With aspiration levels rising, HUL’s premiumisation strategy gives its personal products portfolio a new sheen
WITH Fair & Lovely now a Rs 2,000 crore brand, four decades after its launch, Hindustan Unilever Ltd (HUL) has proved once again it’s possible not just to launch and nurture home-grown brands but also to rejuvenate them if they’re jaded.
Indeed, that’s the secret behind the success of the fast moving consumer goods (FMCG) major’s personal products portfolio which continues to contributely handsomely to HUL’s Rs 31,000 crore top line. Some smart premiumisation has helped keep it as profitable as ever; last year the portfolio’s share of Ebit to total Ebit was 47.2%, up from 46.4% in the previous year.
Samir Singh, executive director, HUL is clear the firm’s strategy has paid off and will stay the same with some tweaking here and there. “We will focus on driving the core brands harder where there is consistency in the proposition. We’re also focussed on the rural and the bottom end of the pyramid,” Singh adds.
The second plank of the strategy is, of course, premiumisation which has paid off handsomely for HUL in the last few years following the launch of brands like Dove. “We’re attempting to premiumise with products such as face wash, conditioners and, of course, also through the premium brands. So, the entire portfolio doesn’t go up, we’ll keep the core brands aspirational but, a significant part we keep moving up,” Singh explains.
What HUL has been able to do is to increase the aspiration on Fair & Lovely dramatically with a relaunch in 2013.
“We have challenged all the expensive creams on performance, we have brought this out into the open. We have innovated a lot more behind it. The skin lightening marketing is the biggest part of the skin care market and growing as fast as the rest of skin care,” Singh says. Almost all its peers have attempted to penetrate the market with some variant or other—P&G, Nivea, Emami, Garnier, and Dabur—but Fair & Lovely is still the market leader.
That’s because HUL is able to continuously innovate. Brand consultant Harish Bijoor attributes Fair & Lovely’s success to HUL’s ability to reposition the brand preposition, from the one that played on the fairness fixation to one that provides a complete skin care solution using branding terms like “radiance, glow or uniform skin” that connote fairness. “Earlier Fair & Lovely advertising was all about whiter skin that could better one’s prospects, whether getting a job or a marriage proposal. However, after realising there was a disconnect with consumers, a sensitive HUL reworked the brand making it relevant for today’s day and age,” says Bijoor. HUL relaunched the Axe range of deodorants about a year back and is working to pep up Pepsodent.
Relaunches and repositioning can be tricky given some products cater for both rural and urban markets. But perhaps it’s becoming easier since aspirations, as it were, continue to grow, not just in urban India but also in smaller towns.
“The immediate association, when it comes to personal products, especially the premium-end, is the urban-based catchment but in reality that association can be made as much with the rural market,” says Singh, who believes the difference between aspirations in cities and villages is narrowing; stores in a small town like Kanchipuram stock more or less the same product categories that are seen in big cities like Mumbai. “We are getting growth from what might have been unexpected areas,” he points out, adding that Bihar has the highest penetration for bar soaps among all Indian states.
The rural markets are not a new hunting ground for HUL: market watchers estimate that’s where close to half the company’s top line is earned. HUL has, for long, crafted its portfolio so that it caters for consumers in the hinterland as much as it does for customers elsewhere. As Singh says, it is in the intrinsic nature of the portfolio. To its credit, the company has managed to reach beyond where others have feared to tread; as the company points out even where there’s no television coverage. Among its recent initiatives the radio channel has been much talked out.
The channel that HUL proposes to use extensively is the digital one. Singh says he wants HUL’ digital initiative to become the Wikipedia of beauty in India leveraging its brands, knowledge and reach. The initiative is housed in a portal called BeBeautiful and Singh claims it is pulling in 40 million views on YouTube and becoming popular on Facebook too. “So we can advise the consumer on make-up or any problems she may have. We are also working on brands individually. So, there is an initiative with Tresemme on YouTube,” the executive director says. With consumers spending more time on the Internet, whether to browse or buy, HUL can’t ignore the space. The firm is selling through e-commerce retailers, which could be Flipkart and Amazon or some of the beauty retailers. “We make joint plans with them so that consumers are able to actually see the new stuff that we’re doing and also get the details of the brands,” Singh points out.
As digital influences multiply and the demand for newer beauty products grows, HUL believes its strategy of staying focussed on core products while continuing to premiumise is more relevant than ever. As Singh points out, in several categories, penetrations are low, so there is opportunity to grow. Access to salons and beauty parlours is increasing, and these are the conduit for trends. In face wash for example, penetration would be a fifth or sixth of what it would be in south-east Asia.