Rohit Jawa’s new job at HUL: Getting bigger and better amid stiff competition, market volatility

Much like Hindustan Unilever’s outgoing managing director & chief executive officer Sanjiv Mehta, the company’s incoming boss Rohit Jawa, 56, has a problem of plenty to deal with.

The country’s largest fast-moving consumer goods (FMCG) company will see Jawa, who is also the president of Unilever, South Asia, take over from Mehta as MD & CEO on June 27. Jawa, who was earlier chief of transformation at Unilever, has been 35 years with the company, working in multiple markets including India, China and the Philipines, growing from a management trainee to a general manager to a CEO.

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Regarded as a turnaround specialist, Jawa’s abilities to quickly seize market opportunities should hold him in good stead, say experts, at a time when getting bigger and better will be a challenge. Mehta took over in 2013, when HUL was under Rs 30,000 crore in size and had relatively fewer organised players and a stable market environment.

While turnover doubled and profit tripled in the last decade under 62-year-old Mehta’s tenure, the last three years has seen HUL battle Covid-19, a rural slowdown and inflation back-to-back. At the same time, the Rs 5-trillion domestic FMCG market has seen a significant rise in competitors from online to offline, direct-to-consumer and traditional businesses.

The Indian unit of the $63-billion British multinational company is the largest by volume and the second-largest by value at `58,154 crore (or $7.24 billion) for the London-headquartered firm. HUL contributes nearly 12% to Unilever’s topline, while the US market, the largest by value contributes nearly 22% to sales. China is the third-largest market by value.

Jawa is credited with turning around one of them, namely, China, where US major Proctor & Gamble is a key player. The Philippines is another example where Jawa took the unit there into Unilever’s top 10 markets. But will he be able to take India to the top position by value for Unilever? Some experts say he will, some others say that the road will be tougher now.

In the last one year, HUL has had to contend with deep-pocketed players such as Reliance Consumer Products, led by billionaire Mukesh Ambani’s daughter Isha Ambani, who are looking to become big fast. Over the last one year, for instance, Reliance Consumer Products has made a string of local acquisitions, stepped into almost every FMCG category and expressed its intent to emerge as a player of scale in the next few years.

On Wednesday, Reliance Consumer Products said it was expanding its indigenous brand ‘Independence’ to markets in the north including Punjab, Haryana, Delhi-NCR and Uttar Pradesh, among others from Gujarat, where it was initially launched earlier this calendar year.

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“With offerings such as atta, edible oil, rice, sugar, glucose biscuits and energy toffee, ‘Independence’ will offer packaged foods and other items of daily need,” a statement from the company said. In addition, the company will also collaborate with trade partners including manufacturers and kirana stores to empower them with business opportunities, it added.

As G Chokkalingam, founder and MD at Mumbai-based Equinomics Research, explains that market leaders such as HUL will have to find innovative ways to grow. He also says that HUL will have to scale up its inorganic ambitions and look at acquisitions even more aggressively if it wishes to stay ahead of the curve. In the last few years, HUL has acquired Ayurveda haircare brand Indulekha, the consumer healthcare portfolio of GSK including brands Horlicks, Boost and Maltova and a few D2C brands.

“Every decade brings with it a new set of priorities for CEOs and companies do transform themselves every ten years or so to deal with new market realities. But Covid-19 has upended the learning curve for chief executives today. 10 years’ worth of learnings has been crunched into three years and CEOs have to be ready from the word go in the post-pandemic world,” he says.

It hasn’t helped that the rural recovery, which market insights agency Nielsen said would help bring back volume growth into the domestic FMCG market in FY24, is playing out slowly with a likely El Nino effect expected to impact the monsoon season this year.

Parts of central, eastern and western India have not received rainfall so far in June with concerns mounting that it could impact sowing during the ongoing kharif season.

That would mean a potential impact on farm output and therefore incomes, which is something that companies such as HUL can ill-afford. The FMCG major derives 40% of its total sales from rural areas, which is ahead of the industry average of 33% of total sales from rural areas, say experts.

Most consumer companies are counting on a post-harvest consumption uptick, which could show up in the third quarter of FY24, if all goes well on the monsoon front, say analysts.

“Inflation is easing up,” says Sachin Bobade, vice-president, research at brokerage Dolat Capital. “If the monsoon is good, the harvest will be good and so will FMCG sales,”he adds.

Jawa will be keeping his fingers crossed.