CHAPTER 1

INTRODUCTION
Fast-moving consumer goods (FMCG), also called consumer packaged goods (CPG) is the
largest group of consumer products. It includes durable and non-durable goods such as
food & drinks, personal health, and home care products. FMCG products are required
every day in human life. All sections of society consume these products frequently and
spend a considerable portion of their income on these goods. The FMCG product group is
an important contributor to the economy. The products included in the FMCG group have
a quick turnover. The global FMCG market includes a wide range of durable and non-
durable consumer products, which are frequently purchased. These include soap, toiletries,
cosmetics, shaving products, tooth cleaning products, detergents, and the non-durable
consumer products such as glassware, paper products, and others. The food & beverages
segment was the leading segment that generated highest revenue in the overall market.
The global FMCG market size was valued at $11,490.9 billion in 2021 and is projected to
reach $18,939.4 billion by 2031, registering a CAGR of 5.1% from 2022 to 2031.Increase
in global population is directly proportional to the rise in consumption of the consumer
goods. This is one of the major factors responsible to drive the global FMCG market
growth.

The Fast-moving consumer goods (FMCG) sector is the 4th largest sector of the Indian
economy. Since the sector encompasses a diverse range of products, different companies
dominate the market in various sub-sectors. However, some of the top FMCG companies
in India are- Hindustan Unilever, Dabur and Colgate etc. In the twenty-first century,
everything is available online, and clients are aware of the benefits of digitalization. In
large metropolitan regions, the majority of consumer purchases are conducted online or
through e-commerce, and this trend is quickly extending to non-metropolitan areas as
well. Shopping online via apps is becoming a current trend in the FMCG business as a
consequence of the massive increase in internet access across metros and non-metros.
Over the next 10 years, consumers will continue to acquire power via the use of new
communication technologies. In 2015, India gained 260 million new internet users, and by
2025, the country is expected to have 900 million internet users. It is expected that by
2020, that around 75-90 million customers would have purchased FMCG goods online
and that 55-60 million consumers will be digitally touched by FMCG, with 12-20 million

1
doing so. The generation of wireless features and device integration, such as wallet
phones, are expected to stimulate mobile commerce, supporting the rise of the FMCG
industry.

INDUSTRY PROFILE

FMCG industry is evolving and dynamic, there are

some trends which are taking place in this industry
and shaping the FMCG industry in India include
the growing demand for natural and organic
products, the rise of e-commerce and digital
channels, and the increasing focus on sustainability
and ethical business practices. Additionally, the COVID-19 pandemic has also had a
significant impact on the industry, with changes in consumer behaviour and preferences.

1. Health and Wellness

Seemingly healthier low-sodium, reduced fat, and sugar-free products have been available
for decades. However, other options that used to be found only in speciality health food
stores have made their way into “normal” supermarkets as consumers want food and
beverages that they believe will do less harm or actively improve their health, day-to-day
performance, and general well-being. Products such as plant-based protein milk
alternatives (like soy or almond drinks), lab-grown “cultured meat,” and alcohol-free
“mocktails” are gaining wider acceptance and availability. Allergen-free products are also
becoming more popular amongst those who don’t have allergies. For example, whereas in
the past products such as gluten-free baked goods and beers appealed almost exclusively
to those suffering from celiac disease, consumers who don’t suffer from a gluten allergy
are gradually adopting these due to the perceived health benefits of a gluten-free diet.

2. Sustainability

Consumers are becoming more conscious of the negative impact of FMCG production and
its byproducts. Products labelled as “organic” and “local” have broadening appeal as does
the adoption of more plant-based foods. Consumers who still choose meat, dairy, poultry,
fish, etc. can also choose products that are “antibiotic-free,” “grass-fed,” “free range,” etc.

2
And it’s not just the product itself, but how the product is packaged that will impact
consumer choices as more and more consumers opt for plastic-free solutions. Messaging
around sustainable improvements will help consumers make choices that are ethical ones
that positively impact animal welfare, sustainability, and the environment as well as their
individual health.

3. Personalization

FMCG makers have become aware that consumers – especially Millennial and those from
Generation Z – are interested in experiences more than actual products. Therefore,
industry players are looking to create experiences around their products and encourage
sharing among consumers by investing in digital capabilities to enable more personalized
communication via social media and community management. FMCG makers are
launching more products that grab the attention of consumers, such as Coca-Cola cans
with names on them, or snack with more extreme flavors, such as hot and spicy Doritos
Blaze. These products encourage consumers to share their experiences online and generate
conversations with their peers to create better return on investments in marketing, not to
mention a treasure trove of data to further accelerate and inform marketing efforts.

4. Digitalization

Technology is a trend that has been around for a while and will stick around for a while
whilst constantly transforming and evolving. Nowadays, it’s more important than ever for
consumers to be at the cutting edge of this technology as it evolves. From VR, AI, and
AR, there are many avenues FMCG brands can take to stay ahead of the game.
Smartphones are now an extension of reality, and so brands need to find new ways to
reach customers, enhance their experience, encourage engagement and offer up exciting
products and ideas that align with their values. The use of data can help a brand to
understand how their customers interact with them at present, and how they can utilise
consumer insights to work in their favour.

5. Convenience

As consumers and their families live busier lifestyles, they are demanding more
convenience, especially when it comes to getting meals. There has been a proliferation of

3
services specializing in restaurant delivery, like Uber Eats, Grubhub, and Deliveroo, and
others, such as Blue Apron in the USA and Les Commis in France, that distribute meal
kits with recipes and ingredients to consumers’ front doors’. Supermarkets are also upping
their game by offering a large selection of ready-to-go meal options, from pre-cut fruit-
vegetable-nut packs to three-course dinners. FMCG makers are responding to the desire
for convenience in different ways. For example, some are improving on the frozen “TV
dinners” and microwavable dishes of yesteryear by launching a wider variety of easy-to-
prepare meals that are fresher and better-tasting than their predecessors.

CHALLENGES FACED BY FMCG INDUSTRY

Given that the FMCG industry controls the majority of home products, its market has huge
revenues and is very competitive. The market is continuously working to advance and
succeed at the highest level. Currently, the market is facing several challenges, and here
are five of the most significant ones:

 Marketing

While the objectives of marketing have not changed, the strategies for achieving them are
continually changing to meet consumer demand. FMCG organisations should comprehend
the journeys of each of their clients to discover fresh approaches and chances to interact
with them. Additionally, it is essential to build and market these chosen channels.
Creating, rewarding, and distinguishing many marketing streams may be a crucial
step.Keep in mind that is not required to participate in every channel that is offered.
Instead, focus on exploiting the strengths to generate additional revenue.

 Environment and Sustainability

The FMCG industry has contributed to its fair share of controversy by engaging in
environmentally harmful activities. Today’s youth are seeking businesses that support
sustainability. According to a Forbes article, FMCG businesses should make R&D
investments to help reduce nearly a third of the world’s greenhouse gas emissions. One of
the many ways to make sure that businesses are adhering to the environment and fostering
sustainable practices is by adapting to sustainable ways, such as reducing the use of
plastic, consciously eliminating waste, adopting alternate packaging methods, sustainable

4
sourcing, and plant alternatives. Industries must maintain sustainability and the
environment at the forefront of their strategy. Some brands have taken steps to lessen the
quantity of degradation even if FMCG firms struggle to address the environmental
responsibilities of their production, packaging, and waste management. The recycling and
reuse of thousands of kilos of garbage have also begun. Brands must be socially and
ecologically conscious when using supply chain management techniques.

 Fragmented Supply Chains

Supply chains must remain stable for FMCG and retail companies to be sustainable. Most
businesses have been stymied by difficulties in this area of business, which has prevented
them from reaching their intended objectives. FMCG companies must make the necessary
supply chain infrastructure investments to effortlessly satisfy customer expectations.
Customers from all walks of life are guaranteed a quick and secure shopping experience
thanks to a nimble supply chain and usage of cloud-based supply chain management
system that guarantees an offer a clientele that is continually expanding. With multiple
small suppliers involved, it can be difficult to coordinate and manage the supply chain
effectively. This can lead to a lack of visibility, delays, and inefficiencies. Additionally,
each supplier may have their own unique requirements and processes, which can further
complicate matters. Fragmentation can also make it difficult to ensure quality control and
maintain consistent product standards. Companies must find ways to overcome these
challenges, such as implementing technology solutions to improve visibility and
communication, or developing strong relationships with suppliers to ensure coordination
and consistency throughout the supply chain.

 Ageing

FMCG has always been an industry that relies on enduring brand loyalty. But the key
thing is to figure out who their target market is. The FMCG business will have a difficult
time striking the appropriate balance to satisfy and remain relevant with a wide variety of
age groups, in contrast to other industries that have catered to a certain set of consumers.
Senior folks have always served as the backbone of the industry and are frequently the
brand loyalty pioneers. Their demands have changed in response to the epidemic, moving
toward items that are straightforward, dependable, and risk-free. FMCG companies may
simplify their goods to meet these objectives by making minor modifications to the

5
ingredients they use, lowering the chemicals they use, and increasing the natural
components they use in both food and non-food items. The current generation should also
be taken into consideration at the same time.

 Multi-Channel Engagement

Today’s shoppers like using the internet to do their product research and place their orders.
These solutions offer unparalleled safety and convenience. To stay relevant and maintain a
sizable market share, FMCG firms must adapt to these market developments. Voice
assistants and podcasts offer a very effective advertising platform. Firms might use this
medium to direct the research procedures of their clients. Additionally, there is chances of
creating a strong brand memory. With a strong IT infrastructure, FMCG firms can
successfully adapt to the tremendous move toward digital platforms. However, improved
ERP connection will be crucial in increasing sales.

