India is a phenomenal market for us: HUL chief

India is Unilever’s largest market after the US, contributing 10% to its top line

India is a phenomenal market, where Hindustan Unilever (HUL) enjoys a long history and leadership position, Alan Jope, chief executive officer, Unilever, said in an investor call on Thursday.

“Eighty-four per cent of the India business has been growing volume share and there is a significant opportunity for growth,” Jope said while laying out the company’s road map. India is Unilever’s largest market after the US, contributing 10 per cent to its top line. The US contributes 18 per cent and China 6 per cent to Unilever's turnover.

The consumer goods major, which reported a 3.5 per cent increase in underlying sales for the October-december period, will increasingly bet on India, China, and the US as it seeks to aggressively grow in a post-pandemic world. Unilever follows a January-december accounting year.

The December quarter results are the first since Unilever consolidated its headquarters in London in June, moving away from its longstanding Anglo-dutch structure. Jope said the company would continue to simplify operations and look at a flatter reporting structure as it sought to be future-ready.

Key categories such as beauty and personal care grew 1.5 per cent, home care by 4.7 per cent, and foods and refreshment by 5.4 per cent in the December quarter, Unilever said.

The company has set long-term targets, saying it will aim for underlying sales growth in the range of 3-5 per cent as markets recover in India and China. It will also aim for profit growth to be ahead of sales growth, led by a continued focus on cost savings. Inflationary pressures, however, in inputs such as crude oil and agri commodities, are forcing Unilever to take calibrated price hikes across categories in a bid to protect margins.

Greame Pitkethly, chief financial officer of Unilever, said raw material prices would rise even more in 2021 and that the company would have to be at the “top of its game” in terms of pricing this calendar year.

Unilever has forecast €2 billion (or $2.38 billion) per annum in savings, though restructuring costs in 2021 and the next year would be in the range of €1 billion (or $1.19 billion). Restructuring costs are expected to reduce after 2022, the company said.

India, China, and the US contribute a third to Unilever's top line. Jope said he would like to see their total contribution to company topline go up to 60 per cent by 2030.

For this, Unilever is counting on categories such as hygiene, skincare, beauty, functional nutrition and plantbased foods to drive growth. It is also looking to expand its presence in e-commerce, a channel that has grown significantly in the last one year, as stay-athome consumers turned online for their grocery needs.

In 2020, Unilever saw 61 per cent growth in its e-commerce business over the previous year, taking its overall contribution to topline at 9 per cent. Pitkethly said the company was digitising traditional trade stores it was reaching directly in markets such as India, where the retail universe is estimated at 14 million stores.

Of these, Unilever reaches 5 million outlets directly, and 1.5 million outlets have been digitised to ensure they are part of the growing online universe that is now counting on neighbourhood stores for fulfillment and delivery.

For the full year 2020, Unilever’s underlying sales growth was 1.9 per cent, led by 1.2 per cent rise in beauty and personal care, 4.5 per cent in home care, and 1.3 per cent in foods and refreshment.

84 PER CENT OF THE INDIA BUSINESS HAS BEEN GROWING VOLUME SHARE AND THERE IS A SIGNIFICANT OPPORTUNITY FOR GROWTH” ALAN JOPE

Chief executive officer, Unilever