With March quarter net profit and revenue hit by subdued consumer demand and rural recovery still to show legs, FMCG bellwether Hindustan Unilever is following the strategy of premiumisation, focus on urban consumers and investing in a few growth categories to boost its performance.

In Q4 of FY24, the company’s net profit fell 1.6 per cent to ₹2,558 crore and revenue was flat at ₹15,441 crore. The underlying volume growth was 2 per cent and with price cuts as the company passed on the benefit of softened raw material costs to consumers.

While the gross margin improved by 350 basis points, the company’s spend on advertising and promotion increased 200 bps in the quarter to nearly 11 per cent of total expenses. The EBITDA margin declined 30 bps to 23.4 per cent due to 60 bps impact from the termination of GSK Consumer Healthcare consignment selling arrangement and investment in long-term capabilities.

Most of the segments showed low single-digit growth. For instance, home care sales rose a mere 1 per cent on mid single-digit volume growth. The company has also taken price cuts in this category.

One of its largest segments, beauty and personal care saw flat volume growth with sales shrinking 2 per cent. In this segment, however, premium portfolios grew better than the mass portfolio. For instance, premium skin care saw a double-digit growth.

The food segment saw 4 per cent sales growth mainly due to pricing as the volumes were flat. With commodity prices more or less stable, price growth is expected to be negative in the near to medium term.

For the full year, the company reported a 1.5 per cent rise in net profit to ₹10,277 crore on total income that rose 2.6 per cent to ₹62,707 crore.


The company has a four-pronged strategy which primarily hinges on premiumisation as that is where the demand is at the moment.

It has identified six high growth bets in which it plans to invest, Chief Financial Officer Ritesh Tiwari said in a media briefing. These categories include sun care, facial cleansing, and serums. It has already built up an over ₹2,000 crore portfolio across these products and plans to scale them further.

These products will be primarily geared towards urban consumers but there are certain categories such as sun care which are also used by rural consumers. “We are investing in high growth products, we are going where the money is, investing in the channels of the future,” said Managing Director and Chief Executive Officer Rohit Jawa.

About a third of the company’s portfolio is premium.

Rural vs urban demand

While rural demand has shown improvement over the last several quarters, it is still not accretive to overall FMCG demand. With the forecast for a good monsoon this year, the company is expecting the pace of rural recovery to be accelerated.

Both Tiwari and Jawa pointed out that while urban demand is still outpacing rural demand, the gap between the two has been narrowing over the quarters. On an overall basis with respect to consumer demand in the economy, Jawa said that a gradual recovery was being seen sequentially and “market is slowly returning to normal.”

In response to a specific question as to whether current elevated levels of inflation were a source of concern, Tiwari said that the company had the experience of weathering periods of inflation, deflation, and stagnation and had devised strategies to ride them out. It had built up a robust supply chain that allowed it to react with speed and agility to changing circumstances, including taking price actions when required.