Thus FMCG sector has to put forth more effort to adapt its tactics to shifting consumer
expectations. To survive and grow in the post-Covid age, the FMCG sector, particularly a
customer-focused, long-established pioneer, must adopt new strategies. Digitalization and
shifting strategy in response to client wants are the core components of any significant
solutions to these problems.

FACTORS INFLUENCING CHALLENGES IN FMCG SECTOR

For any challenges which are being faced/facing in FMCG industry are being influenced
by several factors and those factors affect the operations and profitability of particular
company in that industry. Some of the factors are briefly mentioned below

 Intense competition

The FMCG industry is highly competitive, with numerous players competing for market
share. The competition in the industry is driven by various factors such as low entry
barriers, high profitability, and changing consumer preferences. This competition makes it
challenging for FMCG companies to maintain their market share or increase their market
share. FMCG companies must constantly innovate, evolve their products, and develop
effective marketing strategies to remain relevant and competitive.

6
 Evolving consumer preferences

Consumer preferences and buying habits are continuously evolving, and this presents a
significant challenge for FMCG companies. Consumers are becoming more health-
conscious, eco-friendly, and sustainability-oriented, and they are demanding products that
cater to these preferences. Additionally, consumers are increasingly becoming digitally
savvy, and they expect to be able to purchase products through various channels such as e-
commerce, social media platforms, and mobile applications. FMCG companies must adapt
to these changing consumer preferences and buying habits to remain relevant in the
market.

 Supply chain disruptions

The FMCG industry relies heavily on efficient and effective supply chains to ensure that
products are delivered to consumers on time and in good condition. However, supply
chain disruptions such as natural disasters, trade disputes, and geopolitical tensions can
impact the industry's ability to deliver products to consumers. Additionally, supply chain
disruptions can also increase the cost of production and impact profitability. FMCG
companies must develop effective supply chain management strategies to mitigate the
risks associated with supply chain disruptions.

 Fluctuating prices of raw materials

The prices of raw materials and commodities used in FMCG products are often volatile,
and this can impact the profitability of FMCG companies. Raw materials such as oil,
sugar, and wheat can experience significant price fluctuations due to factors such as
weather patterns, supply and demand imbalances, and geopolitical tensions. These price
fluctuations can impact the cost of production and pricing of FMCG products, which can
impact demand and profitability. FMCG companies must develop effective pricing
strategies and engage in strategic sourcing to mitigate the risks associated with fluctuating
prices of raw materials.

 Regulatory and legal challenges

7
 The FMCG industry is subject to a wide range of regulations and laws, and changes in
these regulations can create significant challenges for FMCG companies. Regulations
related to labeling, advertising, and product safety are constantly evolving, and FMCG
companies must comply with these regulations to avoid legal challenges and reputational
damage. Additionally, FMCG companies may also face challenges related to intellectual
property, antitrust laws, and environmental regulations. These regulatory and legal
challenges can impact the industry's ability to innovate and remain competitive. FMCG
companies must develop effective legal and regulatory compliance strategies to mitigate
the risks associated with regulatory and legal challenges.

A RELEVANT SOLUTION FOR THE PARTICULAR CHALLENGES

However, not all of the strategies chosen can provide a competitive advantage. As a result,
executives at FMCG companies must be able to make accurate decisions in order to identify
the appropriate strategies that can provide solutions. Hence, here are some things industries
can do to overcome various challenges in the FMCG industry:

 Digitization

For traditional FMCG players, digitization is one of the most disruptive trends. Each
component of the value chain, from R&D to distribution, will be profoundly impacted. AI,
data analytics, IoT, robotics, machine learning, RPA, and additive manufacturing are cutting-
edge technologies that will transform FMCG research departments, factories, warehouses,
and stores while improving customer experience and engagement. These technologies will
automate redundant and low-value-added tasks and optimize internal processes. They will
improve client intimacy by leveraging data to provide perfect customized solutions to billions
of customers.

 Use of recyclable packaging

The FMCG sector has come under increasing pressure to address the environmental impact of
its activities, from production to distribution and disposal. However, companies in the sector
can take several steps to overcome this challenge and become more sustainable. Mainly,
reducing carbon emissions through energy-efficient technologies and using renewable energy
sources can significantly reduce their impact on the environment. And also by adopting

8
sustainable packaging materials, such as biodegradable or recyclable materials, can also be
beneficial. Finally, educating consumers on the importance of sustainability and encouraging
them to adopt sustainable practices can promote sustainable development.

 Mass personalization

In the industry, there will be a significant structural shift from mass production to mass
personalization. For decades, players in the personal care and food and beverage industries
have served their customers with a mass-market mindset. Nonetheless, a significant portion
of their product portfolio is related to intimate and personal factors such as skin and hair type.
The pursuit of personalization is reshaping industry norms. Personalization is posing
significant challenges for traditional FMCG players. The implications for sourcing, supply
chain management, real-time production, packaging, distribution, marketing, and sales are
critical.

 Superior quality control

Product quality affects both cost and revenue in the short and long term. Through a thorough
examination of the production line and quality processes related to product development,
Business Intelligence assists in determining the root causes of poor quality. BI systems can
aid in the detection of patterns and the prediction of failure, as well as the identification of
components for repair and maintenance at low-impact times, thereby improving the quality of
finished product. FMCG companies can ensure the quality of their products by being able to
dive deep into the possible causes of failure.

 Agile business models

Because of the growth of the omnichannel experience, the once-standard delivery model has
now fragmented into multiple delivery models. Customers are technologically savvy, and
their needs are constantly changing. As a result, FMCG companies are exploring and testing
newer, more innovative delivery models. Using analytics, FMCG companies can identify the
most efficient and successful business models based on customer profile data and success
factors. Having a highly flexible dynamic delivery model can help to keep sales costs low.

9
GLOBAL, NATIONAL AND REGIONAL PERSPECTIVES OF SECTORAL
GROWTH

The FMCG (Fast Moving Consumer Goods) or Consumer Packed Goods (CPG) industry
represents one of the largest industries worldwide. As per a study, the FMCG industry is well
positioned to register a growth of $310. 5 bn between 2022 and 2026, primarily driven by the
rising consumption of ready-to-eat food products. In fact, by 2025, the total consumer
spending on food is expected to touch around 8.85 trillion U.S. dollars. Additionally,
increasing awareness among the consumers and expansion of organized retailing will also be
catapulting the demand gradient over the next few years.To put things into perspective, one
of the major factors steering the growth of the global FMCG market is the increase in
population. In fact, the rapid surge in population is directly proportional to the increase in
consumption of consumer goods. Similarly, frequent launches of new products, growing
awareness amongst consumers about various FMCG products, rise in disposable incomes of
the middle-class population, easier access to consumer goods, a marked change in lifestyle of
the consumers in developed and developing countries, effective brand advertising and
attractive price points, strong logistics and distribution channels of such companies, growth in
online commerce and R&D spend by old and new entrants in product innovation and go-to-
market strategies; are all collectively contributing to the FMCG market growth.

Region-wise, in the middle-east, Egypt recorded the highest total consumer spending on food
and non-alcoholic beverages. Before COVID-19 particularly, the country had hugely
benefited from rising consumer demands, especially for consumer-packaged goods. In the
MENA region, there are more than 60 free economic zones that extend business incentives,
including tax exemptions and modern infrastructure for such businesses.However, the FMCG
sector has not been alien to its own share of challenges. Even before the pandemic struck, the
middle-east encountered a decline in oil prices, geopolitical volatility, and accelerated
evolution of digital technology. Apart from that, consumers have also become less loyal to
specific brands, and their needs, wants, demands, and aspirations have also undergone sea
changes. Consumers today are seeking convenience, healthier options, and organic locally
sourced produce. In fact, this push for convenience had led to the stellar rise of eCommerce.
During Covid-19 induced lockdowns, restrictions on movement and social contact, online
and mobile shopping went through the roof, especially in categories such as grocery, food,
and beverages, other essentials. Now, that the incidences of Covid have reduced from earlier

10
levels and vaccinations have happened, these trends are still likely to stay forever.In 2021, the
global economy witnessed inflation which impacted the growth in consumer spending and
increase in prices of products that shoppers had to bear. In terms of volume sales in FMCG
and shopping frequency of consumers, most markets such as East Africa and North America
witnessed a dip, except Egypt.

Globally, one category, however, showed tremendous potential, which is the Chocolate
Confectionery market. Its market size, according to reports, is projected to touch $265.9
billion by 2028, rising at a market growth of 6.7% CAGR between 2022 and 2028. Within
the segment, manufacturers of nuts stands to gain, as nuts complement chocolate exquisitely,
delivering a variety of nutritional and sensory benefits. It is important to mention here that,
there has been a tremendous rise in the demand for premium or specialty chocolates,
especially in developed markets with a growing trend expected in the coming years. Today,
consumer wants information about the origins of ingredients used in chocolate
confectioneries.

As per the United Nations World Economic Situation and Prospects (WESP) 2022, after
snowballing by 5.5 per cent in 2021, the global output is anticipated to grow by only 4.0 per
cent in 2022 and 3.5 per cent in 2023. However, since a recession is not currently underway,
as experts opine, market recovery is foreseen to pick up space soon.

FMCG SECTOR IN INDIA

Fast-moving consumer goods (FMCG) sector is India’s fourth-largest sector and has been
expanding at a healthy rate over the years as a result of rising disposable income, a rising
youth population, and rising brand awareness among consumers. With household and
personal care accounting for 50% of FMCG sales in India, the industry is an important
contributor to India’s GDP. India is a country that no FMCG player can afford to ignore due
to its middle class population which is larger than the total population of USA. The Indian
FMCG market continues to rise as more people start to move up the economic ladder and the
benefits of economic progress become accessible to the general public. More crucially, with a
median age of just 27, India's population is becoming more consumerist due to rising
ambitions. This has been further aided by government initiatives to increase financial
inclusion and establish social safety nets. Growing awareness, easier access and changing
lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a

11
revenue share of around 55%) is the largest contributor to the overall revenue generated by
the FMCG sector in India. However, in the last few years, the FMCG market has grown at a
faster pace in rural India compared to urban India. Semi-urban and rural segments are
growing at a rapid pace and FMCG products account for 50% of the total rural spending.

