit Jawa

An average Indian consumer is spending more than 50 per cent of their time on the digital media, with e-commerce and digital commerce gaining traction, Hindustan Unilever Limited (HUL)'s, Rohit Jawa, the company’s managing director and chief executive officer, told investors after the announcement of its December quarter results.

In December, HUL announced that Arun Neelakantan has been appointed as the company’s first chief digital officer and will take on the role from January. It also announced that it will split its beauty and personal care  business and the change will be effective from April 1 as the consumer goods maker will focus on its digital agenda. 

HUL on Friday posted a smaller-than-expected increase in its Q3 profit as demand in the rural regions remained lacklustre due to the delayed winter.

Its net profit was Rs 2,509 crore in Q3FY24, up only 1.4 per cent from Rs 2,474 crore in the same quarter during the previous year. HUL’s revenue was down marginally by 0.3 per cent year-on-year (Y-o-Y) to Rs 15,294 crore, while volume growth was only 2 per cent Y-o-Y.

The fast-moving consumer goods major (FMCG) is also digitising its “route to market”, and it currently sees 40 per cent of its orders coming from general trade sales through Shikhar, its B2B app for retailers, Jawa said.

He also spoke of the company’s macro-economic challenges.

“While there have been near macro-term challenges, we have focused on ensuring the fundamentals of our business remain strong. We continued to expand our consumer franchise despite heightened competitive intensity in the market,” Jawa said.

HUL’s chief financial officer, Ritesh Tiwari, however, pointed out towards stress in the mass end of the market.

“In the near-term, we expect our mass business winning metric to be impacted as we lap up the high pace. We expect it to dip below 60 per cent for a couple of quarters before coming back towards the second half of the calendar year 2024,” Tiwari told investors.

“However, on a two-year basis, we would continue to have substantial market share gain and a healthy percentage of business winning shares,” Tiwari added.

However, the premium end continues to lead growth for the maker of Surf Excel.

“On an YTD (year-to-date) financial year basis, the premium portfolio continues to lead growth, surging more than 2.5 times the mass portfolio. Premium products to remind you are those with a relative price index greater than 120 per cent of the category average,” Tiwari explained.

He said that its premium business unit, the plus range in Horlicks, mayonnaise and peanut butter in foods and its premium laundry portfolio are a few examples of segments growing in double-digits in this financial year.

On the demand scenario, Jawa pointed out, “The dualism we've seen in the recent past continues, with certain parts of the market recovering faster than the rest.”

Jawa explained: “Urban growth continues to outpace rural. Across many industries, we see premium segments doing better than mass. These factors have paid off in shaping the city market demand as well.”

Going forward, the company continues to see competition from local and regional players who have emerged in the last few quarters.

“We are seeing a resurgence of small and regional players who had vacated the market during the peak of inflation. Consequently, in recent years, the pace at which we are gaining incremental market share has slowed down. But it is important to note that we're holding on to almost all the gains made in 2021 and 2022,” Tiwari added.