RE-IMAGINING HUL JP MORGAN 2018 INDIA INVESTOR SUMMIT | 20 SEP 2018 - Sanjiv Mehta, Chairman & Managing Director
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RE-IMAGINING HUL JP MORGAN 2018 INDIA INVESTOR SUMMIT | 20 SEP 2018 Sanjiv Mehta, Chairman & Managing Director
SAFE HARBOUR STATEMENT
This Release / Communication, except for the historical information, may contain statements, including the words or
phrases such as ‘expects, anticipates, intends, will, would, undertakes, aims, estimates, contemplates, seeks to,
objective, goal, projects, should’ and similar expressions or variations of these expressions or negatives of these terms
indicating future performance or results, financial or otherwise, which are forward looking statements. These forward
looking statements are based on certain expectations, assumptions, anticipated developments and other factors which
are not limited to, risk and uncertainties regarding fluctuations in earnings, market growth, intense competition and the
pricing environment in the market, consumption level, ability to maintain and manage key customer relationship and
supply chain sources and those factors which may affect our ability to implement business strategies successfully,
namely changes in regulatory environments, political instability, change in international oil prices and input costs and
new or changed priorities of the trade. The Company, therefore, cannot guarantee that the forward looking statements
made herein shall be realized. The Company, based on changes as stated above, may alter, amend, modify or make
necessary corrective changes in any manner to any such forward looking statement contained herein or make written or
oral forward looking statements as may be required from time to time on the basis of subsequent developments and
events. The Company does not undertake any obligation to update forward looking statements that may be made from
time to time by or on behalf of the Company to reflect the events or circumstances after the date hereof.
2
RAPID PACE OF CHANGE : LAST 5 YEARS
Market Disruptions & Climate Consumers &
Context Extremities Competition
Market Growth
GST: Biggest Tax Growing affluence
reform in India and aspirations
2012 2013 2014 2015 2016 2017 481Mn
Foods safety
Rapid increase in
Urban – Rural Growth Internet and 130Mn
Demonetization of mobile usage
86% currency in 2012 2017
circulation No. of Internet users In India*
2012 2013 2014 2015 2016 2017
Urban Rural
Increased competitive
Floods and Droughts intensity
Rural Growth subdued till 2017
3
*Source : IAMAI
PERFORMANCE IN THE LAST 6 YEARS
Net Sales EBITDA Market Capitalization
~$1.9bn ~$573 Mn ~$37bn*
added^ added added
All nos compared with FY’11-12 which is reinstated to reflect key IND AS accounting impact
^Not adjusted for GST accounting impact & hence the net sales number looks deflated 4
* Difference in market capitalization converted to USD based on rate as of 7 th Sep 2018
A FEW EXAMPLES OF CONSISTENT HIGH
PERFORMANCE
Laundry Hair Care Tea
5
LAUNDRY – LAST 6 YEARS
Turnover Profitability
1.8 X 3.7 X
Consistent Growth in Topline & Bottom line
6
All nos are basis internal management reporting & compared with FY’11-12
HAIR CARE – LAST 6 YEARS
Turnover Market Share
1.9 X ~700bps
Consistent delivery on all fronts powered
by strong portfolio
7
All nos are basis internal management reporting & compared with FY’11-12. Market share increase is as of MAT July18
TEA – LAST 6 YEARS
Turnover Profitability
1.8 X 2.0 X
No. 1 Tea Company in India
8
All nos are basis internal management reporting & compared with FY’11-12
BEING RECOGNISED
Best Performing # 3 Company globally Economic Times – #8 Globally and Corporate Citizen of
Unilever Business for building leaders Company of the year #1 in India the year
2014 2014 2015 2018 2018
‘Dream Employer’ for 9 years in a row among top Indian universities
9
HUL SHARE PERFORMANCE
Performance vs Indices
HUL Market Capitalization
$ 12 4.1 X $ 49
billion billion
BSE FMCG 2012 Current*
HUL among the top 5 most valuable companies
BSE SENSEX
in India*
2011 2012 2013 2014 2015 2016 2017 2018
Markets rewarding our Consistent, Competitive, Profitable and Responsible Growth
USD to INR conversion rate used as of 7th Sep 2018 10
*Based on market capitalization as of 7th Sep 2018THE WORLD AROUND US IS CHANGING..