MARKET SIZE

The retail market in India is estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion
in 2017, with modern trade expected to grow at 20-25% per annum, which is likely to boost
revenue of FMCG companies. The FMCG market in India is expected to increase at a CAGR
of 14.9% to reach US$ 220 billion by 2025, from US$ 110 billion in 2020. The Indian FMCG
industry grew by 16% in CY21 a 9- year high, despite nationwide lockdowns, supported by
consumption-led growth and value expansion from higher product prices, particularly for
staples. The Indian processed food market is projected to expand to US$ 470 billion by 2025,
up from US$ 263 billion in 2019-20.

FMCG giants such as Johnson & Johnson, Himalaya, Hindustan Unilever, ITC, Lakmé and
other companies (that have dominated the Indian market for decades) are now competing
with D2C-focused start-ups such as Mamaearth, The Moms Co., Bey Bee, Azah, Nua and
Pee Safe. Market giants such as Revlon and Lotus took 20 years to reach the Rs. 100 crore
(US$ 13.4 million) revenue mark, while new-age D2C brands such as Mamaearth and Sugar
took four and eight years, respectively, to achieve that milestone. Advertising volumes on
television recorded healthy growth in the July-September quarter, registering 461 million
seconds of advertising, which is the highest in 2021. FMCG continued to maintain its
leadership position with 29% growth in ad volumes against the same period in 2019. Even the
e-commerce sector showed a healthy 26% jump over 2020.

ROLE OF FMCG SECTOR IN SUPPORTING AND GROWTH OF ALLIED

INDUSTRIES

FMCG sector plays a vital role in supporting and driving the growth of allied industries.
Through supply chain management, packaging, support for the agricultural sector,
collaboration with retailers, and contributions to the broader economy, the FMCG sector
creates jobs, stimulates economic growth, and helps to improve the lives of millions of people
around the world.

12
 Agriculture: According to a report by the World Economic Forum, the FMCG sector
is the largest purchaser of agricultural raw materials in the world, accounting for 40%
of all agricultural output. This partnership between the FMCG sector and agriculture
has the potential to reduce poverty and promote sustainable development in rural
areas. For example, a study by the International Finance Corporation found that by
working with smallholder farmers in developing countries, FMCG companies can
increase their yields by up to 300%, which leads to higher incomes and improved
food security for local communities.
 Packaging: The FMCG sector is a significant user of packaging materials, and there is
growing concern about the environmental impact of this consumption. However, the
sector is taking steps to address this issue. According to a report by the Ellen
MacArthur Foundation, 70% of the world's leading FMCG companies have
committed to using 100% reusable, recyclable, or compostable packaging by 2025.
This commitment is driving innovation in the packaging industry, with new materials
and designs being developed to meet the demand for sustainable packaging.
 Logistics and Transportation: The FMCG sector is a major customer of logistics and
transportation services, and this partnership is driving innovation in the sector. For
example, a report by the Boston Consulting Group found that FMCG companies are
investing heavily in logistics technology, such as warehouse automation and
predictive analytics, to improve efficiency and reduce costs. This investment is
expected to drive significant growth in the logistics industry over the coming years.
 Retail: The FMCG sector is closely tied to the retail industry, and the success of both
sectors is dependent on their partnership. According to a report by the International
Council of Shopping Centers, FMCG companies account for approximately 50% of
retail sales in the United States. This close partnership between the FMCG and retail
sectors is driving growth in both industries, with new retail formats and marketing
strategies being developed to meet the changing needs of consumers.
 Advertising and Marketing: The FMCG sector is highly competitive, and companies
invest heavily in advertising and marketing to build brand recognition and loyalty.
According to a report by Nielsen, FMCG companies spend an average of 20% of their
revenue on advertising and promotion. This investment is driving growth in the
advertising and marketing industry, which is expected to grow at a CAGR of 6.8%
between 2020 and 2027, according to a report by Allied Market Research.

13
  Employment: The FMCG sector is a major employer, and this partnership is driving
job growth around the world. According to a report by the International Labour
Organization, the FMCG sector employs over 6 million people in India alone, making
it one of the largest employers in the country. The sector is also a significant
employer. in many other countries, particularly in developing regions where job
opportunities are scarce

CONTRIBUTION TOWARDS GDP

Employing more than 10 million people,

contributing to nearly 10% of the country’s GDP,
the Fast-Moving Consumer Goods (FMCG)
sector in India plays a quintessential role in the
Indian economy. It is the fourth largest sector in
the economy, with 80% of the sales coming from
Food & Beverages, Household and Personal Care
products.Although the sector’s landscape is
mostly unorganized and almost 80% of the sales still come from the local kirana stores.
However, during the pandemic the sector evolved, and a major transformation was seen with
the industry trying to become more organized and going digital. Even the rural markets of the
country are becoming an important part of this digital revolution, with deeper internet
penetration lessen the digital transformation and going the ‘e’ (e-commerce) way, have
become an important imperative for all the players of the sector.

According to NielsenIQ’s FMCG Snapshot for Q2 2022, the FMCG industry has grown by
10.9% in the quarter ending June 2022, versus 6% in the previous quarter. Also, the
consumption recovery and promising macro factors indicate a double-digit growth for FMCG
in India, in 2022. The festive season is on and consumers are more open to shed their wallets,
giving that additional push to the industry.India is the 4th largest retail market in the world
and is gradually progressing towards a 360-degree shift in value proposition, consumer
behaviour and whole supply-distribution ecosystem. With a CAGR of 14.7%, the Indian
FMCG industry has been anticipated to grow to a market size of almost $220bn by 2025.

Currently, India’s FMCG sector is categorized into the demographics of urban and rural
segments. The urban areas have always led the growth of FMCG revenues in India. However,

14
semi-urban and rural consumption has recently witnessed a significant rise such that the rural
FMCG market is estimated to grow up to 220 billion USD by 2025. Furthermore, with 12.2%
of the total population living in villages, rural demands for consumer goods cannot be
neglected. In fact, some of the top FMCG companies, like Dabur, Hindustan Unilever, etc.,
generate about 35 to 45% of their domestic revenue from Indian rural markets.

MAJOR GLOBAL PLAYERS

The FMCG industry is dominated by several

players that have established themselves over
many years.

1. Hindustan Unilever Limited (HUL) is a

consumer goods company
headquartered in Mumbai, India. It is a
subsidiary of Unilever, a British company. Its products include food, beverages,
detergents, personal care products, water purifiers, and other fast-moving consumer
goods.HUL was founded in 1931 as Hindustan Vanaspati Manufacturing Co. and was
renamed Hindustan Lever Limited after a merger of the separate groups in 1956. The
company was renamed Hindustan Unilever Limited in June 2007.In 2019, Hindustan
Unilever’s portfolio comprised 35 product brands across 20 categories. The company
employs 18,000 people and had a turnover of `34,619 crores in the financial year
2017-18.In December 2018, HUL announced the acquisition of GlaxoSmithKline’s
Indian consumer business for $3.8 billion, at a ratio of 1:4.39. However, the
integration of GSK’s 3,800 employees remained uncertain as HUL stated that the deal
did not include a retention clause. In April 2020, HUL completed its merger with
GlaxoSmithKline Consumer Healthcare (GSKCH India) after completing all legal
procedures.

2. Amul is an Indian dairy cooperative based in Anand in the Indian state of Gujarat. It
was established in 1946 and is a cooperative brand owned by a cooperative society,
Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which is now
jointly owned by 3.6 million (3.6 million) milk producers in Gujarat, and the apex
body of 13 District Milk Unions spread across 13,000 villages in Gujarat. Amul has
kick-started India’s White Revolution, which has made the country the world’s largest

15
 producer of milk and dairy products.Kaira Union introduced the brand “Amul” to
market its range of products. The word ‘Amul’ is derived from the Sanskrit word
‘Amulya’ which means ‘priceless’ or precious (a name suggested by the then
Principal of Agriculture College, Dr Maganbhai Patel) and was established in 1946
through the efforts of Tribhuvanda’s Kishibhai Patel. The establishment of Amul
made an important contribution to the white revolution in India.

3. Marico Limited is an Indian multinational consumer goods company that provides

consumer products and services in the health, beauty and wellness sectors.
Headquartered in Mumbai, Maharashtra, India, Marico has operations in over 25
countries across Asia and Africa. With its portfolio of brands like Parachute, Saffola,
Hair & Care, Parachute Advanced, Nihar Naturals, Mediker and many more, the
company touches the lives of one in three Indians.
The company owns brands in the categories of hair care, skincare, edible oils, health
food, men’s care and textile care. In the financial year 2019-20, the company
generated a turnover of ₹7,315 crores. Marico has 8 factories in India located in
Pondicherry, Perundurai, Kanjikode, Jalgaon, Paldhi, Dehradun, Baddi and Paonta
Sahib.

