HUL Changes Strategy to Push Products

8/10/2019 HUL Changes Strategy to Push Products

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Last updated on: March 17, 2011 10:22 IST

The country's largest fast moving consumer goodscompany, Hindustan Unilever, is using "out-of-

home" aggressively to grow its foods business. Out-

of-home means initiatives undertaken beyond just

selling products.

The move comes at a time when the over $50-billion

Unilever is looking to double its turnover in 10 years.

Foods business, which includes packaged foods,

beverages, ice creams, etc, would have to grow at 50 per cent per annum,

Unilever Chief Executive Officer Paul Polman had said during his India visit

last week, if the objective of doubling the turnover had to be achieved.

HUL's foods business is growing at 15 per cent per annum, according toanalysts tracking the company.

It constitutes 17 per cent of the company's Rs. 17,524-crore turnover,

according to 2009-10 Annual Report.

In contrast, Unilever's global foods business constitutes 52 per cent of its

turnover, growing at 10 per cent per annum.

Polman had said out-of-home had a key role to play in galvanising its foods

business in India.

HUL Managing Director Nitin Paranjpe agreed: "Out-of-home is a very

significant opportunity. And we will look to leverage that."


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The company has taken few steps in that direction, with the launch of three

Bru cafes in three cities, including Mumbai, recently. Bru is the coffee brand of

HUL.

The move, say FMCG analysts, is to build traction for the brand on the ground,something Paranjpe doesn't deny.

He said: "We will systematically approach the business of foods, enter

categories, take up initiatives, where Unilever has an advantage and where we

will be able to build the market for the long-term."

Even as it steps into the cafe space, HUL is also ramping up its Swirls ice-

cream parlours.

"At the moment, we have 130 of them," said Paranjpe.

"We will add rapidly to the number in 2011, possibly one a week."

On packaged foods, while there is no plan to do anything out-of-home, the

company has been using experiential marketing tools to increase awareness

and improve sampling.

During the launch of Knorr soupy noodles last year, vans dishing out portions

of it were posted at different locations in cities such as Mumbai.

As HUL attempts to push its foods business using out-of-home, analysts say

the success of it will depend on how much business these outlets can generate.

Paranjpe does not get into the details of how much these outlets, especially the

Swirls parlours, are generating at the moment.

But the service model has been a difficult one for other FMCG companies.

Amul, for instance, is looking to discontinue its pizza and ice cream parlours.

According to Shripad Nadkarni, director at Marketgate Consulting, the skill

sets for a retail business are totally different as opposed to an FMCG business.


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"Quite often, the reason for stepping into the retail or out-of-home space is

more brand-building than for commercial purposes," he said.

WASTE & PACKAGING

OUR WASTE IMPACT PER CONSUMER USE HAS REDUCED BYAROUND 11% SINCE 2010*

OUR COMMITMENT

Halve the waste associated with the disposal of our products by 2020.*

OUR PERFORMANCE

Our waste impact has reduced by around 11% since 2010.*

achieved: 2

on-plan: 7

off-plan: 2

%of target achieved: 1

OUR PERSPECTIVEIncreasing resource scarcity means it is more urgent than ever to be efficient with

packaging and to find solutions to deal with post-consumer waste - packaging andproducts thrown away after use by our consumers. We purchase over 2.4 million tonnes of

packaging a year and we are determined to reduce the absolute amount of materials we

use and to ensure they are reused or recycled.

We are on track to meet our 2020 commitment. Our total footprint from packaging waste to

landfill has reduced by 11%. Efficient pack designs and innovative use of materials, as well

as the disposal of sauce brands with large waste footprints, have been the main drivers.

We are deploying new technologies to lightweight packaging and cutting-edge techniques to

optimise material use across hundreds of different designs. We are also working with others

to stimulate recycling infrastructures, particularly for materials which are important to us but

which are more difficult to recycle or recover, such as sachets in developing countries oraluminium aerosol sprays. This can take time but is crucial for the long-term.

Likewise, in our own operations, we are making strong progress against our targets. Our

manufacturing teams have already exceeded their 2020 target, reducing waste by 66% per

tonne of production since 2008. In 2012 we set a new target for all our sites to achieve zero

non-hazardous waste to landfill by 2015. Three quarters of our sites have now achieved

this, an increase of more than 50 sites compared to 2012. Since we launched the Unilever


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By 2020 we will increase the recycled material content in our packaging to maximum

possible levels. This will act as a catalyst to increase recycling rates.

7% increase in recycling and recovery rates in 2013, over the 2010 average Recycling and

Recovery Index (RRI), averaged across our top 14 countries.

3,204 tonnes of post-consumer recycled materials incorporated into our rigid plastic

packaging in 2013.

REUSE PACKAGING

We will provide consumers with refills in our home and personal care portfolio to make it

possible to reuse the primary pack.

In 2013 we extended some of our current portfolio and introduced new refills across

countries such as China, India, South Africa, Brazil, Argentina and the UK.

TACKLE SACHET WASTE

Our goal is to develop and implement a sustainable business model for handling our sachet

waste streams by 2015. We are continuing to investigate the potential of new technology but progress is slower than

the time scale anticipated.

