The country’s largest consumer goods company, Hindustan Unilever (HUL), sees a virtuous cycle of growth kicking in for the sector in FY27 after a challenging FY26, marked by GST-led trade disruptions, volatile commodity costs and urban slowdown woes.
On Thursday, HUL’s CEO and managing director Priya Nair signalled that consumer sentiment and demand were finally improving in both urban and rural areas, with the company prioritising volume-led revenue growth in FY27, as GST-led price changes stabilise in the market. Margins are expected to be in the range of 22-23% in FY27, as the company chases “fewer, but bolder and bigger bets”, “doubles down on quick commerce”, which now contributes 3% to HUL’s overall sales and will also “continue to premiumise its portfolio” in line with market trends.
“We see a stronger FY27 than FY26 led by favourable macro-economic factors,” Nair said. “Overall food inflation remains low and income tax cuts as well as GST price cuts are beginning to flow into the sector. We are seeing an uptick in demand and consumer sentiment,” she said of the domestic FMCG market .
Nair’s optimism has been fuelled in part by the return of HUL to strong volume growth. It reported a 4% volume growth in the December quarter (Q3FY26) after seeing flat volume growth in Q2 due to GST-led trade disruptions. HUL had last reported a 4% volume growth in Q1. Q3 standalone net profit jumped 136% due to one-time gains and standalone revenue grew 4.4% during the quarter.
Volume vs. Value
“When we are talking of volume-led growth, it comes from increasing consumption. This can happen through addition of products via volume (sales) and through premiumisation. This is an ‘and’ and not an ‘or’ strategy as far as maintaining both a volume and premiumisation strategy goes,” she said.
Strategic Pivot
Globally, parent Unilever has been pushing HUL to focus its attention on premiumisation especially in beauty and wellbeing and focus on new-age channels such as quick commerce.
“India is becoming an omni-channel market and different channels are becoming significant across India. Quick commerce is doubling in India for us. So, we are designing dedicated systems, processes and sales teams for each of our channels, so that we serve consumers no matter from where they buy,” Nair said.
HUL has also announced a new “unified India strategy” aimed at simplifying its organisational structure, becoming more agile and speedy in its decision-making, empowering chief marketing officers now appointed for every division in the company and tapping into a unified R&D structure to create and rollout tailor-made products for the Indian market.