HUL recently announced its FY2024 full-year financial results, reporting 2% underlying sales growth to INR606bn (US$7.16bn) in turnover and 5% growth in profit after tax year-on-year to INR106bn (US$1.26bn).
According to HUL CEO and Managing Director Rohit Jawa, the overall FMCG market in India has witnessed subdued demand trends in the 2024 financial year so the firm remains cautious about the market moving forward.
“[We observed many] divergent trends in commodity prices this year, such as significant inflation in palm oil, tea and coffee and deflation in crude oil, soda ash and skimmed milk powder,” he told the floor during the firm’s most recent investors’ meeting.
“Though palm oil and tea prices have eased sequentially, the rupee has further depreciated against the dollar and given the current geopolitical climate, we will continue to closely watch this space for any volatility.”
Despite this uncertainty, HUL is determined to not just play it safe but to continue pushing for growth in one of its most-challenging categories historically, namely that of Nutrition Drinks.
“We see Nutrition Drinks as one of the brands in our Core portfolio where we need to improve performance, but it is definitely still a core brand for us, specifically comprising Future Core brands that for us are at the sweet spot for premiumisation ” he added.
“It has been five years since we acquired the brands in 2020, and I think we have done well in terms of penetration growth especially in the regions where we are market leaders, and also done well in terms of market share and distribution expansion.
“All this means that we have driven an immense amount of cost synergies here and profitability is strong as a percentage -but what we haven’t managed to do well until now is in driving the category consumption.
“We have tried to address this through proposition, pack and other actions, but now, after exhaustive deep analysis, we realise we now need to focus on three very specific actions.
“Number one is to revitalise Horlicks and make it more contemporary, more modern, more relevant to today’s needs, pressing on the triggers of Nutrition and addressing the barriers of health and credibility.
“Secondly, we will also double down on our Adult Nutrition business as a whole, where we believe we can do a better job by doubling medical marketing, investing more in chemists, revamping and refocusing on high-growth parts of that portfolio.
“And number three essentially is Boost, which is a great brand as it’s a chocolate drink, but also more an energy brand so we see levers of growth in both aspects. It is also in the ready-to-drink format which works very well in geographical expansion, and we’re doubling down to drive the consumption of the category in this way”.
This was seconded by HUL CFO Ritesh Tiwari, who also provided deeper detail into the company’s plans for boosting the category.
“For this category, over the last few years [we] have been unable to drive consumption as the overall category witnessed a drop in average household consumption, leading to the category as a whole as well as our products showing a decline,” he said.
“In terms of specific strategies, we are looking at pack price architecture adjustments to incentivise consumption, where we are reducing the price gap between individual sachets and big packs in order to accelerate the pack upgradation journey of consumers.
“The last quarter was the first full one where consumers experienced the change, and though the process of consumer price discovery is gradual, we are already seeing some impact on account of this transition [and] will further refine the price incentive curve if needed.”
Other food categories
HUL also hopes to push existing successful brands in its Foods portfolio further.
“One of our most successful brands within the consumer packaged foods category is Kissan, which is considered a very big brand locally and doing well here,” Tiwari added.
“We will definitely work to stretch it further as Kissan is a brand that can serve a lot of Indian cuisine cooking occasions, as well as fulfil consumer demands for mini meals or condiments to be used alongside meals.
“Looking forward, we expect growth trends to gradually improve for HUL due to both our accelerated portfolio transformation actions and improvement in underlying macro conditions.
“For the latter, we believe that macro conditions will benefit from monetary stimulus, tax relief, lower food and crude inflation and higher agricultural output, hence overall expect the first half of FY2026 to be better than the second half of FY2025.”