4. The Procter & Gamble Company (P&G) is an American multinational consumer

products company headquartered in Cincinnati, Ohio, founded in 1837 by William
Procter and James Gamble. The company specializes in a wide range of personal
health, personal care and hygiene products. These products are divided into several
segments, including beauty, personal care, health care, textile and household care, and
baby, feminine and family care. Before the sale of Pringles to Kellogg’s, the product
portfolio also included food, snacks, and beverages. P&G is based in Ohio.In 2014,
P&G reported sales of $83.1 billion. On August 1, 2014, P&G announced that it
would streamline the company, eliminating and selling about 100 brands from its
product portfolio to focus on the remaining 65 brands that generated 95% of the
company’s profits. A.G. Lafley, the company’s chairman and CEO until Oct. 31,
2015, said the future P&G will be “a much simpler, much less complex company with
leading brands that are easier to manage and operate.”

16
 5. ITC Limited is an Indian company headquartered in Kolkata, West Bengal. ITC
operates in various industries such as cigarettes, FMCG, hotels, packaging,
paperboard and speciality paper, and agribusiness. The company has a total of 13
business units across 5 segments. ITC also exports its products to 90 countries. Its
products are available in 6 million retail outlets.Established in 1910 as Imperial
Tobacco Company of India Limited, the company was renamed India Tobacco
Company Limited in 1970 and later as I.T.C. Limited in 1974. Today, the company
has been renamed ITC Limited, though “ITC” is no longer an acronym. The company
turned 100 in 2010 and had annual revenue of $10.74 billion and a market
capitalization of $35 billion in 2019-20. It employs over 36,500 people in more than
60 locations across India and is part of the Forbes 2000 list. Within a relatively short
period, ITC has built 25 parent brands, many of which are market leaders in their
segments. This dynamic portfolio of brands today represents annual consumer
spending of over H19,700 million. ITC’s world-class Indian brand’s anchors
competitive and inclusive value chains that create, capture and sustain the greater
value within the country.

GOVERNMENT INITIATIVES1

As per the Union Budget 2022-23. Some of the major initiatives taken by the Government to
promote the FMCG sector in India are as follows:

 Rs. 1,725 crore (US$ 222.19 million) has been allocated to the Department of
Consumer Affairs
 Rs. 215,960 crore (US$ 27.82 billion) has been allocated to the Department of Food
and Public Distribution.
 In FY 2021-22, the government approved Production Linked Incentive Scheme for
Food Processing Industry (PLISFPI) with an outlay of Rs. 10,900 crore (US$ 1.4
billion) to help Indian brands of food products in the international markets.
 The government’s production-linked incentive (PLI) scheme gives companies a major
opportunity to boost exports with an outlay of US$ 1.42 billion.
 In November 2021, Flipkart signed an MoU with the Ministry of Rural Development
of the Government of India (MoRD) for their ambitious Deendayal Antyodaya
Yojana – National Rural Livelihood Mission (DAY-NRLM) programme to empower
1
IBEF Report NOV-2022

17
 local businesses and self-help groups (SHGs) by bringing them into the e-commerce
fold.
 Companies are counting on recent budget announcements like direct transfer of 2.37
lakh crore (US$ 30.93 billion) in minimum support payment (MSP) to wheat and
paddy farmers and the integration of 150,000 post offices into the core banking
system to expand their reach in rural India.
 The Government of India has approved 100% FDI in the cash and carry segment and
in single-brand retail along with 51% FDI in multi-brand retail.
 The Government has drafted a new Consumer Protection Bill with special emphasis
on setting up an extensive mechanism to ensure simple, speedy, accessible, affordable
and timely delivery of justice to consumers.
 The Goods and Services Tax (GST) is beneficial for the FMCG industry as many of
the FMCG products such as soap, toothpaste and hair oil now come under the 18% tax
bracket against the previous rate of 23-24%. Also, GST on food products and hygiene
products has been reduced to 0-5% and 12-18% respectively.
 GST is expected to transform logistics in the FMCG sector into a modern and
efficient model as all major corporations are remodelling their operations into larger
logistics and warehousing.
 The Government has allowed 100% Foreign Direct Investment (FDI) in food
processing and single-brand retail and 51% in multi-brand retail. This would bolster
employment, supply chain and high visibility for FMCG brands.
 According to a joint report released by industry body FICCI and property consultancy
firm Anarock, Indian e-commerce market is expected to reach US$ 120 billion by
2026 from US$ 38 billion in 2021
 In October 2022, Dabur acquired 51% stake in Badshah Masala Private Limited for
Rs. 587.52 crore, (US$ 71.81 million) less proportionate debt as on the closing date,
with the Badshah enterprise being valued at Rs 1,152 crore (US$ 140.81 million).
 In July 2022, Chief Minister of Uttar Pradesh Mr. Yogi Adityanath, inaugurated
HUL’s ultra-modern factory in Sumerpur with a total investment of Rs. 700 crore
(US$ 88.07 million) planned by 2025.2

PRODUCTION DISTRIBUTION AND CONSUMPTION PATTERN OF

FMCG INDUSTRY
2
IBEF Report NOV-2022

18
The FMCG (Fast-Moving Consumer Goods) industry encompasses a wide range of products
that are consumed frequently and purchased regularly, such as food and beverages, personal
care items, and household goods. Production, distribution, and consumption are crucial
factors that impact the FMCG industry's growth and performance.

 Production Pattern:The production pattern of the FMCG industry is driven by

changing consumer preferences and demand. FMCG companies must be agile and
responsive to changing market dynamics to remain competitive. Production processes
in the FMCG industry are often complex and require a combination of manual and
automated processes. Manufacturers must ensure high-quality standards, fast
turnaround times, and efficient supply chain management to meet demand.The FMCG
industry in India has seen significant growth in recent years, driven by changing
consumer preferences and increasing demand. The industry's production is expected
to increase further in the coming years, with the rise of e-commerce platforms and
increased consumer awareness.
 Distribution Pattern:The distribution pattern of the FMCG industry is critical for
reaching consumers in diverse geographic regions. A robust distribution network is
essential to ensure that products reach retailers and customers quickly and efficiently.
In India, FMCG products are distributed through a variety of channels, including
traditional trade (mom-and-pop stores), modern trade (hypermarkets, supermarkets,
and convenience stores), and e-commerce platforms. FMCG companies need to have
a diverse and efficient distribution network to ensure that their products reach
consumers across the country. FMCG industry in India has a vast and diverse
distribution network that caters to consumers across the country. Traditional trade
remains the dominant distribution channel, accounting for over 80% of sales.
However, the rise of modern trade and e-commerce platforms has led to increased
competition and pressure on traditional trade channels.
 Consumption Pattern:The consumption pattern of the FMCG industry is influenced by
a range of factors, such as changing consumer behavior, income levels, and
urbanization. In India, consumers are increasingly shifting towards premium and
value-added products, driven by changing lifestyles and increasing disposable
incomes. The rise of e-commerce platforms has also impacted the consumption
pattern of the FMCG industry, making it easier for consumers to access a wide range
of products., the FMCG industry in India is expected to continue its growth trajectory,

19
 driven by rising disposable incomes, changing consumer behavior, and increased
urbanization. The industry's consumption is expected to increase significantly in the
coming years, particularly in the premium and value-added segments.

DOMESTIC AND GLOBAL COMPETITIVENESS FOR FMCG INDUSTRY

The FMCG industry is highly competitive, both domestically and globally. Domestic and
global competitiveness are critical factors that impact the industry's growth and performance.
Here are some key factors that contribute to domestic and global competitiveness in the
FMCG industry:

 Product Innovation: The FMCG industry is highly competitive, and companies must
continually innovate to maintain their market position. This means developing new
products and improving existing ones to meet changing consumer needs and
preferences. Companies must invest in research and development (R&D) to identify
market trends, consumer preferences, and emerging technologies. They must also be
able to quickly adapt to changes in the market and consumer behavior.
 Branding and Marketing: Strong branding and effective marketing strategies are
essential for FMCG companies to build brand recognition and loyalty among
domestic consumers. Companies must invest in advertising and promotional activities
to reach their target audience and differentiate themselves from competitors. They
must also ensure that their branding is consistent across all channels and that their
messaging resonates with their target market.: FMCG companies must conduct
extensive market research and localization efforts to understand the unique needs and
preferences of consumers in different regions. This includes adapting product
formulations, packaging, and branding to suit local markets.
 Pricing Strategy: FMCG companies must price their products competitively to remain
competitive in the domestic market. This requires understanding the pricing strategies
of competitors and the willingness of consumers to pay for their products. Companies
must also consider factors such as production costs, distribution costs, and margins
when setting their prices.
 Distribution Channels: FMCG companies must ensure that their products are
accessible to domestic consumers through various distribution channels. This includes
both traditional retail channels such as supermarkets, convenience stores, and
pharmacies, as well as e-commerce platforms. Companies must invest in distribution

20
 infrastructure and logistics to ensure that their products reach consumers efficiently
and cost-effectively. The FMCG industry relies heavily on efficient supply chain
management to ensure that products are produced and delivered on time and at the
right cost. Companies must manage relationships with suppliers, optimize
transportation and logistics, and minimize inventory costs to remain competitive.
 Regulatory Compliance: FMCG companies must comply with local regulations and
standards in the countries they operate in. This includes complying with labeling,
packaging, and advertising regulations, as well as food safety and product quality
standards.
 Brand Recognition: Building brand recognition is essential for FMCG companies to
succeed in the global market. Companies must invest in advertising and promotional
activities to reach their target audience and differentiate themselves from competitors.
They must also ensure that their branding is consistent across all channels and that
their messaging resonates with consumers in different regions.
 Partnerships and Collaborations: FMCG companies can leverage partnerships and
collaborations with local companies and distributors to gain access to new markets
and distribution channels. This requires building strong relationships with local
partners and ensuring that there is alignment on goals and strategies.

FACTORS DRIVING THE GROWTH OF FMCG INDUSTRY

Indian FMCG industry recorded a 37 percent value

based growth in April-June 2021; it was the time
when the quarter was hit by the second wave of the
pandemic. E-commerce grew in the double digit in
the April-June quarter and traditional trade channels
like grocers and chemists remained buoyant in the
quarter, according to FMCG snapshot released by data analytics firm, Nielsen.

