HUL Says Weak Consumer Demand Still Prevails

India’s largest consumer goods maker said slowdown in domestic demand continues in the ongoing financial year. But it expects the government’s initiatives to spur growth to benefit in a few quarters.

There’s a huge potential for growth of fast-moving consumer goods companies in India as the nation’s per capita consumption is lower compared to peers, Hindustan Unilever Ltd. said in an analyst meet. The per capita consumption of consumer goods in Indonesia and China is two and four times that of India’s, it said.

Domestic demand for consumer goods makers fell as growth slowed in rural areas due to agrarian distress. Rural growth has moderated and is on a par with the pace of increase in urban areas, Nielsen India had said in April.

HUL expects its cheaper and affordable price-point packs to drive growth as demand is seen to rise for these entry-level products. Nearly half of its overall revenue comes from these low unit packs of Rs 10 and below, it said.

Here’s how the company’s various segments fared:

Hair Care

• HUL’s revenue grew at an annualised rate of 11 percent over financial years 2013-2019.
• Market share in the segment increased 560 basis points, largely due to strong performance of its naturals portfolio, focus on innovations and premiumization, the company said.

Natural Segment

• The maker of Lever Ayush range said its naturals portfolio has twice the growth rate of the overall company.
• The company witnesses good performance of Lever Ayush range of products in south India.

Laundry

• The segment grew at an annualised rate of 10 percent over financial years 2013-2019 due to premiumisation.
• Last year, the company launched low unit packs in detergent liquids and fabric conditioners to make them more affordable for consumers and further drive consumption and presence.
• In the premium laundry segment, which includes Surf Excel, revenue rose from 17 percent in 2011 to 22 percent in 2018.
• In 2018, the premium laundry market grew two times. HUL’s share grew 3.6 times.

Foods

• By volume, the tea segment’s revenue grew at a compounded annual growth rate of 10 percent over financial years 2013-2019.
• In ketchup, HUL said it’s under penetrated with only 30 percent users.