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Unilever in India


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Unilever in India
Doug Baillie
Group Vice President, South Asia Unilever

Accelerating change

Mumbai 14th November 2007

Safe harbour statement
This presentation may contain forward-looking statements, including 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995. Words such as 'expects', 'anticipates', 'intends' or the negative of these terms and other similar expressions of future performance or results, including financial objectives to 2010, and their negatives are intended to identify such forward-looking statements. These forward-looking statements are based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Group. They are not historical facts, nor are they guarantees of future performance. Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including, among others, competitive pricing and activities, consumption levels, costs, the ability to maintain and manage key customer relationships and supply chain sources, currency values, interest rates, the ability to integrate acquisitions and complete planned divestitures, physical risks, environmental risks, the ability to manage regulatory, tax and legal matters and resolve pending matters within current estimates, legislative, fiscal and regulatory developments, political, economic and social conditions in the geographic markets where the Group operates and new or changed priorities of the Boards. Further details of potential risks and uncertainties affecting the Group are described in the Group's filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report & Accounts on Form 20-F. These forward-looking statements speak only as of the date of this presentation


Overview India opportunity How are we winning The road ahead….

The Indian context

~ 29 states ~ Diverse language and culture ~ US$ 1trln economy ~ GDP growth ~9%
Population 1129 Mln
5,545 Towns 2.5 Mln outlets

6,38,000 Villages 5.0 Mln outlets

* Source: Statistics on India, Total Coverage : AC Nielsen, Census of India 2001

Unilever in India: Where have we come from
• 75 year history in India

Sunlight soap first imported in 1888 Lever Brothers incorporated in 1933 Hindustan Lever Ltd formed through merger in 1956
• Unilever equity diluted in 1977 and 1980 to 51% 1993 : TOMCO merged with HLL 1996 : Brooke Bond Lipton & HLL merge 1998 : Ponds merges with HLL 1999 : Modern Foods acquired 2006 : Move to one Unilever structure 2007 : Name change to Hindustan Unilever Ltd

Unilever – Largest FMCG in India

Turnover (US$m)





P&G Combined









Tata Tea Godrej CP

2006 TTM Turnover –Source: Audited Reports and Company Press release P&G Turnover is the combined Turnover of its listed entity together with its estimated turnover of its unlisted entity

Sales growth trend
FMCG Underlying sales growth %




4.8 -0.5

3.6 0.3
2003 2004 2005 2006




excludes non-FMCG businesses such as Chemicals.

Operating margin



15.5% 13.2%

14.7% 13.3%









* Before restructuring and disposal profits

2007 where we stand…

2005 Reported turnover growth FMCG Underlying Sales Growth Operating profit growth* Operating margin* % 11.4% 12.7% 1.1% 13.3%

2006 9.4% 12.8% 16.2% 14.1%

YTD ’06 10.8% 14.5% 22.3% 13.0%

YTD ‘07 12.1% 12.2% 14.0% 13.3%

* Before restructuring and disposal profits

Market share – Stable in key categories
% value market share

Q2-06 Laundry Shampoo Personal wash Skin Care Oral Tea 34.1 48.0 54.6 54.7 30.2 23.7

Q3-06 34.3 48.9 54.1 54.4 30.7 23.9

Q4-06 34.6 48.5 55.3 54.7 30.4 22.9

Q1-07 35.2 46.9 55.3 54.8 30.0 21.9

Q2-07 36.5 47.5 54.0 55.1 30.0 22.3

Q3-07 37.0 47.7 53.2 55.0 30.0 23.4

Leadership across FMCG categories
Market leader
63.6 53.2 56.4 59.8 55.0 47.7 37.0 24.3 13.2 23.4 14.1 10.2 8.6 7.4
Packet Tea

Strong No. 2

47.5 36.8


30.9 26.9

20.2 5.1
Coffee Jams Toothpaste Ketchups

Fabric Personal Dishwash Skin Shampoo Talcum Wash Wash Powder

HUL – Market Share (%)

Main Competitor Market Share (%)

Source : A.C Nielsen - Quarter Ended Sept 2007 Value shares


Overview India opportunity How are we winning The road ahead…

Opportunities and challenges
• A buoyant and growing economy • Increasing per capita income drives FMCG growth • Current FMCG market growth • A changing profile of a differentiated set of consumers • Opportunity to grow consumption and penetration • The Foods opportunity • Evolving trade structure


Sustained 8% + growth
12 8 rowth 5-6% G
% 7-9 o Gr

800 wth 600

Rising GDP and Per Capita Income
GDP ($ Bln) Per Capita Income ($)


