Unilever South Asia Sanjiv Mehta Dec 4th 2018 My Introduction - 26 years with Unilever
5 2013 - to date 3 CMD, HUL 2007 - 2008 & EVP UL South Chairman 4 Asia UL Philippines 2008 - 2013 2 Chairman 2002 - 2006 1 UL North Africa Chairman 1992 - 2002 and Middle East UL Bangladesh Varied Functional Roles
17 years as CEO of Unilever Businesses
2 Home to 25% of world population
South Asia Multiple commonalities
India
Pakistan
Bangladesh Colonial history Cricket Sri Lanka
Nepal
30+ Languages 8+ Religions Food and spices Big festivals
3 Huge headroom to grow
Large millennial population Low FMCG consumption Fast growing region
Real GDP growth % population Median South Asia $29 Countries below 24 Age# South Asia GDP years# growth relative Indonesia $58 2x to world 45% 28 China $120 52% 24 Improved Ease of doing business 46% 27 rankings** FMCG Consumption per capita* +23 +11 +1 +11 38% 33
# Source: CIA Factbook * Source: Nielsen ** 2019 movement vs 2018 4 AV : South Asian consumers
5 Unilever’s 130+ years of presence in South Asia
Unilever Indian subsidiaries Sunlight soap Nepal set up Unilever Sri Lanka consolidated under introduced as HLL’s increases stake in operations Hindustan Lever to India subsidiary HUL to 67% begin Limited
1888 1931 1938 1948 1956 1971 1992 2007 2013 2018
Unilever sets HLL renamed as Unilever Unilever HUL market cap up subsidiary “Hindustan Pakistan Bangladesh crosses $50bn in India incorporated carved out Unilever Limited”
6 Largest FMCG company in each of the countries
80% Revenue from categories with Great fusion of global and local brands No.1 market position Global Local
Skin Cleansing 1 1 1 1
Face Care 1 1 1 1
Hair Care 1 1 1 1
Hand & Body 1 1 1 1
Toothpaste 2 1 1
Laundry 1 1 1 1
Household Care 1 1
Tea 1 2 2
Ketchup 1
Noodles 1
Not Tracked
Market share is as of MAT Sep’18 7 Unilever South Asia performance – Last 10 years
Double digit topline growth Robust margin* expansion Broad based sales growth
Turnover growth Sri Lanka Nepal Bangladesh
11% + 500 bps Pakistan 10 years India CAGR
6% 10% 14% 14% 9% 14%
2007 2017 UVG 10 years CAGR
All numbers based on internal management reporting * Underlying Operating Margin 8 INDIA’S LARGEST FMCG COMPANY
9 Hindustan Unilever Limited : €4.5bn powerhouse
HUL performance Our footprint Recognition
‘Dream Employer’ for 9 10% CAGR over years in a row among 10 years* top Indian universities Nearly every household uses one or more of our brands 530 bps EBIT improvement #8 Globally and #1 in India
Among the top 5 most Our brands are valuable companies in available in India with market cap 8mn+ stores 13 HUL brands of $51b** in India’s Top 50 Most Trusted Brands
*HUL performance as per India local reporting 10 ** Market capitalization converted to USD based on rate as of 22nd Nov 2018 Consistent high performance across Divisions
A few examples in the last 6 years
Beauty & Personal Care Home Care Foods & Refreshment*
Hair Fabric Solutions Tea
Turnover Market Share Turnover Profitability Turnover Profitability
1.9x ~ 700 bps 1.8x 3.7x 1.8x 2.0x
Largest Beauty & Personal Care Largest Home Care Largest Tea company in India company in India company in India
*On completion of merger with GSKCH, our F&R business will become one of the largest in the country 11 All nos are basis internal management reporting & compared with FY’11-12. Market share increase is as of MAT Sep’18 Our strategy is anchored around..