The Goods and Services Tax (GST) has proved to be beneficial for the FMCG Industry. It
can be said as things of daily use like hair oil, soaps, toothpaste etc. now fall under the 18
percent tax bracket. Earlier, there was a tax of 24 percent over these products. After the
introduction of GST, experts are expecting the transformation of logistics in the FMCG sector
into a modern and efficient model as all major corporations are remodeling their operations
into larger logistics and warehousing. Also, the products are sold quickly at relatively low

21
cost.The Indian Government has drafted a new Consumer Protection Bill and emphasized on
setting up an extensive mechanism to ensure accessible, speedy, simple, on-time and
affordable delivery to consumers. Because of higher minimum support price (MSP),
disbursements through the Mahatma Gandhi National Rural Employment Guarantee Act
(NREGA) programme and waiving loan to farmers by the government, the purchasing power
of rural masses have been increased which ultimately boosts the FMCG consumption in
India.

 Investment and Development

The Government of India has allowed 100 percent Foreign Direct Investment (FDI) in food
processing and single brand retail and 51 percent in multi brand retail.This has strengthened
the employment in the country, supply chain, consumer spending and encouraged the
launches of more products. The sector has witnessed a good FDI inflow of US$ 18.03 billion
from April 2000 to December 2020. In January this year, Del Monte has launched a special 1
litre pouch pack of olive oil in India and its price has been kept at Rs. 250 (US$ 3.42), hence
making olive oil affordable to consumers.

 The e-Commerce Boom

The revolution of technology not just took place in urban India but rural India as well. There
has been a noticeable shift in the demand of e-commerce due to its wider reach across the
country, be it rural or urban areas. It has the greater consumer convenience as with the help of
apps and websites, consumers can easily select and purchase the products of their choice and
products will be delivered to their homes with the home delivery option.

 Value expansion

The retail market in rural India and rise in rural consumption is also responsible for driving
the FMCG market. Its contribution is 36 percent in the overall FMCG spending. The
processed food market of India is projected to reach US$ 470 billion by the year 2025, from
the US$ 263 billion in 2020-21. The Indian FMCG industry grew with the support of
consumption led growth and value expansion from higher product prices, particularly for
staples.It witnessed growth in double digits and reached 10.6 percent due to various
government initiatives such as hygiene categories, high agricultural production, reverse

22
migration and packaged staples. There is a contribution of different categories in FMCG
sector such as Household & Personal Care, tobacco, Food & Beverages and others.

 Role of Technology

Agility is the pervasive sentiment in the FMCG sector and technology can provide this agility
to the FMCG companies. With the help of technology, FMCG sector is further planning to
improve operational efficiency, identify new opportunities and manage multifaceted supply
chain requirements. FMCG relies heavily on the market research as it helps the sector to
identify consumer behaviour and field sales professionals. With the use of advanced field
service management software, enterprises leverage the power of cloud, business intelligence
and data analysis to increase the performance of the sales operation.

 The Way Forward

The rural market of India is expected to reach up to US$ 220 billion by 2025 from US$ 23.6
billion in 2018. The rural consumption of India has increased which has led to combination of
increasing incomes and higher aspiration level of masses. Another important factor that will
drive the demand of FMCG in India is the growing percentage of young population in the
country.It is a well known fact that India has the largest number of youth in the world and in
today’s fast paced lifestyle, they prefer going with packaged food and products rather than
preparing it on their own. This category contributes the largest amount of sales to the FMCG
sector. With these developments, the FMCG sector looks all set to keep traversing the path of
growth.

CHAPTER 2: COMPANY PROFILE

HISTORY

23
Hindustan Unilever (HUL) is India's largest fast moving consumer goods company, with
leadership in Home & Personal Care Products and Foods & Beverages. HUL's brands, spread
across 20 distinct consumer categories, touch the lives of two out of three Indians. In the
summer of 1888, visitors to the Kolkata harbour noticed crates full of Sunlight soap bars,
embossed with the words 'Made in England by Lever Brothers'. With it, began an era of
marketing branded Fast Moving Consumer Goods (FMCG).Soon after followed Lifebuoy in
1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and
the famous Dalda brand came to the market in 1937.In 1931, Unilever set up its first Indian
subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India
Limited (1933) and United Traders Limited (1935). These three companies merged to form
HUL in November 1956; HUL offered 10% of its equity to the Indian public, being the first
among the foreign subsidiaries to do so. Unilever now holds 52.10% equity in the company.
The rest of the shareholding is distributed among about 360,675 individual shareholders and
financial institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company
had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was
formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition.
The erstwhile Lipton's links with India were forged in 1898. Unilever acquired Lipton in
1972, and in 1977 Lipton Tea (India) Limited was incorporated.Pond's (India) Limited had
been present in India since 1947. It joined the Unilever fold through an international
acquisition of Chesebrough Pond's USA in 1986.

Since the very early years, HUL has vigorously responded to the stimulus of economic
growth. The growth process has been accompanied by judicious diversification, always in
line with Indian opinions and aspirations.The 1990s also witnessed a string of crucial
mergers, acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile
Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. In
1993, it acquired the Kissan business from the UB Group and the Dollops Icecream business
from Cadbury India.As a measure of backward integration, Tea Estates and Doom Dooma,
two plantation companies of Unilever, were merged with Brooke Bond. Then in July 1993,
Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited
(BBLIL), enabling greater focus and ensuring synergy in the traditional Beverages business.
1994 witnessed BBLIL launching the Wall's range of Frozen Desserts. By the end of the year,

24
the company entered into a strategic alliance with the Kwality Icecream Group families and
in 1995 the Milkfood 100% Icecream marketing and distribution rights too were acquired.

Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal
restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL in 1998.
The two companies had significant overlaps in Personal Products, Speciality Chemicals and
Exports businesses, besides a common distribution system since 1993 for Personal Products.
The two also had a common management pool and a technology base. The amalgamation was
done to ensure for the Group, benefits from scale economies both in domestic and export
markets and enable it to fund investments required for aggressively building new categories.

In January 2000, in a historic step, the government decided to award 74 per cent equity in
Modern Foods to HUL, thereby beginning the divestment of government equity in public
sector undertakings (PSU) to private sector partners. HUL's entry into Bread is a strategic
extension of the company's wheat business. In 2002, HUL acquired the government's
remaining stake in Modern Foods.In 2003, HUL acquired the Cooked Shrimp and Pasteurised
Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine
Products exports.HUL's brands – like Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely,
Pond's, Sunsilk, Clinic, Pepsodent, Close–up, Lakme, Brooke Bond, Kissan, Knorr–
Annapurna, Kwality Wall's – are household names across the country and span many
categories – soaps, detergents, personal products, tea, coffee, branded staples, ice cream and
culinary products. They are manufactured over 37 factories across India. The operations
involve over 2,000 suppliers and associates. HUL's distribution network, comprising about
2,500 redistribution stockists, covering 6.3 million retail outlets reaching the entire urban
population, and about 250 million rural consumers.

HUL has traditionally been a company, which incorporates latest technology in all its
operations. The Hindustan Unilever Research Centre (HURC) was set up in 1958, and now
has facilities in Mumbai and Bangalore. HURC and the Global Technology Centres in India
have over 200 highly qualified scientists and technologists, many with post–doctoral
experience acquired in the US and Europe.HUL is also running a rural health programme –
Lifebuoy Swasthya Chetana. The programme endeavours to induce adoption of hygienic
practices among rural Indians and aims to bring down the incidence of diarrhoea. It has
already touched 120 million people in approximately 50, 676 villages across India. The
vision is to make a billion Indians feel safe and secure.

25
FMCG major Hindustan Unilever (HUL) has received its board’s nod for divestment of
43.31% stake in Hindustan Field Services (HFS) to Smollan Group 30 June 27, 2010. HFS is
a joint venture (JV) company between HUL and Smollan Holdings. It was incorporated for
building capabilities for 'in–store' execution in Modern Trade and operates as a dedicated
venture with processes, capability and culture of execution. Smollan Group currently holds
49% stake in HFS.In 2012 HUL entered into an agreement with Unilever for manufacturing,
marketing and distributing the Brylcreem brand in India.

VISSION, MISSION, OBJECTIVES

Hindustan Unilever Limited, also known as

HUL, is one of India's largest consumer goods
companies with a rich history spanning over
eight decades. The company's vision, mission,
and objectives have been critical in guiding the
organization towards its success, making ita
household name in the country.

Vision: HUL's vision statement reflects the company's aspirations and long-term goals. The
company aims to be the best fast-moving consumer goods (FMCG) company in India by
providing products and services that improve the quality of people's lives. HUL recognizes
that consumers' needs are diverse, and to meet these needs, the company strives to offer a
wide range of products that cater to all age groups and social classes.

Mission: HUL's mission statement defines its primary purpose and outlines how the company
intends to achieve its vision. The mission is to earn the love and trust of consumers by
consistently delivering products and services of the highest quality that meet their needs and
enhance their well-being. The company understands that to achieve this mission, it must
continuously innovate and improve its products, ensuring that they are accessible and
affordable to all its consumers.