730 634 553


3-4% Growth

0 58 62 -4 66 70 74 78 82 86 90 94 98 02 06 200 400



-8 1960- 1980 1980- 2000 2000-2006









• Growth trend line has significant upward bias • Per capita Income has doubled in 4 years • India embarking on an accelerated growth cycle
Source: IMF Website

Increasing per capita income drives FMCG growth
Disposable income per capita vs HPC spend per capita
HPC Spend Per Capita (US$)


200 India


0 0 1000 2000 3000 4000 5000 6000 7000
Per capita Disposable Income (US$)

Per capita incomes drive consumption
Source: Euromonitor, Morgan Stanley Research 2006

Market size and growth
Hair Wash Skin Tea

16% 672 12% 466

912 Personal Wash 907


8% 1522 4% 1972


Size of Market US$m.

India - 2013
181 mn hhlds

231 mn hhlds










The shape of India is going to change… from a pyramid to a diamond
Source : National Council of Agriculture & Economic Research

Opportunity to grow consumption
Per capita consumption (US$ )
22.9 16.6 12.1 1.4

6.0 6.7 7.5


China Brazil Germany USA

India India


Indonesia Brazil USA Germany

Ice creams

Skin care
36.6 26.9


India India



Brazil Germany USA

India India


China Brazil USA Germany

Source : Euromonitor, 2006

Opportunity to grow penetration
Penetration %* Category Deodorants Toothpaste Skin Cream Shampoo Utensil cleaner Instant coffee Washing powder Detergent bar Toilet soap All India % 2 49 22 38 28 7 86 89 92 Urban % 6 75 32 52 60 16 91 91 97 Rural % 1 38 18 32 15 3 84 87 89

Source : MRUC, Hansa Research - Guide to Indian Markets 2006 *Penetration numbers based on study conducted by Indian Readership Survey, on a sample size of ~250,000 based on usage in 6 months

Foods opportunity…
196 6.6 138 5.2
HPC Market Size Food Market Ratio of Food Market to HPMC Market


3.8 75 21
Eastern Europe

2.3 6 14

37 19
Latin America Africa and West Asia

•Packaged Food market $14 Billion •Largely Urban (80%), rapid historical growth: 13% •Poised to accelerate: income elasticity of 1.33
Source: Euromonitor, Family Budget Study

The “real” India Foods opportunity
Packaged, 5% $ 14 Billion

Unpackaged/ Fresh, 95% $ 275 Billion Bulk of food in India is still consumed fresh & unpackaged….. Conversion Opportunity

Evolving trade structure…
Modern Trade General Trade

Year 2007 2010 2025

Modern Trade 5% 10% 25%

General Trade 95% 90% 75%


Overview India Opportunity How are we winning The road ahead….

Unilever in India – Uniquely positioned to create value
• Evolving strategic focus • Unmatched brand portfolio • Innovation and R&D capabilities to straddle the pyramid • Versatile distribution network • Strong corporate responsibility and governance • Strong local talent base

Evolving strategic focus
Non Core Business



DIVESTED AFS Quest Adhesives Nickel Catalyst Seeds Diversey Lever Oils & Fats Mushrooms 110 Brands 35 Powerful Brands

One Company Leading positions High growth spaces

One Top Team Global Innovation; Local Activation One Sales Force Non Core Processes Outsourced



Portfolio straddling the pyramid Case study : Laundry
Laundry Market Size Unilever share No.2 Share Current $ 1773 M. 37.0% 13.2%
Aspiring Affluent


Our Strategy

Work the pyramid; Grow profitably ahead of the market; Regain profitability through judicious price increases and cost effectiveness programmes
Source: AC Nielsen retail panel; Euromonitor

Path breaking activation

Innovation in activation Case Study : Sunsilk
Exceptional ratings for a websites • No. of hits : 200 million • Nos. of registration : 280,000 • No. of gangs : 26,000 • Time spent on the site : 14 mins

Recognition • Enquiry from Star groups on acquisition • Google & Travelguru sought alliance • Link on Orkut site • Competitor imitation

Opportunity from increased penetration
Unique innovations & promotions to drive category penetration
Rural shampoo penetration : % households bought once/quarter

45 39 40 35 30 25 20 15 23 21 27 31 35 39





SSK Black 8m Rural plan

Rollout of Rs 1 (2 cents) and Rs 0.50 (1 cent) sachets

MQ 04 JQ 04 SQ 04 DQ 04 MQ 05 JQ 05 SQ 05 DQ 05 MQ 06 JQ 06 SQ 06

Low price shampoo sachets have helped drive category penetration

Innovation and R&D capabilities
Unilever India leads global research in Oral, Skin and Laundry Some achievements:

