Hindustan Unilever focuses on premium brands amidst slow rural recovery

Customers have become more perceptive and more aspirational compared to the past, said Hindustan Unilever CEO Rohit Jawa.

With rural recovery still taking time to materialize, India’s largest FMCG player, Hindustan Unilever (HUL), is shifting its focus to selling more premium brands to bolster its bottom line.

CEO Rohit Jawa emphasized this strategy during the earnings call for the quarter ended June, stating, “Our commitment to unlocking access to aspiration, market making, and premiumization supported by our distinctive capabilities is a key driver of our competitive edge.”

Growth in Premium Portfolio

Over the past three years, HUL’s premium portfolio contribution has increased by around 300 basis points. This shift is attributed to consumers becoming more discerning and aspirational. As a result, most of HUL’s premium categories are experiencing faster volume growth compared to their mass-market counterparts.

Strategic Portfolio Reshaping

HUL has strategically reshaped its portfolio to focus on high-growth areas such as skincare-infused makeup, international cuisine, and home care liquids, including fabric softeners and dishwashing liquids. This approach aims to cater to the evolving preferences of consumers seeking premium products.

Segmentation of Beauty and Personal Care

For the first time, HUL reported its “Beauty & Wellbeing” and “Personal Care” segments separately in the first quarter of the current fiscal year. Previously combined, these categories were separated due to their uneven growth and differing competitive landscapes.

The “Beauty” segment contributed Rs 3,199 crore to the topline, compared to Rs 2,386 crore from the “Personal Care” segment. While the mass portfolio of skincare and color cosmetics declined, the premium skin portfolio and future channels continued to grow.

Financial Performance

Hindustan Unilever reported a net profit of Rs 2,538 crore for Q1 FY25, a 3 percent increase from Rs 2,472 crore in Q1 FY24, surpassing analysts’ estimates slightly. Total sales for the April-June quarter rose 2 percent year-on-year to Rs 15,523 crore.

This focus on premiumization and strategic portfolio adjustments underscores HUL’s efforts to maintain its competitive edge and drive growth in a challenging market environment.