Objectives: HUL's objectives are specific, measurable, and achievable targets that help the
company realize its vision and mission. Here are some of the company's key objectives:

26
  Maintain a leading position in the FMCG market in India: HUL aims to maintain its
position as the market leader in the FMCG industry by continuously improving its
products and expanding its presence across the country. The company understands
that consumer preferences and market dynamics are constantly evolving, and it must
keep pace with these changes to stay ahead of the competition.
 Expand the company's footprint in India and grow market share in new categories:
HUL is continually looking for growth opportunities and expanding its product
portfolio in existing and new categories. The company's objective is to cater to the
diverse needs of its consumers and provide them with innovative and high-quality
products. HUL is committed to investing in research and development to create new
and exciting products that will drive growth and profitability.
 Prioritize sustainability and responsible business practices: HUL understands that
sustainability and responsible business practices are essential for long-term success.
The company's objective is to reduce its environmental footprint and promote
sustainable practices across its value chain. HUL aims to achieve this by reducing its
carbon emissions, conserving water, and promoting sustainable sourcing of raw
materials.
 Provide a positive and empowering workplace culture: HUL recognizes that its
employees are its greatest asset and is committed to providing them with a positive
and empowering workplace culture. The company's objective is to attract and retain
the best talent in the industry by offering a challenging and fulfilling work
environment, providing opportunities for career development, and promoting diversity
and inclusivity.
 Deliver sustainable and profitable growth for shareholders: HUL's ultimate objective
is to deliver sustainable and profitable growth for its shareholders. The company is
committed to creating long-term value for its shareholders by continuously improving
its financial performance, maximizing operational efficiency, and investing in growth
opportunities.

MAJOR MILESTONES OF HUL3

Year Events

1933
Application made for setting up soap factory next to the Vanaspati factory at Sewri;
3
https://www.hul.co.in/our-company/hul-history/

27
 Lever Brothers India Limited incorporated on October 17.
Soap manufacture begins at Sewri factory in October; North West Soap Company's
1934 Garden Reach Factory, Kolkata rented and expanded to produce Lever brands
1935 United Traders incorporated on May 11 to market Personal Products.
1937 Mr. Prakash Tandon, one of the first Indian covenanted managers, joins HVM.
Garden Reach Factory purchased outright; concentration on building up Dalda Vanaspati
1939 as a brand.
Agencies in Mumbai, Chennai, Kolkata and Karachi taken over; company acquires own
1941 sales force
Unilever takes firm decision to 'train Indians to take over junior and senior management
1942 positions instead of Europeans'
1943 Personal Products manufacture begins in India at Garden Reach Factory. –
Reorganisation of the three companies with common management but separate
1944 marketing operations
Mr. Prakash Tandon becomes first Indian Director. Shamnagar, Tiruchy, and Ghaziabad
1951 Vanaspati factories bought
1955 65% of managers are Indians.
Three companies merge to form Hindustan Unilever Limited, with 10% Indian equity
1956 participation.
1957 Unilever Special Committee approves research activity by Hindustan Unilever
Mr. Prakash Tandon takes over as the first Indian Chairman; 191 of the 205 managers
1961 are Indians.
1962 Formal Exports Department starts.
1963 Head Office building at Backbay Reclamation, Mumbai, opened
Lever's baby food, more new foods introduced; Nickel catalyst production begins; Indian
shareholding increases to 15%. Statutory price control on Vanaspati; Taj Mahal tea
1966 launched.
1967 Hindustan Unilever Research Centre, opens in Mumbai
Mr. V. G. Rajadhyaksha takes over as Chairman from Mr. Prakash Tandon; Fine
1968 Chemicals Unit commissioned at Andheri; informal price control on soap begins.
Mr. V. G. Rajadhyaksha presents plan for diversification into chemicals to Unilever
1971 Special Committee – plan approved; Clinic shampoo launched
1973 Mr. T. Thomas takes over as Chairman from Mr. V. G. Rajadhyaksha

28
 Pilot plant for industrial chemicals at Taloja; informal price control on soaps withdrawn;
1974 Liril marketed.
Ten–year modernisation plan for soaps and detergent plants; Jammu project work begins;
statutory price control on Vanaspati and baby foods withdrawn; Close–up
1975 toothpaste launched
Construction work of Haldia chemicals complex begins; Taloja chemicals unit begins
1976 functioning.

1977 Jammu synthetic Detergents plant inaugurated; Indian shareholding increases to 18.57%.
Dr. A. S. Ganguly takes over as Chairman from Mr. T. Thomas; Unilever shareholding
1980 in the company comes down to 51%.
1982 Government allows 51% Unilever shareholding.
1984 Foods, Animal Feeds businesses transferred to Lipton
Agri–products unit at Hyderabad starts functioning – first range of hybrid seeds comes
1986 out; Khamgaon Soaps unit and Yavatmal Personal Products unit start production.
1990 Mr. S. M. Datta takes over as Chairman from Dr. A. S. Ganguly.
1992 HUL recognized by Government of India as Star Trading House in Exports.
HUL's largest competitor, Tata Oil Mills Company (TOMCO), merges with the company
with effect from April 1, 1993, the biggest such in Indian industry till that time. Merger
ultimately accomplished in December 1994; Launch of Vim bar; Kissan acquired from
1993 the UB Group.
HUL forms Unilever Nepal Limited, HUL and US–based Kimberley–Clark Corporation
form 50:50 joint venture – Kimberley–Clark Lever Ltd. – to market Huggies diapers and
Kotex feminine care products. Factory set up at Pune in 1995; HUL acquires Kwality
1994 and Milkfood 100% brandnames and distribution assets. HUL introduces Wall's.
HUL and Indian cosmetics major, Lakme Ltd., form 50:50 joint venture – Lakme Lever
Ltd.; HUL enters branded staples business with salt; HUL recognised as Super Star
1995 Trading House.
Mr. K. B. Dadiseth takes over as Chairman from Mr. S. M. Datta; Merger of Group
company, Brooke Bond Lipton India Limited, with HUL, with effect from January 1;
1996 HUL introduces branded atta; Surf Excel launched
Unilever sets up International Research Laboratory in Bangalore; new Regional
1997 Innovation Centres also come up.

29
 Group company, Pond's India Ltd., merges with HUL with effect from January 1, 1998.
1998 HUL acquires Lakme brand, factories and Lakme Ltd.'s 50% equity in Lakme Lever Ltd.
Mr. M. S. Banga takes over as Chairman from Mr. K. B. Dadiseth, who joins the
Unilever Board; HUL acquires 74% stake in Modern Food Industries Ltd., the first
2000 public sector company to be disinvested by the Government of India.
HUL enters Ayurvedic health & beauty centre category with the Ayush range and Ayush
2002 Therapy Centres.
2006 Brookefields food operations moved to Mumbai
Company name formally changed to Hindustan Unilever Limited after receiving the
approval of share holders during the 74th AGM on 18 May 2007 Sales of Brooke Bond
2007 and Surf Excel each cross the Rs 1,000 crore mark
2008 HUL completes 75 years on 17th October 2008
HUL decided to license 'Lakme' and 'Lever Ayush', brands to its subsidiary, Lakme
2009 Lever Private Limited, for the Beauty and Wellness services business
Ø HUL and Star Bazaar, of Trent Hypermarket Limited, the retail arm of Tata Group,
launched a unique consumer initiative titled ‘India’s Favorites’ to promote the cause of
education of underprivileged children.HUL and Bharti Retail’s ‘easyday Market’ and
‘easyday’ stores, launched a joint initiative to promote plastic recycling among
2011 consumers in NCR.
In March, 2012 HUL’s state of the art Learning Centre was inaugurated at the Hindustan
Unilever campus at Andheri, Mumbai. In April, 2012, the Customer Insight &
Innovation Centre (CiiC) was inaugurated at the Hindustan Unilever campus at Andheri,
2012 Mumbai
HUL completes 80 years of corporate existence in India. HUL launches ‘Prabhat’
(Dawn) - a Unilever Sustainable Living Plan (USLP) linked program to engage with and
contribute to the development of local communities around our manufacturing sites. In
2013 October 2013, Sanjiv Mehta took over as the CEO and Managing Director of HUL.
The ‘Winning in Many Indias’ operating framework, piloted in 2013, launched
nationally. Sales offices expanded from four to seven with launch of offices in Lucknow,
Indore and Bangalore in addition to the existing sales offices in Delhi, Kolkata, Mumbai
2014 and Chennai

HUL signed an agreement with Mosons Group for acquisition of its flagship brand

2015 ‘Indulekha’. HUL announced signing of an agreement for the sale and transfer of its

30
 bread and bakery business under the brand “Modern” to Nimman Foods Private Limited.
Sales of six HUL brands namely Surf excel, Brooke Bond, Wheel, Lifebuoy, Rin and
2016 Fair & Lovely cross the rupee 2000 crore mark. Surf excel crosses the 3000 crore mark
A new state-of-the-art manufacturing facility was commissioned in Doom Dooma
2017 Industrial Estate, Assam on 11th March 2017.
HUL signs an agreement with Vijaykant Dairy and Food Products Limited (VDFPL) and
its group company to acquire its ice cream and frozen desserts business consisting of its
2018 flagship brand ‘Adityaa Milk’ and front end distribution network across geographies
HUL announced acquisition of VWash, the market leader in female intimate hygiene
category to enter the currently underpenetrated and rapidly growing market segment.
Merger of GSK Consumer Healthcare with Hindustan Unilever Limited. Iconic health
food drink brands – Horlicks and Boost enter the foods & refreshment portfolio of HUL,
2020 making it the largest F&R business in India.
HUL's turnover crossed the INR 50,000 Crore mark for FY 2021 – 2022 In July 2022,
Unilever India Limited's new Home Care factory and an automated distribution centre
were inaugurated in Sumerpur, Uttar Pradesh. The factory is a zero-carbon factory and
2022 Unilever South Asia's first gender-balanced factory.

