'HUL turns focus on price cuts, volumes to fight small cos'
Indian market is seeing a lot of aggression from small players in the FMCG sector after raw material prices cooled off, forcing its Hindustan Unilever subsidiary to focus on volumes and price cuts.
«In India, about 40% of our portfolio is fabric cleaning and skin cleanser. And we know from experience that they are highly correlated to the underlying commodity prices.
When inflation happens, a lot of smaller local firms in the category drop out of the category and then re-emerge once deflation starts to come in. So, we are starting to see that in India,» Unilever global chief financial officer Graeme Pitkethly said at the Barclays Global Consumer Staples Conference.
For years, local brands have been nibbling away market shares from leading consumer product companies, especially in soaps, detergents, hair oil, tea and biscuits.
However, pandemic-led disruptions and subsequent inflation in key raw materials forced many to either shut shop or scale down operations. However, in the past two quarters, soaps, detergents and tea have become cheaper due to falling commodity prices.
«The competitiveness of media spend will continue to go up and it is the right thing to moderate our pricing and retain our volumes and our market share.
We really trust our team in India to manage that dynamics properly,» said Pitkethly.
Hindustan Unilever, during its earnings conference, said it was witnessing resurgence of small and regional players, many of whom had vacated the market during the peak of inflation.
For instance, within tea, small companies have grown at 1.6 times that of larger rivals in the three months ended May, while in detergent bars, regional players have expanded three times faster. HUL isn't alone in witnessing smaller