Single Shot Soap making process

• • •

Skin Lightening Cream
Non Soap Detergent Bars Poly coated Dish Wash Bar Drinking water purifier (Pure-It)

R&D achievements
Surf Excel Quick Wash Context 20 % of the world population in 30 countries face water shortage; No. to rise - 30% in 50 countries by 2025

Proposition: Technology to deliver superior clean while significantly reducing water consumption

Skin Creams Low Unit Packs Opportunity of Increasing consumption and penetration of Context skin creams by breaking the affordability barrier and driving price point strategy Proposition: Packaging Innovation to develop an unique multiuse sachets, small containers at a cost of 10 cents (1/5th of the regular tube)

R&D achievements…Water
Context ~ 220 Mln Households, where safe drinking water in short supply

Proposition: ‘as safe as boiled water’ without hassles of boiling no harmful virus, bacteria, parasites, pesticides Works without electricity & piped water Business model based on sale of consumables Affordable price: Cost of Unit - ~$ 40; Cost of battery - $ 7 Being Rolled out across key towns and urban areas
COST 220 liters of pure water for $ 1

Our strategy

Build brand image leadership & strong consumer relationship through effective communication; secure ongoing sale of consumables

Winning with “Go to Market Approach”
Total population (In Bln.) Number of Retail Stores (Mlns) FMCG Market (Annual, $ Mln)* Urban : Rural Ratio FMCG Growth (Value %) Store Density (Stores Per 1000 People) Per Capita FMCG Spend (Annual,$)

Distribution Strength
1.1 7.74 16448 67:33 11 Portfolio of category and Brands give unique reach in Modern Trade 6.8 Project Shakti, a competitive advantage in Rural India 14.5 Strong IT capability, end to end connectivity Unique channel Initiatives to Win at “Point of Purchase” Direct coverage – 1milllion outlets Brands reach – 6.3 million outlets


Source AC Nielsen

Leveraging IT for growth


Distributor Mgmt System

Hand Held Terminals

~4000 stockists

~1m outlets End 2008

35 Brands, 1500 skus 45 Depots, 4000 stockist

Organized retail - A source of competitive advantage
HUL Market Shares in Modern Trade



NSD Bars

NSD Powders


Skin Cleansing

Skin Care

Tooth Paste




HUL Modern Trade (MT) Shares are higher than its General Trade (GT) shares in many categories

Source : Retailer POS Data & AC Nielson Comparison with Top 6 Metros in GT

What sets us apart - Reaching shoppers
DAIRY MEAT Ice cream


Sanitary napkins


Dish Wash

Tooth brush



Paper pdts















CHECKOUTS Custards and jelly Jams, Squashes


Project Shakti- Enabling direct rural reach
• To Reach: • Small, scattered settlements and poor infrastructure make distribution difficult • Over 500,000 villages not reached directly by Unilever • To Communicate: • Low literacy hampers effectiveness of print media • Poor media-reach: 500 million Indians lack TV and radio • To Influence: • Low category penetration, consumption, brand awareness • Per capita consumption in Unilever categories is 33% of urban levels


Three Shakti initiatives • Shakti entrepreneur; currently ~ 42000 women cover 1,23,000 villages • Shakti Vani: one-to-many communication for category growth • iShakti: customized interaction with remote consumers Impact on community • Business and social impact can go together • Partnerships with diverse stakeholders

Corporate Responsibility – Aiding in the Development of the Country
Lifebouy Swasthya Chetana - Health & Hygiene

Shakti – Empowerment of women through micro-enterprise Opportunity
Yashodadham - Relief and Reconstruction in Gujarat's Kutch district Asha Daan - Happy Home actively supported by Unilever

Combining corporate responsibility and business strategies to aid development of rural India

Lifebuoy Swastya Chetna
The Challenge in rural India: 1. Lack of awareness about disease causing germs 2. Need for repeated contacts to drive behaviour change 3. Lack of media reach SWASTYA CHETNA Diarrhoea – Kills a child every 10 secs - 33%(1 mn) of these deaths are in India LSHTM* Study - Washing hands with soap and water reduces diarrhoeal diseases by 47% * London School of Hygiene &
Tropical Medicine

Business objective – To increase soap consumption in rural India

Lifebuoy - India’s leading health soap brand - Role in propagating health & hygiene awareness in villages

* Expect to complete by end 2007

Glow Germ Demo

Health Check- up

Results No of villages contacted No. of people contacted (mn)

