Unilever South Asia Sanjiv Mehta Dec 4Th 2018 My Introduction - 26 Years with Unilever
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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