ACHIEVEMENTS OF HUL4

 Hindustan Unilever Limited (HUL) has emerged as the No. 1 Employer of Choice
across all sectors for the 2014 graduating batch of B–School students
 Awarded top Indian company in the 'FMCG' sector for the third consecutive year at
Dun & Bradstreet–Rolta Corporate Awards, 2009
 HUL ranked fourth in the ‘Top Companies for Leaders, 2009' (Asia Pacific region)
and 10th place in the global rankings in a survey carried out by Hewitt Associates
 Awarded Customer and Brand Loyalty Award by Business India & Business Standard
in 2009
 Awarded for Best Corporate Social Responsibility Practice at the Social & Corporate
Governance Awards 08–09 by BSE, Nasscom Foundation and Times Foundation.

4
https://www.hul.co.in/our-company/hul-history/

31
 Awarded in the Category 'FMCG Manufacturing Supply Chain Excellence' at the
Third Express, Logistics & Supply Chain Awards by APL Logistics, Indiatimes,
Mindscape, Business India Group in 2009
 The company’s Orai unit received the Gold Excellence award and the Khalilabad unit
received the Silver Excellence award in the environment category by Greentech
Foundation in 2009
 HUL's Goa factory won a Gold Trophy at the Greentech Awards in 2009 the
manufacturing sector category for their outstanding work in Safety Management
 Project Shakti won the Silver Trophy at the EMPI–Indian Express Indian Innovation
Awards, 2009
 Kwality Wall's Swirl's awarded 'The Franchisor of the year' for the Ice–cream parlour
category by Franchise India in 2009.
 HUL was felicitated for receiving the highest number of patents in the year 2009 at
Annual Intellectual Property Awards 2010. The award was instituted by
Confederation of Indian Industry (CII) in association with Department of Industrial
Policy & Promotion (DIIP) and Intellectual Property India (IPI) in New Delhi.Six
HUL brands (Lux, Lifebuoy, Clinic Plus, Pond's, Fair & Lovely and Pepsodent)
featured in the top 10 and eight in the top 20. All together there are 17 HUL brands
among the ‘100 most trusted brands’ in the 2010 survey.
 Received CNBC AWAAZ Consumer Awards in six categories for 2010 – Green
company of the year, Value for money brand of the year, Ad effectiveness award,
Marketer of the year award across all categories, Most preferred personal care and
home care company in FMCG category (for the third consecutive year).
 HUL received the Award for Excellence in HR in 2010 from Confederation of Indian
Industry (CII). This is a rigorous fact–based assessment which is conducted by a team
of external assessors. HUL has won this award for the third consecutive year.
 Five of HUL's leading brands – Lux, Dove, Pears, Clinic Plus and Sunsilk – won the
Reader's Digest Trusted Brand 2008 Awards.
 Four HUL brands featured in the top 10 list of the Economic Times Brand Equity's
Most Trusted Brands 2008 survey
 HUL was awarded the Bombay Chamber Civic Award 2007 in the category of
Sustainable Environmental Initiatives.
 HUL was selected as the top Indian company in the FMCG sector for the Dun &
Bradstreet – American Express Corporate Awards 2007.

32
  HUL is also one of the country's largest exporters; it has been recognized as a Golden
Super Star Trading House by the Government of India.

PRODUCTS AND SERVICE PROFILE

With nearly 90 years of heritage in India, Hindustan Unilever Limited (HUL) is India’s
largest fast-moving consumer goods company. On any given day, nine out of ten Indian
households use one or more of our brands, giving us a unique opportunity to build a brighter
future. Company is known for our great brands, the positive social impact company creates
and our belief in doing business the right way. HUL works to create a better future every day
and helps people feel good, look good and get more out of life with brands and services that
are good for them and the planet.

With 50+ brands spanning 15 distinct categories such as fabric solutions, home and hygiene,
life essentials, skin cleansing, skin care, hair care, colour cosmetics, oral care, deodorants,
tea, coffee, ice cream & frozen desserts, foods and health food drinks, the company is a part
of the everyday life of millions of consumers across India. Its portfolio includes leading
household and personal care. HUL is a subsidiary of Unilever, one of the world’s leading
suppliers of Food, Home Care, Personal Care and Refreshment products with sales in over
190 countries. And some of the products are-

 Personal Care: HUL is a leading player in the personal care category, offering a wide
range of products, including skin care, hair care, oral care, and deodorants. Some of
the popular brands under the personal care category are Dove, Lux, Lifebuoy,
Pepsodent, Clinic Plus, and Axe.
 Home Care: HUL is also a dominant player in the home care category, offering a wide
range of products, including laundry detergents, household cleaners, and air
fresheners. Some of the popular brands under the home care category are Surf Excel,
Rin, Vim, Domex, and Comfort.
 Foods and Beverages: HUL has a presence in the foods and beverages category,
offering a wide range of products, including tea, coffee, ice cream, and packaged
foods. Some of the popular brands under the foods and beverages category are Brooke
Bond, Lipton, Bru, Kwality Wall's, and Knorr.

33
  Water: HUL is also present in the water category, offering a range of packaged
drinking water and water purifiers under the brand name Pureit.
 Customer Care Support: HUL has a dedicated customer care support team that is
available round the clock to address customer queries and complaints. Customers can
reach out to the team via phone, email, or social media and expect a prompt and
satisfactory resolution to their issues.
 Home Delivery: HUL offers home delivery services for its products, making it
convenient for customers to get their favorite HUL products delivered to their
doorstep. The company's online shopping platform, HULstore, allows customers to
place orders online and get them delivered to their preferred location.
 Loyalty Programs: HUL offers various loyalty programs, such as the "Wheel Active
Challenge" and "Lipton Challenge," aimed at rewarding loyal customers and
encouraging them to purchase more products.
 Consumer Education: HUL also offers consumer education programs, aimed at
creating awareness about the proper usage of its products and their benefits. The
company conducts various campaigns and workshops to educate consumers on the
importance of hygiene, nutrition, and sustainable living.

KEY COMPETITOR PROFILE AND ANALYSIS

1. Procter & Gamble (P&G): P&G is a leading competitor of HUL in the Indian FMCG
market. In 2021, P&G's net sales in India amounted to approximately USD 1.8 billion,
a growth of 16% compared to the previous year. P&G's fabric care segment, which
includes brands such as Ariel and Tide, is one of its strongest categories in India, with
a market share of around 25%. The company also has a strong presence in the hair
care and grooming segments with brands such as Gillette and Head & Shoulders.
2. Nestle: Nestle is a Swiss multinational food and beverage company that competes
with HUL in the Indian FMCG market. In 2020, Nestle India's net sales amounted to
approximately USD 1.9 billion, a growth of 10.1% compared to the previous year.
Nestle India's key categories include milk and nutrition, beverages, and prepared
dishes and cooking aids. Nestle's Maggi noodles, which were launched in India in
1983, is one of the most popular instant noodle brands in the country.
3. Colgate-Palmolive: Colgate-Palmolive is a global consumer goods company that
competes with HUL in the oral care category in India. In 2020, Colgate-Palmolive's

34
 net sales in India amounted to approximately USD 876 million. Colgate-Palmolive's
toothpaste brands, such as Colgate Dental Cream and Colgate Active Salt, compete
with HUL's Pepsodent and Close-Up. The company also has a strong presence in the
toothbrush and mouthwash segments.
4. Dabur: Dabur is an Indian consumer goods company that competes with HUL in the
personal care category. In 2020, Dabur's consolidated revenue amounted to
approximately USD 1.3 billion. Dabur's key categories include hair care, oral care,
skin care, and health supplements. The company's hair care brand, Vatika, is a major
competitor of HUL's Dove and Clinic Plus.
5. ITC: ITC is an Indian conglomerate that competes with HUL in the personal care and
home care categories. In 2020, ITC's FMCG segment revenue amounted to
approximately USD 4.4 billion. ITC's key categories include personal care, home
care, and packaged foods. The company's personal care brand, Fiama Di Wills,
competes with HUL's Lux and Lifebuoy, while its home care brand, Nimyle,
competes with HUL's Domex.

HUL faces stiff competition from both multinational and domestic players in the Indian
FMCG market. Despite intense competition, HUL has been able to maintain its market
leadership position due to its strong product portfolio, innovative marketing strategies, and
focus on customer satisfaction,

ORGANIZATIONAL HIERARCHY

HUL, or Hindustan Unilever Limited, has a complex organizational structure that reflects the
company's size, scope, and diverse operations. Here is a detailed overview of HUL's overall
organizational structure:

• Board of Directors: The Board of Directors is the highest decision-making body in the
company, responsible for setting the company's strategic direction and overseeing its
operations. The Board comprises 12 members, including the Chairman and Managing
Director, Executive Directors, Non-Executive Directors, and Independent Directors.

• Leadership Team: The Leadership Team comprises senior executives who are responsible
for managing the day-to-day operations of the company. The Leadership Team reports to the

35
Board of Directors and is responsible for implementing the company's strategy and achieving
its objectives.

• Business Segments: HUL operates in various business segments, including Home Care,
Personal Care, Foods and Beverages, and Water. Each business segment has a separate
management team responsible for managing the operations and achieving the segment's
objectives.

• Functional Departments: HUL has various functional departments that provide support to
its business segments, including Finance, Human Resources, Information Technology, Legal,
Research and Development, and Supply Chain. These departments are responsible for
ensuring that the company's operations are efficient, effective, and aligned with its strategic
objectives.

• Regional and Area Offices: HUL has a vast distribution network, with regional and area
offices located across the country. These offices are responsible for managing the distribution
of HUL's products in their respective regions and ensuring that the company's products reach
its customers on time.

• Manufacturing Plants: HUL has manufacturing plants located across the country,
producing a wide range of products. The manufacturing plants are responsible for producing
high-quality products, ensuring that they meet the company's standards and comply with
regulatory requirements.

