Unilever’s Indian business shows resilience amid market challenges

Unilever (LON:)’s subsidiary, Hindustan Unilever (HUL), has reported a slight decrease in net profit for Q2, while also observing a 3.1% year-on-year revenue increase and a volume growth of 2% during the quarter. The company’s CFO, Graeme Pitkethly, has signaled potential deflation in pricing for its skin and fabric cleansing business in India due to fluctuating commodity prices and the emergence of local competition.

Despite the challenges posed by these factors, Unilever’s performance in India remains competitive, with positive price and volume. The company’s management noted a gradual recovery in the urban Indian market, although rural areas are still subdued.

Over the past eight to nine months, HUL has reduced product prices in three-fourths of its business — home care and personal care — in response to a correction in commodity prices. According to Rohit Jawa, CEO and MD of HUL, transitioning from high to low prices takes time and a gradual volume recovery is being observed.

The re-entry of smaller players into the market has increased media intensity and competition. Despite maintaining their overall market share, Jawa admitted that HUL lost some share at the mass end due to the price-quality equation and the increased number of local players.

According to an investor presentation by HUL in August 2023, regional players’ market value growth outpaced that of large brands in the tea and detergents category, gaining faster compared to last year.

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