With dramatic disruptions …
A 20 word tweet can start a revolution today !
11IT’S AN AGE OF CHANGE AND DISRUPTION
Millennials / Gen Z There is a thrill of Changing family dynamics
purpose
Globally connected but Digital disruptions
Uncertainties and Volatility reshaping business models
there is a search for
are the new normal
authenticity
12AND HENCE THERE IS A NEED FOR...
Consumer Centricity Speed & Agility Digital Connectivity Being Glocal
13FMCG CONTINUES TO BE A BIG OPPORTUNITY IN INDIA
INDIA INDONESIA CHINA PHILIPPINES
US$ 29 ~2X INDIA ~4X INDIA ~ 5X INDIA
PER CAPITA FMCG CONSUMPTION
To tap this big opportunity, we need more money in the hands of more people i.e. Inclusive Growth
14
Source: Nielsen as of MAT March’18MARKETS SHOWING EARLY SIGNS OF REVIVAL
Rural vs Urban Rural vs Urban
Tailwinds Currency & Crude
value growth volume growth
Good monsoon
1.3X 1.5X
1X
1X
Increasing MSP*
2013 Q218 2013 Q218
Upcoming
elections Rural Growth Indexed Rural Growth Indexed
Urban Growth Urban Growth
Rural growth on an upward trajectory; Gradual improvement in demand
15
* MSP : Minimum Support Price
Source: Nielsen16
17
RE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
18RE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
19INDIA IS A HETEROGENOUS COUNTRY
Diverse Varied affluence Different media Differential category
demographics levels habits adoption
Multiple languages LSM 7+ = 9% nationally Mobile internet penetration: Market share in adjacent
8 Major religions (Range of 5-48%) Rural- 18%*; Urban- 59%* states also not the same
20
*A report published jointly by the Internet and Mobile Association of India (IAMAI) and KANTAR-IMRB: March’18WINNING IN MANY INDIAS (WiMI)
WiMI in action
Distinctive strategy
at a cluster level
Madhya Pradesh,
Chhattisgarh, Empowered Cluster
Rajasthan
Heads enabling
faster decision
Customized product making closest to
propositions & the point of action
media deployment
14 Consumer for every cluster
Clusters
21CCBTs: 15 MINI-BOARDS IN ACTION
Building a stronger sense of empowerment & ownership
Multi functional Merger of Brand Development
representations in CCBTs & Brand Building
Marketing Customer
Development
Supply
Finance
Chain
Research &
Development
Responsible for delivering in-year P&L
22
*CCBT: Cluster Category Business TeamsLIBERATING THE MANAGEMENT COMMITTEE TO FOCUS
ON LONGER TERM GOALS
Build new Greater focus on Explore Inorganic Coach & Mentor
business models talent & capabilities growth opportunities CCBTs
23
*CCBT: Cluster Category Business TeamsRE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
24STRENGTHENING THE CORE
Focus on driving Constantly Focused SKUs at Offering multiple
penetration & innovating and cluster level to value additions
Making the core
weighted renovating the address demands across the core
more aspirational
distribution core of all Indias portfolio
25CREATING CATEGORIES OF THE FUTURE
Opportunities to premiumize and up trade; huge headroom to grow
India Nascent Category Penetration %
Up- 20
Trading
Consumption 1
Dishwash
Conditioner
Washing
Instant Coffee
Hand Wash*
Soups*
Face Wash
Body Wash*
Body Lotion
Liquids
Liquids
Hair
Penetration
26
Source: IMRB As of MAT June’18 (Urban + Rural) ; *Urban onlyMARKET DEVELOPMENT & PREMIUMIZATION
Powered by education demos and sampling
Business Results Science of Sampling
Consumer
X contacts 8X
Growing at ~2X HUL Average 2014 2017
27BRIDGING PORTFOLIO GAPS
Pioneering Trends BB Male grooming range co- Building the Anti
No 1 in Green Tea
cream created with Amazon Perspirant category
Making Traditional
Toilet cleaning powder Tailormade for the Indian India’s No.1 Fabric
Ingredients
made for Indian toilets skin tones Conditioner brand
Contemporary
28BUILDING NATURALS
Naturals portfolio growing ~2.5X of overall HUL average
29BUILDING SPECIALIST BRANDS - INDULEKHA
Turnover
5x
X
MQ 17 JQ 17 SQ 17 DQ 17 MQ 18 JQ 18
