The CEO of Hindustan Unilever Ltd., Rohit Jawa, has emphasized that one of the key drivers of growth that the company believes in and intends to pursue despite the turbulence that the FMCG industry is faced with in India is premiumization. This emphasis on premiumization appears to be in line with the group’s conviction that focus on brands and quality is of greater value in the marketplace.
Talking about the present operating context, the CEO was quoted as saying that Indian consumers are becoming more discerning by the day. Though this might affect consumption in the short term, thanks to some inflationary pressures, there is a structural shift towards more premium and value-added offerings. The company plans to cash in on this by growing its premium brands in categories ranging from personal care to foods.
Premiumization, according to the management of the firm, is not just about higher price points. It involves innovation, superior product performance, sustainability, and brand storytelling, among other elements. Hence, through providing products that offer real benefits, Hindustan Unilever aims to premiumize its products with regard to price, thus increasing brand loyalty while sustaining strong margins despite changes in the price of inputs.
Volatility in the market has increased the complexity for FMCG players. Rising prices due to input cost inflation, fluctuations in commodity prices, and variations in rural-urban demand trends have challenged FMCG players in addressing both profitability and affordability along with marketing their products effectively in mass, “masstige,” or premium categories. Leadership at Hindustan Unilever highlighted that while products in ‘entry-level & mass’ categories continue to offer volume, ‘premium & masstige’ categories continue to deliver ‘value.’
CEO also stressed that the concept of premiumisation has a major link with innovation. Even now, HUL is engaged in R&D activities in order to develop unique products catering to changed consumer demands. Ranging from highly specialized skincare products to innovative nutritional or eco-friendly home care products, innovation acts as a key driver in improving the overall product line.
Analytics and distribution are the two other bases on which the Hindustan Unilever premiumisation strategy is founded. Hindustan Unilever has been widening its footprint in the modern trade, ecommerce, and quick-commerce spaces, as the uptake of premium brands has usually been better in the said channels. At the same time, the company has been using analytics to personalize its product assortment plans.
Sustainability has also been a important dimension in the superpremium segment. According to the CEO, sustainable sourcing, the use of less plastic, and a clear supply chain are also important factors in decision-making. The sustainability programs undertaken by Hindustan Unilever are not only in line with sustainable goals around the world, but they also promote trust in the brand in the youth segment who are willing to pay a higher price.
Though the focus is on premiumization, the importance of ‘affordability,’ especially in a diverse market like India, was not forgotten. The focus remains on pricing and packaging so as to make themselves available to consumers in stressful buying phases. This subtle positioning enables Hindustan Unilever to sustain their volumes as they ease their consumers gradually towards premium segments with improving economic conditions.
Industry experts find the approach taken by Hindustan Unilever to be a reaction to uncertainties in the market. Instead of preparing to defend itself amidst market volatility, the firm seems to concentrate on boosting its market performance in the long run. This would be achieved through the development of brands that are emotionally and functionally appealing.
Moving forward, the CEO again expressed his faith in the consumption story in India. Though challenges in the near term are expected to continue, increased incomes, urbanization, and lifestyle changes are anticipated to drive demand for premium FMCG products. The focus on premiumization, innovation, and sustainability at Hindustan Unilever places the company well to reap the benefits of the consumption story while countering the challenges in the market. In today’s rapidly changing market, the message coming out clearly through its leadership is that in a volatile market, value for customers can be created through quality, relevance, and trust. By focusing on premiumization without neglecting affordability, HUL is trying to achieve a balance in a rapidly changing market.
