HUL Growth Playbook: Premiumisation, Six Long-Term Bets To Drive Demand In Coming Decade

Hindustan Unilever Ltd. has placed its bets on six categories with a potential to deliver high double-digit growth in the coming years and pinpointed 10 brands primed for premiumisation, as the consumer goods giant seeks to bolster its performance amid shifting market dynamics and fierce competition.

The categories are premium face, body wash, premium hair, home-care liquids, condiments and mini meals, as well as prestige and well-being, according to its 270-slide presentation released during Capital Markets Day on Friday.

As of the last financial year, the cumulative size of these categories is Rs 7,000 crore. HUL plans to invest heavily in these "market-makers", aiming to grow 1.5 times the market growth rate.

HUL also plans to drive premiumisation with an emphasis on its 10 power brands — Surf Excel, Vim, Dove, Pond's, Lakme, Lux, Pears, Brooke Bond, Horlicks and Kissan. Each of them is generating over Rs 1,000 crore in revenue. Its flagship detergent brand, Surf Excel, is on track to exceed Rs 10,000 crore in revenue by the current fiscal, the company stated.

As for premium beauty and wellbeing, HUL aims to grow this portfolio by 900 basis points over the next few years. The gameplan includes extending large brands such as Ponds and Lakme into more demand spaces, introducing more of Unilever’s global brands into India and acquiring local brands within beauty and wellbeing.

In 2022, Surf Excel achieved a remarkable milestone by surpassing $1 billion in sales, making it the only non-food brand in India's fast-moving consumer goods industry to attain "unicorn" status. HUL aims to triple Horlicks Plus sales by 2030.

Overall, HUL sees a growth potential of two–four times across categories in the next decade, driven by rising incomes, heightened aspirations and a young demographic. It expects volume growth to exceed the market by 100 basis points and deliver double-digit earnings-per-share growth. Between 2021 and 2024, it grew its turnover and profit by 1.3 times, achieving a cumulative market share gain of 200 bps.

The company also been focusing on social-first advertising for higher demand generation. Share of TV in advertising for HUL has gone further southward from 60% to 30%, while digital has grown from 20% to 29% and social media is up to 15% from 12%. OTT's share has risen from 8% to 17%. HUL's digital media contribution has tripled in the last four years to 40% of its total ad spends.

While these are long-term projections, HUL expects stable demand in the short term with "low single-digit" price growth if commodity prices remain where they are. 

HUL has also introduced Winning in Many Indias 2.0, which is an ongoing shift from its traditional one-size-fits-all strategy. As part this strategy, it will further identify clusters of affluent population to drive its premiumisation agenda, particularly in the beauty and wellness, and food and refreshment segments.