ELIMINATE PVC

We will eliminate PVC (polyvinyl chloride) from all packaging by 2012 (where technical

solutions exist).

9999% of PVC removed from our portfolio by end 2012.

REDUCE OFFICE WASTE

In our top 21 countries, at least 90% of our office waste will be reused, recycled or

recovered by 2015 and we will send zero waste to landfill by 2017. By 2015 we will reduce paper consumption by 30% per head in our top 21 countries.

We will eliminate paper in our invoicing, goods receipt, purchase order processes, financial

reporting and employee expense processing by 2015, where legally allowable and

technically possible.

92% of our office waste was reused, recycled or recovered in 2013.

In 2013 paper consumed per occupant was 37% lower than 2010.

59% of our in-scope Business and Finance Services processes were completed

electronically.

Independently assured by PwC

* Our environmental targets are expressed on a per consumer use basis. This means asingle use, portion or serving of a product. We have taken a lifecycle approach with a

baseline of 2010.


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These include selling smaller pack sizes, affordable variants of best-selling brands for the

developed world's bottom of the pyramid consumer, and single-serve sachet variants.

Company officials say consumers indeveloped

marketsplagued byunemploymentand shrinkingdisposable incomeare displaying similar

habits of thrift as those in developing markets.

The maker of brands such as Axe, Dove, Knorr and Lipton is selling small packs of its brands in

markets such as Spain, Greece and the US. In Spain, for instance, Unilever sells Surf detergent

in packs offering five washes, and offers mashed potatoes and mayonnaise in small packagesin Greece. It has also launched a low-cost brand for tea and olive oil for the euro markets.

Confirming the move, a Unilever spokesperson said: "We have 'reverse-engineered' products

from D&E markets - where we have big, long-established businesses - starting with a price point

that people can afford and then working our way backwards along the supply and manufacturing

chain to make sure that we can make it a profitable business model. We know that this works as

a way of meeting the needs and aspirations of consumers who struggle to make ends meet - be

that through low-price sachets of shampoos or basic bouillons."

Across Europe, Unilever has noted that the recession drives more consumers to packed

lunches and home-baking. The company has now introduced new baking products like Stork

baking liquid as an option to the more expensive butter as well as in packs that can be re-used

as lunch boxes.

The spokesperson also points out that Unilever runsmarketing campaignson mayonnaise that

seek to inspire people to make the most of their leftovers. "Groups of consumers see value

differently. The 'cash strapped' are really about spending the least out of pocket as possible;
http://economictimes.indiatimes.com/topic/developed%20marketshttp://economictimes.indiatimes.com/topic/developed%20marketshttp://economictimes.indiatimes.com/topic/developed%20marketshttp://economictimes.indiatimes.com/topic/developed%20marketshttp://economictimes.indiatimes.com/topic/unemploymenthttp://economictimes.indiatimes.com/topic/unemploymenthttp://economictimes.indiatimes.com/topic/unemploymenthttp://economictimes.indiatimes.com/topic/disposable%20incomehttp://economictimes.indiatimes.com/topic/disposable%20incomehttp://economictimes.indiatimes.com/topic/disposable%20incomehttp://economictimes.indiatimes.com/topic/marketing%20campaignshttp://economictimes.indiatimes.com/topic/marketing%20campaignshttp://economictimes.indiatimes.com/topic/marketing%20campaignshttp://economictimes.indiatimes.com/topic/marketing%20campaignshttp://economictimes.indiatimes.com/topic/disposable%20incomehttp://economictimes.indiatimes.com/topic/unemploymenthttp://economictimes.indiatimes.com/topic/developed%20marketshttp://economictimes.indiatimes.com/topic/developed%20markets


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whilst 'smart shoppers' might be looking for the best price per portion; and 'bargain hunters' the

best possible promotional deal," explains the spokesperson. One way Unilever is trying to meet

consumer needs is by positioning specific brands as value-for-money alternatives. Example: the

spreads portfolio has 'I can't Believe it's not Butter' in the United Kingdom, Homa in Germany

and Delma in Poland. Unilever is also rolling out Saga, a strong value-for-money tea brand in

central European markets.

The consumer goods giant has also dramatically increased the number of products that retailers

can choose to sell at euro 1 or 1. In tea, for instance, there's PG Tips One-Cup and in

dressings there's a 450-mg jar of Hellmann's Salad Mayonnaise.

Within the Knorr Bouillon range, Unilever has launched Knorr Economica with an entry-level

stock cube that's priced some 60% lower than the normal line. Another strategy involves

offering more at an affordable price: like ice-creams in mega packs, large jars of mayo, and PG

Tips in '240 Tea Bag' formats.

Much of what Unilever is replicating in the developed world has originated in India. Forinstance,HUL had launched a sachet blitz across such power brands as Close-Up, Pepsodent,

Sunsilk, Ponds, Vaseline, Brooke Bond Taj Mahal and Bru to increase product penetration at

the bottom of the pyramid.

However, a relatively smaller player, CavinKare from the South, had a huge role to play in

ushering the sachet revolution as a strategy for low-unit pricing to drive sales at the low end.
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HUL Changes Strategy to Push Products