Hindustan Unilever Ltd’s home care division, responsible for popular brands like Surf Excel, Wheel, and Rin, is experiencing faster growth than the company’s beauty and foods and refreshments business. This growth can be attributed to the increasing demand for premium laundry detergents and utensil cleaners. Deepak Subramanian, the executive director of home care at the FMCG major, highlighted the division’s outperformance in the market and its continuous efforts to enhance competitiveness.
Impressive Growth and Contributions
Over the past seven years, the home care segment has achieved a Compound Annual Growth Rate (CAGR) of 10.1%, surpassing HUL’s overall CAGR of 8.5%. In the previous fiscal year, the home care segment contributed 36% to HUL’s standalone revenue, a significant increase from 32.3% in FY16. This amounted to ₹21,230 crore in total revenue.
Noteworthy Brand Achievements
While HUL’s overall sales grew by 16% in FY23, the home care division, led by the renowned Surf Excel brand, achieved an impressive growth rate of 28%. Surf Excel has already surpassed the milestone of being a $1 billion brand for HUL. Furthermore, home care liquids generated sales exceeding ₹3,000 crore in FY23. Other brands within the Home Care portfolio, including Wheel, Rin, Vim, and Comfort, have also achieved remarkable revenue milestones.
Premiumization as a Growth Driver
Deepak Subramanian emphasized that the growth of the home care segment in recent years can be attributed to the significant premiumization trend within the category. The company has successfully led this premiumization movement with its portfolio, capitalizing on the expanding market and enhancing its competitiveness. Subramanian highlighted the company’s focus on improving the “price per wash” and providing compelling offerings in detergents.
Unlocking the Market Potential
Subramanian acknowledged that while HUL’s home care business holds a global leadership position, per capita consumption of home care products in India remains relatively low compared to other countries. This presents a substantial growth opportunity for the company. In India, mass-market detergents like Wheel are still used by 60% of households, and the penetration of formats like liquids is less than 15%. Subramanian emphasized the significant headroom for growth in these areas.
Key Growth Drivers
Subramanian highlighted several key growth drivers for the home care segment. Firstly, as consumers become wealthier, the number of households with washing machines is expected to increase from 50-60 million to over 100-120 million in the coming years. This transition to washing machines often prompts consumers to revaluate their detergent choices, leading to increased adoption of washing liquids.
Additionally, the growing variety of fabrics and the modernization of homes with specialized surfaces such as granite tops, marble floors, and wooden floors create a demand for specialized cleaning products. Hindustan Unilever aims to cater to these evolving needs by providing tailored solutions.
Balancing Mass Market and Premiumization
Despite the focus on premiumization, Subramanian acknowledged the presence of a mass market in the Indian economic recovery, characterized by a K-shaped pattern. HUL is fortunate to possess a diverse portfolio that can cater to consumers across various contexts. Despite short-term demand pressures, HUL remains committed to driving growth across both mass and premium price points. The company understands that the search for value is everlasting, and by understanding consumer pain points and providing effective solutions, they can continue to drive premiumization even during a K-shaped recovery.
Conclusion
Hindustan Unilever’s home care division has witnessed remarkable growth, outpacing other divisions within the company. This growth has been fuelled by the increasing trend of premiumization in laundry detergents and utensil cleaners. With the company’s focus on improving the “price per wash” and providing compelling offerings, Hindustan Unilever has positioned itself as a leader in the home care market. Despite the K-shaped economic recovery, the company’s ability to understand consumer needs and craft valuable solutions has allowed them to successfully drive premiumization. Hindustan Unilever is well-positioned to capitalize on the significant growth opportunities in the Indian market while continuing to serve both mass and premium market segments.
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