Fast-Moving Consumer Goods (FMCG) major Hindustan Unilever Ltd (HUL) has witnessed growth in its premium product portfolio launched over the last 10 years. The premium products which contributed to 22 per cent of sales in FY 12 has grown to 33 per cent in FY’22.
The new business categories created in the last 10 years have revenue of more than ₹10,000 crore. The products include home care liquids, premium hair care, hand and body wash, premium skincare, premium color cosmetics, Matic detergents, ice cream (WiMi), green tea, spice tea, and spread and dressings.
“Notably, the ₹10,000 crore delta that HUL has created from its new businesses is larger than the sales of many consumer companies. In the last 12 months alone, the Premium Beauty Business Unit has grown 2x the market rate,” states a Motilal Oswal report.
Premium brands growth
The new business categories have contributed to 20 per cent of FY22 sales.
HUL Managing Director Sanjiv Mehta during the quarterly results pointed out an uptick in the sales of premium products of the company.
“Premium brands are growing faster than popular brands while popular brands are growing faster than mass products. Value packs have also seen growth,” Mehta had said.
“The digital demand capture was 0 per cent 10 years ago and it now stands at 25 per cent. This is significantly higher than any FMCG company in India,” states Motilal Oswal’s report.
The home care segment had a growth of 2.5x over FY12-22 with profitability growing at 7.3x over the same period. The volume contribution from mass laundry, premium laundry, and dish stood at 33 per cent, 52 per cent and 15 per cent in 2021 from 50 per cent, 31 per cent, and 11 per cent in 2010 respectively.
The shift indicated the focus on premiumization via market development. In the Food and Refreshment segment, a CAGR of 8.5 per cent is registered over FY12-22 and the segment margin has improved to 18.6 per cent from 11.4 per cent.