WAR OF NATURALS

The emergence of Patanjali Ayurveda's herbal personal care products at competitive prices gave most FMCG companies a run for their money. Its Dantkanti toothpaste, Alovera Gel, natural soaps and shampoos led to market share erosion of almost all personal care brands including HUL.

Be it Colgate, L’Oreal or P&G, all responded with a natural care portfolio. HUL which typically took two years to research and roll out a product introduced 15 products under the Lever Ayush brand. While Patanjali seems to have lost out, Colgate and Dabur registered robust growth in recent quarters.

HUL had launched Ayush at the start of the millennium but didn’t get its strategy right then. The Patanjali effect pushed it to look at its natural portfolio again. It became a priority category and HUL adopted a three-pronged strategy. It has launched natural variants across brands –be it Lifebuoy or Tresseme, each has a natural variant. It gave a lease of life to neem soap brand, Hamam. It acquired ayurveda hairoil brand Indulekha. It is also test marketing Ayurvedic breakfast mixes in south India, under the Ayush brand.

Though experts believe HUL hasn't got its natural strategy right (apart from Indulekha), Sandeep Kohli, Executive Director, Personal Care, HUL, says, "We are executing a strategy with speed and rigour that will keep us well positioned as consumers and markets evolve."

of the future. Just like the products of the future, we are investing in the channels of the future too,” says Mehta.

E-commerce, says Srinandan Sundaram, Executive Director, Sales and Customer Development, is actually teaching them how to do business even in traditional trade. “In many ways, in e-commerce, if you are not sharp and are unable to explain in a short time-frame about a product like Comfort Fabric Conditioner or even Indulekha, the consumer will move on. Therefore, it is forcing us to be precise in what we want to put out in front of your screen, because that five seconds dictates whether you are going to be chosen or not. If we are getting better conversions over there, certainly, the same can be adapted for general trade.” For instance, the company saw a lot of buzz on green tea when it put out the green tea communication on digital platforms. “When we saw the buzz, we felt that we could increase the depth of distribution of green tea even in physical stores, and when we did so, it worked well for us. That’s where endto-end data plays a very important role,” adds Sundaram.

“Beauty and personal care is a category that lends itself to lot of discovery. It has a lot of passion and emotional engagement with brands, and digital allows us a wonderful way to talk to consumers. We are also excited by developments in e-commerce. We are innovating to stay ahead as these trends shape – with our current iconic brands as well as new brands. This has upped our game on data,” adds Sandeep Kohli, Executive Director, Personal Care, HUL.

Culture of Saving

Reimagining and rewiring HUL will need huge investments. The company launched Project Symphony to get employees to inculcate an attitude of ownership and come up with ideas to improve effectiveness and cost efficiency. It got over 800 ideas and has been able to increase savings from 3 per cent- 4 per cent to 6 per cent-7 per cent in the last few years. “That gave us the corpus to deploy market development and increase our competitiveness,” says Mehta.

Though HUL has always been a cost conscious organisation, Srinivas Phatak, CFO, HUL, says the last few years have seen some fundamental shifts. “It has become an organisation wide initiative with a focus on employees having an owners’ mindset. That’s when everybody questions costs in terms of is it really benefitting a consumer or a customer.”

Cost-efficiency and profitability have become global mandates after the Kraft-Heinz bid to take over Unilever for $143 billion last year. Unilever CEO, Paul Polman said that his company would conduct a comprehensive review of options to ensure that it is able to maximise profitability and deliver best possible returns to shareholders. “Pressure will also come on Unilever India and you will see them exiting from few non-performing businesses. Food could be one of them,” points out a senior industry leader.

Food and refreshments contribute 18 per cent to the overall revenue of the company, of which food is barely three per cent. While it has a strong tea and coffee business, its food strategy has been haphazard and halfhearted. While it has a strong market in jams under the Kissan brand, the Knorr brand of soups hasn’t been able to make a significant impact. Though it recently launched Ayurvedic breakfast mixes under the Ayush brand, food is certainly the weakest link in the HUL value chain.

“I would say, we are gaining market share in all the categories that we operate in. If you take a 5-year period, each of the six categories – tea, coffee, ketchup, soups, jams, noodles – have grown,” defends Sudhir Sitapati, Executive Director, Food and Refreshments, HUL.

The larger HUL story however, is one of calibrated growth on the back of a complete re-haul of the organisation. Though a large chunk of industry feels the effect of organisational make-over is yet to show on its balance sheet, they do believe HUL is making the right moves.

With data inputs from Niti Kiran

“A COMBINED STRATEGY OF LOCALISATION AND PREMIUMISATION MAKES IMMENSE SENSE” Raghu Vishwanath MD, Vertebrand