Our Managing Director and Chief Executive Officer, Rohit Jawa, discusses rising consumer aspirations and how we are gearing up to meet their evolving needs.
Here are excerpts of his conversation with the Economic Times that focus on the need to adopt a more innovative and agile business model as the trend of premiumization and upgradation pick up in both rural and urban markets.
HUL's business performance
Market growth has gradually improved over the last four to five quarters. Volume has increased from low single digits to nearly mid-single digits. In the previous 2-3 years, inflation has been steep compared to the historical average, and now that it is waning, people are rewarding it by consuming more.
It would be tempting to look at things quarter by quarter. However, if you only look at the short term, you are likely to make wrong calls. If you look ahead, India, which is currently a $3 trillion economy, is on its way to becoming a $5 trillion economy. Therefore, all categories, including fast-moving consumer goods categories, will grow dramatically because per capita consumption is low in urban and rural areas.
Lines of rural and urban divide blurring
What has changed in recency is that rural growth has started to outpace urban growth, and it seems the trend will continue. Traditionally, for long periods of time, rural growth was ahead of urban, and hopefully, it will get back to that at some point in the future.
The first wave of growth in rural areas has come from the increase in penetration of big categories. The next growth level is coming from upgrading to premium brands, and it's happening at scale. The next wave of growth will be from new categories, from low penetration to medium penetration and beyond. So, upgrading and unlocking aspirations at scale is what we do very well.
The line between premium product consumption in small towns and urban areas has blurred. As the country continues to urbanize and access to channels becomes even more democratized, the lines will keep blurring. Smaller towns will look like larger towns and larger towns will look like metros.
Gearing up for the future
We couldn't be in a better place than where we are now. If you look at HUL, it is Rs 60,000 crore plus, it is a size of global scale, in a market that is the consumer story of the next decade. With India well on the road to becoming the third-largest economy in the world, we can expect the unlocking of all forms of consumption.
A strong, big, fast, moving consumer goods company in an exciting market is one big tick. Across our brands, we have leadership in most of our categories. We get to almost every outlet in the country. We have amazing R&D. Our big brands will only get bigger because of technology unlocks. They will make our products unmissably superior. Today, we are resilient in any volatility; we can reach any part of the country, and we can make anything. So, it is a source of competitive advantage as well. So, if you had asked me, in 2010 that by 2024, would you like a company with that kind of profile? I would have said, Yeah, that's a dream.
But what got us here won't take us there, and the next journey or decade will have to be different. It will be about the new India, which is about meeting the aspirations through upgradation as the main thesis. It's about offering brands at all price points and making new markets, going to high-growth spaces, especially in foods and beauty, where we have lots of white space. It's about building solid digital capability and the ability to innovate, experiment, and pivot fast. A much faster business than in the past.
We compete in many Indias—that is our main successful strategy, and this makes it difficult for competitors to copy. That level of deep consumer nuances, habits, formulations, trade structures, and competitive sets is extremely difficult for anyone to land and start doing.
A dream employer of choice
Every young graduate wants to get their dream job; for many, the dream job is HUL. We have a legacy of being a school of effective leaders, and we continue to enjoy and maintain that reputation even after 91 years of existence.
When you speak to people who want to do marketing or be in the space of services or consumers, we continue to be the first preference. When I recently asked young people, who despite having multiple options, on why they chose to join HUL, their response, most of the time, was that they loved the business of brands, the value systems, the ability to manage work-life balance and personal growth. That's why people like me are still here after 36 years, because of the value system, the learning opportunities and the culture – these are all something that you just fall in love with.