(Bloomberg) -- Hindustan Unilever Ltd.’s decision to rename its melanin-suppressing face cream, Fair & Lovely, will probably need a large media campaign to win over consumers which poses short-term risk to its margin in that particular segment, according to Jefferies India Pvt.
The product, which earns more than $500 million in annual revenue for Unilever Plc from India alone, will be sold under a yet-to be-approved name as the company seeks to become more inclusive. The Anglo-Dutch conglomerate on Thursday said it will remove the terms “fair,” “whitening” and “lightening” from Fair & Lovely’s packaging and marketing material and feature women of all skin tones in future advertising campaigns.
“Purely from a business perspective, there will be uncertainty as consumer acceptance will hold the key,” Jefferies analysts Vivek Maheshwari and Kunal Shah wrote in a note to clients. “We recall around 2012, HUL changed the Fair & Lovely cream colour from white to pink along with a packaging change, which met with a push back from the consumer.”
Hindustan Unilever’s shares fell 0.9% to 2,154.30 rupees as of 12:52 p.m. in Mumbai on Friday, compared with a 0.5% gain in the benchmark S&P BSE Sensex. Jefferies has a buy rating on the stock with a price-target of 2,525 rupees.
The company is the leader in the skin care segment, controlling over 50% of the market. Fair & Lovely is the biggest brand in the segment contributing more than 6% to overall revenues and over 10% to profits, Jefferies estimates.
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