India is not a zero-sum game, says HUL CEO Sanjiv Mehta

Homegrown consumer goods company Hindustan Unilever Limited (HUL)’s chief executive officer (CEO) and managing director (MD) Sanjiv Mehta said that Reliance is a formidable competitor for us in India but with the highly digitised general trade we are strengthening our position.

Mehta, in an interview with Mint, said, “As a company, we respect all our competitors - big or small. In different categories, there are different players.” He added that Ghadi and P&G are HUL’s competitors in the laundry business, Tatas are in the tea business, Nestle is in coffee and Godrej, Wipro, ITC, Santoor and Reckitt among others are in the skin cleansing segment.

“We have a huge number of competitors, both globally and locally. But when you take the total portfolio, no one has the scale and size of HUL. The size, market shares, turnover, depth of talent and the capabilities that we have allow us a very unique position in the market,” Mehta added.

Mehta, while responding to a query about competition from retailers like Reliance Retail, said that India is not a zero-sum game and if someone else grows, that doesn’t mean others would decline. He said, “We have enough space in India at $45 per capita FMCG consumption. Compare this with Indonesia, which is 2x; China, which is 3x; the Philippines, which is 4x.”

Reliance Retail, which is the country's largest retailer and stands among the top 10 retailers in Asia, has recently marked its entry into the country’s consumer goods market in December 2022. Its FMCG arm Reliance Consumer Products Ltd. launched the ‘Independence’ homegrown consumer packaged goods brand in Gujarat.

Moreover, RIL also plans to enter almost every product category and an equal focus on backend sourcing, according to a regulatory filing. Reliance’s this move is expected to have repercussions across India’s vast FMCG market. To back it up further, Reliance Retail has also partnered with Meta to allow consumers to order through WhatsApp.

Despite being a competitor, Reliance also supplies HUL on the chemical side and customers on the modern trade side, Mehta said.

Currently, in modern trade space, the total market constitutes about 13-14 percent, e-commerce constitutes 7-8 percent and institutions like the canteen stores occupy 3-4 percent and general trade has around 75 percent share. HUL’s digital demand, on the other hand, captures over 25 percent.

Mehta highlighted HUL’s strength over Reliance Retail and said, “Every player will have their own strategy. We started on a journey of digitising HUL in 2015-2016, way ahead of the inflection point during covid.”

During an investor presentation in November 2022, HUL revealed that its digital channel accounts for 25 per cent of demand as it has over 9 million digital stores and sells 60 billion units. It added that the demand from digital channels in 2021, stood at 20 per cent. This includes e-commerce and its business-to-business app Shikhar. HUL’s online ordering platform, the Shikhar app, has around 1.1 million retailers, Mehta said.

HUL said that it was witnessing a twofold increase in modern trade and pharma and cosmetics and fourfold growth in e-commerce sales. The FMCG company stated that it had also designed a portfolio to address shoppers’ needs on digital channels and highlighted its five digital-first brands in the premium beauty business.

In addition to this, the company also said that it has a diversifying channel play for its direct-to-consumer brand called ‘Simple’ on e-commerce platforms Amazon and Nykaa, which saw a 230 basis point rise in demand on Amazon.

As of now, HUL operates in 15 categories and holds a leadership position in 85 percent of its business and 16 of its brands had a turnover of over Rs 1,000 crore. The FMCG company also claims that its brands like Surf Excel, Horlicks, Lux Brooke Bond, Lakme, Wheel, Lifebuoy and Glow & Lovely are among India’s most valued brands.