20022006 27800 80

Cum. 2007 40000 140

Health Check- up

Healthy Family

Our talent and corporate reputation…
Hewitt Top Company for Leaders

Global Rank Global Rank Rank in Asia Rank in Asia Rank in India Rank in India

#4 #4 #1 #1 #1 #1
Most Respected Company Ranks

2007 Rankings

Most respected company Most respected company rank (2006 rank ::17)) rank (2006 rank 17

#9 #9 #1 #1 #2 #2

Most respected FMCG Most respected FMCG

Most respected MNC Most respected MNC


Overview India Opportunity How are we winning The road ahead…

The road ahead …

Focus on growing ahead of the market by leading market development activities Grow a profitable foods business by leading market development in the category Grow the bottom-line ahead of top line Leverage the impact on the consumer from the growing Indian eonomy Manage Cost pressure effectively to improve margins Strong commitment to sustainable development

Thank You

Unilever in India
Doug Baillie
Group Vice President, South Asia Unilever

Accelerating change

Mumbai 14th November 2007

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...This title is part of the IDH Case Study Series, published in December 2010. Another title in this IDH Case Study Series is: • nilever sustainable tea, Part II: U Reaching out to smallholders IDH also has a Best Practices Series, whose titles include: • Marketing sustainability • Sustainable sourcing among SME’s • Beyond auditing • Sustainable trading • Retailers and sustainability • Sustainable sourcing and procurement Case study Unilever sustainable tea Part I: Leapfrogging to mainstream y Tania Braga, B Aileen Ionescu-Somers and Ralf Seifert, IMD’s Center for Corporate Sustainability Management Dutch Sustainable Trade Initiative (Initiatief Duurzame Handel) Utrecht, The Netherlands Foreword A tipping point happens when a critical mass of people begin to shift their perception of an issue and take action in a new direction. As I look across the global landscape, I feel that we are approaching a tipping point concerning global sustainability. It is catalyzed by at least three important realizations by business, government, and civil society: The first is a realization that the world is finite and that a growing population with a higher ambition for living standards will inevitably lead to a world which will be resource and carbon constrained. The second is the realization that to solve the challenges for this future world we need systems solutions. We cannot solve individual...

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...changing lives and stimulating economic activity in rural India BY GAVIN NEATH AND VIJAY SHARMA R O J A M M A I S A S I N G L E M OT H E R with two daughters living in Kurumurthy, a small rural village 150 kilometres south west of Hyderabad in Andhra Pradesh. Until five years ago she scraped an existence by working in her mother’s field, earning barely enough to live on herself, let alone bring up two children. Then her life changed beyond recognition. Today she earns around 650 rupees (US$16) a month, is widely recognized and respected in her community, and has become a role model for other women wanting to raise themselves out of poverty. What changed was a visit to her village by a representative from Hindustan Unilever and her decision to become a Project Shakti entrepreneur. Hindustan Unilever, the Indian arm of global consumer goods company Unilever, is one of India’s leading businesses, with an annual turnover of US$2.3 billion and a history in India stretching back a hundred years. It markets such well-known international brands as Lipton, Lifebuoy, Surf, Vim and Pond’s, as well as local brands, such as Kissan, Annapurna, Lakme and Wheel. Unilever has always held the firm belief that the private sector can contribute to social development by creating win-win solutions to social challenges through innovative strategies that meet both business and social objectives. It was this philosophy that prompted Hindustan Unilever to create Project Shakti, a unique micro-enterprise...

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...This title is part of the IDH Case Study Series, published in December 2010. Another title in this IDH Case Study Series is: •  nilever sustainable tea, Part II: U Reaching out to smallholders IDH also has a Best Practices Series, whose titles include: • Marketing sustainability • Sustainable sourcing among SME’s • Beyond auditing • Sustainable trading • Retailers and sustainability • Sustainable sourcing and procurement Case study Unilever sustainable tea Part I: Leapfrogging to mainstream  Tania Braga, By Aileen Ionescu-Somers and Ralf Seifert, IMD’s Center for Corporate Sustainability Management Dutch Sustainable Trade Initiative (Initiatief Duurzame Handel) Utrecht, The Netherlands Foreword A tipping point happens when a critical mass of people begin to shift their perception of an issue and take action in a new direction. As I look across the global landscape, I feel that we are approaching a tipping point concerning global sustainability. It is catalyzed by at least three important realizations by business, government, and civil society: The first is a realization that the world is finite and that a growing population with a higher ambition for living standards will inevitably lead to a world which will be resource and carbon constrained. The second is the realization that to solve the challenges for this future world we need systems solutions. We cannot solve individual problems in silos. The...

Words: 11079 - Pages: 45