Growth exceeding our acquisition business case
30EXPANDING ICE CREAM PORTFOLIO
Innovations Rs. 10* Access Packs
Acquisition
Tap into Distribution and Unlock Portfolio Synergies
31
*Equivalent to $0.14RE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
32BUILDING BRANDS WITH PURPOSE
33CONSISTENTLY EVOLVING BRAND COMMUNICATION
2005 2011 2013 2017
Pride Loyalty & Forgiveness Empathy and Love Learning from
Failure
2005 2008 2010 2014 2017
A cup of motherly A cup with little Taste & Taste &
Health & Taste
love sips of life Togetherness Togetherness
34
Surf AVBUILDING ICONIC ENGAGEMENT PLATFORMS
Lux Golden Rose Lakmé Fashion Lifebuoy help a child
FAL Foundation
Awards Week reach 5
Surf Excel Haar Ko Red Label Taste and Kissan Tiffin
Rin Career Academy
Harao Togetherness Timetable
35
Lakmé Fashion Week AVBUILDING DIFFERENTIATED CONTENT
Digital Video LFW* Content Social Media PR & Influencers Ecommerce
Massive outreach
with bloggers &
influencers
36
*LFW : Lakmé Fashion WeekRE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
37GENERAL TRADE WILL CONTINUE TO REMAIN BIG
More throughput from more stores
All GT channels will remain relevant Driving effective coverage & assortment
Wholesale Shakti EFFECTIVE COVERAGE ASSORTMENT
Retail
1.8X 1.7X
X X
Aids Width of Accessibility at arm’s Deep Rural
distribution reach of desire distribution
2015 2018 2015 2018
In a country of ~600k villages & 10Mn outlets, GT even after 10 years, will remain an important channel
38
*Effective coverage is measured as no. of outlets with monthly average billing >INR 500 ($7.0); 2018 nos are as of July’18BUILDING CHANNELS OF THE FUTURE
Modern Trade ECommerce
Exclusive male grooming range co-
Driving visibility across Modern Trade created with partner
Our Growth & Profitability in ECommerce > Modern Trade > Traditional Trade
39RE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
40TECHNOLOGY AVAILABLE TODAY, OPENS UP A
LOT OF OPPORTUNITIES
Internet of Things Cloud Technology Artificial intelligence
Distinctive Technology giving
Competitive Advantage
Consumer Appropriate
Need/ Unmet Large Part
Problem of the Value
Chain
41OUR DATA STRATEGY
What data do we
have today and
what more we
need to meet
the business
strategy
42WE CHOSE TO DISRUPT THAN BE DISRUPTED
Insights R&D Manufacturing
Consumer
Distribution Communication
Journey
43RE-IMAGINING HUL: OUR VISION
“Re-imagine HUL of the future
by choreographing a holistic
approach across the value
chain to completely transform
the way we do business in a
connected world”
44RE-IMAGINING SUPPLY CHAIN
Plan Source Make Deliver
• 1 Day Planning • Integrated e-
Cycle (real-time) tendering • Digital Factory • New Logistic
models
• Integrated S&OP • Realtime Forecast • Smart Robotics
• Efficient
• Segmentation • Smart Inventory • Network redesign Fulfilment Centres
2.0 modelling
Robotization AV 45RE-IMAGINING MARKETING
Granular data analysis Advanced Analytics & Social Listening: Always
and tracking Decision Support System on Conversation
Precision Marketing: Precision Targeting
Consumer Journey and Deployment
MAXIMA
46
Re-imagining Marketing AVRE-IMAGINING CUSTOMER DEVELOPMENT
Demand
Demand Capture
Capture Demand Fulfilment Demand Generation
Providing superior customer service through vertical task specialization across the three pillars
interlinked through modular IT capabilities
47DEMAND CAPTURE
Salesman Chatbots Advanced Analytics / AI Shikhar app
Enhance salesman Driving better and All inclusive retailer
productivity with chatbots sharper assortment engagement tool
Algorithmic User friendly Customer
Product Know your Smarter
Segmentation Interface Engagement
Discovery Current QOC recommendation
of Outlets
Answer Unlock Retailer Product
Outlet Queries Potential Self-service Information
Learn @
your speed Easy Policies Information Convenient
Understanding Transparency Tracking
behaviors
48DEMAND FULFILMENT
Demand Fulfilment