Growth Underpinned by Unilever Sustainable Living Plan
Consistent, Competitive, Profitable, Responsible Growth
12 Strategy in action
Building Blocks
Strengthening Creating categories Driving Fuel for Execution the Core of future premiumization growth Excellence
Enabled by
Structure Capabilities Culture
Being Future Fit 13 Strategy in action
Building Blocks
Strengthening Creating categories Driving Fuel for Execution the Core of future premiumization growth Excellence
Enabled by
Structure Capabilities Culture
Being Future Fit 14 Our Core portfolio
Straddling the price-benefit pyramid For e.g. Hair
Rs. 432 ($5) High end naturals
Salon care
Anti-dandruff
Daily damage care
Mass beauty
Sachet at Re.1 Family (1.5 US cents)
15 Strengthening the Core
Making the Core more Constantly innovating Focused SKUs at Focus on driving aspirational through and renovating deaveraged level penetration & purpose led brands the Core using local insights weighted distribution
16 Building iconic engagement platforms
Lakmé Fashion Week Fair & Lovely Foundation Lifebuoy Help a child reach 5 Lux Golden Rose Awards
Red Label taste of Rin Career Academy Surf Excel Haar ko Harao togetherness Kissan Tiffin Time Table
17 Innovations driving our growth
18 Our Market development portfolio
Nascent categories penetration
Hand Wash* 22
Instant Coffee
Face Wash
Body Lotion
Washing Liquids
Hair Conditioner
Soups*
Dishwash Liquids
Body Wash* 2
19 Source: IMRB As of MAT Aug’18 (Urban + Rural) ; *Urban only. Creating categories of the future
Market development model Driving category penetration
Growing at ~ 2x of 20% HUL average of Business SEED ACCELERATE EXPLODE
Doubled in size in the last 5 years 2.2 x
UPTO 10% 10% TO 20% 20% AND ABOVE
CATEGORY PENETRATION 200 million consumer contacts
20 Leading with trends
Naturals Perfume on the go Fabric sensations
Male grooming Health Reinvent Indian look
21 Driving Premiumization
Market growing faster in the premium segment Example : Fabric Solutions
HUL share HUL share 2017 Price of segment* of segment*
Premium 28% 1.3x Premium 3.0x 3.5x
Mid 39% 1.2x Mid 1.5x 2.0x
Mass 33% x Mass x x
*Source: Nielsen MAT Sep’18 (Urban + Rural) 22 Fuel for growth
End-to-end cost focus Powered by Savings
1.7x
Non Material Materials Supply Chain Costs x
Return on Marketing Overheads Investments 2014 2015 2016 2017 % of Turnover
Organization wide Crowd sourcing of Driving virtuous effort ideas cycle of growth
23 Execution excellence
Agile Supply Chain Front end execution Speed to market
Inventory days Service 1.8x x
0.6x x Effective Faster landing of 55 x +1000bps 0.94 innovations 0.92 Coverage*
50 0.9 2015 2018 2015 2018 0.88 45 No. of days 0.86
0.84 40 0.7x 1.7x 0.82 Art of pricing 0.8 35
0.78 x Assortment
30 0.76 2015 2018 2015 2018
Driving high customer service Leveraging analytics to drive better while optimizing inventory coverage and sharper assortment
* Effective coverage is measured as no. of outlets with monthly average billing >INR 500 ($7.0); 2018 nos are as of Oct’18 24 India is a heterogenous country
Diverse Varied affluence Different media Differential category demographics levels habits adoption
Multiple languages LSM 7+ = 8% nationally Mobile internet penetration: Penetration in adjacent 8 Major religions (Range of 5-48%) Rural- 18%*; Urban- 59%* states also not the same
*A report published jointly by the Internet and Mobile Association of India (IAMAI) and KANTAR-IMRB: March’18 25 Customer Development
Sharper strategy leveraging Traditional trade channels Building channels of the ecosystem will remain relevant the future
Demand Capture Wholesale Right outlets, Right Aids Width of frequency, Right distribution assortment Modern Trade - Driving visibility
Retail Demand Fulfill Accessibility at On time delivery at arm’s reach of optimal cost desire Explode Ecommerce - Partnerships Demand Generate Shakti and exclusive ranges World class in store Deep rural execution distribution Growth and profitability in E-Com > Modern Trade > Traditional Trade
26 Strategy in action
Building Blocks
Strengthening Creating Categories Driving Fuel for Execution the Core of future premiumization growth Excellence
Enabled by
Structure Capabilities Culture
Being Future Fit 27 Winning in Many Indias
WiMI in action
From 4 branches to Distinctive strategy 14 consumer at a cluster level clusters
Empowered Cluster Customized product Heads enabling propositions & faster decision media deployment making closest to for every cluster the point of action
WiMI is a competitive edge for HUL
28 Winning in Many Indias – few examples
Proposition in face care Pricing and proposition in fabric solutions Product in Refreshment
Low penetration markets Uttar Tamil Punjab and Pradesh Nadu Karnataka
Grow by removing barriers Majority mass Majority mid of proxy usage Designed for color and Other markets taste preference
Upgradation through Upgradation through mid and premium bars top end formats – Leverage by increasing and powders Matic liquids usage occasions 29 C4G in action
Country Category Business Team : 15 Mini – Boards
Functions in a CCBT Empowered to More consumer & Land bigger, faster deliver in-year P&L customer centric innovations
Liberating HUL Leadership Team to focus on longer term goals, Merger of brand building exploring inorganic growth opportunities and managing disruptions and brand development
30 Digital trends shaping India
Rise of vernacular Exponential data growth content
Rapidly evolving digital Rs. 205/GB infrastructure in 2016 Plummeting data costs driving 480+ million internet increased usage rd users with more (4 hours video per day) 3 largest start-up mobile viewers Rs. 19/GB ecosystem in the world in 2017
Data Sources: Decoding Digital Impact; 2017 Report by BCG & Google; YT data extracted in April 2018 31 Kantar IMRB Internet Report 2016, 2017; 2017 KPMG Google Report on Indian Languages – Defining India’s Internet Leading the disruption along our value chain
AI Augmented Digital Factory Robotics Automation @ Digitization of Stores Precision Marketing Decision Making & Robotics Warehouses
Distribution Store Consumers Performance Factory Center Distributor Management
B2B Model and assured N+1 Delivery
Harnessing the power of ‘Data as an enterprise asset’
32 Winning culture: Focus on Wellbeing, Diversity & Inclusion
Nurturing an Building an Inclusive experimentation culture Workplace Holistic Wellbeing
+1200 bps Distinctive Technology giving Competitive Advantage improvement in gender balance
Embracing inclusion beyond Consumer Appropriate Need/ Unmet Large Part gender and Problem of the Value breaking Chain stereotypes People with Physical and purpose mental wellbeing
33 UNILEVER SUSTAINABLE LIVING PLAN Unilever Sustainable Living Plan
Health & Wellbeing Sustainable Sourcing Enhancing Livelihoods Thought Leadership
90,000+ Shakti 450 billion 100% tomatoes entrepreneurs litres are sourced from network sustainable of water saving sources potential created 1.7 million people >67 million people reached - benefitted Lifebuoy Handwashing 100% of our Programme plastics 52% tea is Over 420,000 83 billion litres of safe packaging to sourced from people trained drinking water provided by be reusable, estates Pureit recyclable or certified as compostable sustainable ~1.1 million people impacted 600,000+ women by 2025 through Domex Toilet enrolled Academy
35 AV : USLP in action
36 Key Messages
• Unilever has a rich history and deep heritage in South Asia spanning over 100 years
• South Asia has huge headroom to grow being home to the largest millennial population, growing affluence, rising urbanization and burgeoning digital connectivity
• Unilever has strong business in South Asia and a clear and compelling strategy across divisions
• We are future proofing our business through market development, agile organization structures and building distinctive capabilities across the value chain leveraging data and technology
• USLP continues to be our key differentiator
37 Unilever South Asia Sanjiv Mehta Dec 4th 2018