Depot Redistribution Stockist Outlet
• Project Shogun: Deliver with speed
to trade and ensure efficient
fulfilment
• Impact App : A delivery interface to
unlock benefits for retail stockist Eliminate RS Improved quality Leverage technology
delivery cost of delivery for automation
Project Shogun AV 49DEMAND GENERATION
Demand Generation
• Scaling up B2C (HumaraShop)
• Leverage technology to
improve shelf presence
50RE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
51GENERATING FUEL FOR GROWTH BY CONSTANT
REINVENTION
Savings as a % of End-to-end cost Leveraging Investing back into
Turnover focus Technology virtuous cycle of growth
1.7x
x
2014 2015 2016 2017
Powered by
52RE-IMAGINING HUL
Re-imagining our Re-imagining our Re-imagining magic Re-imagining our
structure portfolio in marketing trade channels
Re-imagining the Re-imagining fuel for Re-imagining culture
value chain growth of the organisation
53ENGRAINING NEW STANDARDS OF LEADERSHIP
54BRINGING AN ORGANIZATION WIDE CHANGE
Building an Owner’s Nurturing an Holistic Diversity and
mindset experimentation culture Wellbeing Inclusion
Distinctive Technology giving
Competitive Advantage
ESOP
Consumer Appropriate
Need/ Unmet Large Part
Problem of the Value
Chain
55FOCUSSED ON WELLBEING, DIVERSITY & INCLUSION
Physical, Mental, Emotional & Purposeful Embracing inclusion and diversity
Wellbeing in all forms
Leadership commitment to
gender balance; Gender
neutral policies
Embracing inclusion beyond
gender - hire the best PwD*
talent
Driving cultural
interventions to break
Adopting technology for
Wide ranging initiatives unwanted stereotypes
health improvement
56
*Persons with DisabilitiesWHILE WE RE-IMAGINE HUL, WHAT WE
WILL NOT CHANGE IS
OUR PURPOSE & VALUES
57LEGACY OF DOING WELL BY DOING GOOD
Founder’s Vision in the 19th
Our Purpose today
century
“I believe that nothing can be greater than a business, however small it may be, that is governed by
conscience; and that nothing can be meaner or more petty than a business, however large, governed
without honesty and without brotherhood.”
-William Hesketh Lever
58UNILEVER SUSTAINABLE LIVING PLAN
Health & Wellbeing Sustainable Sourcing Water Conservation Enhancing Livelihoods
80,000+ Shakti
100% entrepreneurs
TOMATOES are network
sourced from
sustainable
sources
1.7 million people
450 billion litres benefitted
>67 million people reached - of water potential
Lifebuoy Handwashing created
Programme 52% TEA is Over 420,000
sourced from people trained
83 billion litres of safe drinking estates certified
water provided by Pureit as sustainable
200,000 women
~1.1 million people impacted
enrolled
through Domex Toilet Academy
59THOUGHT LEADERSHIP ON PLASTICS
Our Commitment Progress Way Forward
• Factory and packaging
• All our plastics packaging wastage reduced by 54% & • Co-create with the
to be reusable, recyclable 33% respectively Government - National
or compostable by 2025
Framework for Extended
• >1800 tons of plastic Producers Responsibility
• 25% of our plastic usage to
laminates collected and (EPR) for plastics
come from recycled
safely disposed
sources by 2025
• Create a Model segregation
• ~23000 tons of plastic / collection / waste
• Reduce the weight of the
waste converted to energy movement value chain
packaging we use by one
third by 2020 in last 12 months
60IN SUMMARY
The external
context is fast Focussed on Leveraging Building
evolving and FMCG The new structure delivering consistent, technology to re- capabilities and
in India continues to (WIMI, CCBTs) has competitive, imagine our ways re-imagining our
be an immense made HUL more profitable and of working across culture to be
opportunity agile and resilient responsible growth the value chain future ready
Our purpose and values remain unchanged
61HUL IS RE-INVENTING ITSELF TO BE FUTURE READY!
62ForTHANK
more YOU
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