• Sales and Marketing Teams: HUL has a robust sales and marketing organization
responsible for promoting its products and ensuring that they reach the company's customers.
The sales and marketing teams work closely with the regional and area offices to develop
effective sales and marketing strategies and implement them in the field.

Rohit Jawa will succeed Sanjiv Mehta as the MD & CEO of the
company with effect from June 27, 2023. Hindustan Unilever Ltd

36
(HUL) Friday announced that Rohit Jawa will take over as the company’s new Managing
Director and Chief Executive Officer from June 27

OUR LEADERS AS ON 2022

37
.

38
HUL ‘s PORTERS FIVE FORCE MODEL ANALYSIS

Porter's Five Forces of Competitive

Position Analysis were developed in
1979 by Michael E Porter of Harvard
Business School as a simple
framework for assessing and
evaluating the competitive strength and
position of a business organisation.

This theory is based on the concept

that there are five forces that determine
the competitive intensity and
attractiveness of a market. Porter’s five
forces help to identify where power lies in a business situation. This is useful both in
understanding the strength of an organisation’s current competitive position, and the strength
of a position that an organisation may look to move into Strategic analysts often use Porter’s
five forces to understand whether new products or services are potentially profitable. By
understanding where power lies, the theory can also be used to identify areas of strength, to
improve weaknesses and to avoid mistakes.

 Competitive Rivalry or Competition with Unilever

The main competitors of Unilever are Procter and Gamble, Johnson and Johnson, Colgate-
Palmolive, Dabur, and many more. Unilever has many companies which are against it and
that each firm has a wide variety of sectors under it. Since the products have very little
differentiation, the cost of switching is also very low, almost zero. There are many companies
mainly in this Fast-Moving Consumer Goods industry with low switching costs. The
presence of many companies prevents a monopolistic kind of environment and supports
healthy competition. To remain relevant in this industry, Unilever can launch new products
from time to time. If there is no product launch, then at least the packaging has to be renewed
to make it more attractive. Advertisements also play a crucial role in placing the product in
the customer's mind. Discounts, sales, and various offers also increase sales. Another way to
make the company more visible is to hop onto the trends and post witty tweets or Instagram
posts.

39
  Bargaining Power of Unilever’s Customers/Buyers

Customers of Unilever come from every walk of life. The company provide goods to mass
merchandisers, grocery stores, drug stores, E-commerce retailers, and distributors. Unilever is
located in 190 countries with a huge customer base of around 2.5 billion people using the
products. The cost of switching is almost zero, therefore it is easy for the customer to switch
over to other products. Unilever also tries to increase their sale by providing the customers
with interesting discounts and offers. To entice more customers, the company has to
continuously innovate in terms of product or packaging to keep themselves relevant in the
market. The customers do not have much bargaining power as they cannot influence prices,
instead they simply can switch customers. Successfully, Unilever has a strong brand equity
and many of their products are etched in the minds of their customers.

 Bargaining Power of Unilever’s Suppliers

Unilever has 56000 suppliers all over the world, which is present in over 150 countries. The
company also presents awards to its top-performing business partners. Usually, in FMCG
products, the distribution system plays a very crucial role in the sales of the company. There
is a possibility of forward integration as the amount of research and development in this
sector is very low. The suppliers provide all the raw materials and technology required for
manufacturing and packaging the materials. The switching cost is also very low. As a result,
the chances of them influencing the prices are very low. If there are some issues with the
suppliers and the suppliers had increased the prices, the company costs would increase
drastically, then Unilever could easily replace the suppliers as and when required. It is
extremely important to have an efficient supply chain in the FMCG company for the
smoothing manufacturing and distribution of all the products. The company should make sure
that the raw materials received should be standardized and up to quality. Therefore, it is of
utmost importance for the suppliers to be compliant with the regulations of the company.

 Threat of Substitutes or Substitution

Unilever is present in various segments; therefore, every sector has its own set of market
leaders. The switching cost in various FMCG products is very low; therefore, the threat of
substitutes is always very high. Unilever is the market leader in many segments; therefore,
new substitutes could hamper its leadership position. Each and every brand under Unilever

40
have to differentiate their product. The differentiation could be based on the product, price,
quality, or packaging. Most of their brands are well-known and service-oriented rather than
just being an FMCG company. Another issue that could take place is that Unilever might
have more than one product in the same segment. There is a great chance that one brand
could cannibalize the other. Therefore, it is extremely important for the company to place its
brand at two different price levels. There is also a possibility of cheaper knock-offs being
placed on the same market shelf as the market leader; this could hamper the sale to a certain
extent.

 The threat of new entrants

Unilever, a multinational company based in London, England, was started in 1929. Unilever
owns around 400 brands, including toothpaste, cleaning agents, ice cream, food, condiments,
water and air purifiers, pet food, etc. The threat of new entrants in the Fast-Moving Consumer
Goods for one segment is relatively easier but having a huge legacy of many brands is
extremely difficult. The main reason is the requirement of high capital and resources. These
products are easily scalable and are mass-produced. The company has high brand equity and
is located in more than 190 countries. The cost of switching in this industry is very low. The
company is the market leader in many segments; therefore, it would be very difficult for the
new entrant to get market share. Another issue that a new entrant would face would be
following the rules and regulations of the country it is located in. Legal requirements could be
another problem that a new entrant could face.

OVERVIEW: Unilever deals with a wide variety of external factors, considering the extent
of its operations in the global consumer goods market. However, as shown in this Five Forces
analysis, such external factors lead to variations in the intensities of the five forces impacting
the business. The following are the intensities of the five forces in affecting Unilever:

1. Competitive rivalry or competition (strong force)

2. Bargaining power of buyers or customers (strong force)
3. Bargaining power of suppliers (moderate force)
4. Threat of substitutes or substitution (weak force)
5. Threat of new entrants or new entry (weak force)

41
SWOT ANALYSIS OF HUL ( HINDUSTAN UNILEVER LIMITED )

The SWOT Analysis of HUL (Hindustan Unilever Limited) includes its strengths,
weaknesses, opportunities, and threats. And in this reading of the SWOT Analysis of HUL
which will examine the beauty and wellness company in terms of its internal and external
factors.

1. S Stands For Strengths ( Internal Factor )

 Leader in FMCG Market: Two out of three Indian consumers use HUL products,
according to Nielsen Study. To establish itself as a market leader in the Indian market,
HUL has adopted a targeted approach in the supply chain & other things.
 Most Preferred Brand: From soap to mineral water, HUL shapes the lives of 1.3
billion people every day. HUL’s presence in the consumer market with its 20
categories such as soap, tea, detergent, shampoo, etc., and its wide range of products
has helped it occupy a large share of shelf space in grocery and department stores,
which explains the acceptance/demand for its products in the market.
 Innovations: Hindustan Unilever Research Center (HURC), Mumbai, and Unilever
Research India, Bangalore, both research facilities were merged at one location in
Bangalore in 2006. The people at this facility are continuously working on developing
innovations in products and manufacturing processes that will help HUL establish
itself as a frontrunner in the consumer goods market.

42
 High Brand Awareness: HUL generated positive word of mouth over the years by
enlisting celebrities to promote their brands. This allowed them to socially anchor
their brands, which were intelligently tailored to different income brackets.
 Wide Range of Products: It offers product categories, namely, oral care, personal care,
household surface care, textile care, and pet food, etc., and has a wide range of
products in all product categories.
 Social Media: HUL has a strong social media presence with millions of followers on
the three most popular social networking platforms: Facebook, Twitter and Instagram.
The company has a high level of customer engagement with a low response time on
these channels.

2. W Stands For Weaknesses ( Internal Factor )

 Declining Market Share: competitors focusing on a particular product eating up
HUL’s share, such as Ghadi & Nirma detergents eating up HUL’s market share in
wheel washes.
 Large selection of brands in various product categories: A large portfolio of brands
often leads to incorrect positioning. Price placement in some segments ensures low
price competition, such as the market share gained by Amul from Kwality.
 Limited Market Share: The market share of HUL is limited due to the presence of
other strong FMCG brands.

3. Stands For Opportunities ( External Factor )

 Expanding the market: Greater penetration of rural markets through Project Shakti
AMMA and the transition from unorganized to organized enterprises will lead to
further expansion of the consumer market.
 Awareness of the use of consumer products: advertising, word of mouth and medical
prescribing raise people’s awareness of the use of consumer products, leading to an
increase in the rate of use of these products.
 Growing income level: due to a stable political situation, higher literacy rate and
regulated inflation, people’s disposable income is increasing, leading to higher
demand and changing lifestyles.
 Ayurvedic products: May start manufacturing or marketing Ayurvedic products under
the brand name of HUL.
 Partnerships: Mergers and acquisitions can further strengthen the brand in a long run.

43
4. T Stands For Threats ( External Factor )
 Market competition: with the increasing number of local and national suppliers, it is
becoming very difficult for businesses to differentiate themselves from others. There
is also a risk of counterfeit products destroying the brand image in the market.
 Price of raw materials: rising prices of raw materials will lead to further increases in
prices. The further price increase will lead to a decrease in sales, profit margins and
brand switching.
 Buyer Power: In a highly diversified consumer goods market, where many brands are
promising different benefits, it is very difficult for consumers to get loyal to a
particular brand. This leads to brand switching where consumers have the power to
choose a brand based on various factors such as availability, recommendations from
reference groups, preferences and price.
 Government regulations: Changing government norms and regulations can also
directly affect business policies and practices.

Suggestions:

This SWOT analysis of Unilever highlights a number of internal and external strategic
factors that managers must include in strategy development. For example, the weaknesses
of limited business diversification and imitable nature of products are significant because
they influence business stability and performance. In this regard, suggestion is to diversify
Unilever’s business through acquisition of related firms not in the consumer goods
industry. Also, Unilever needs to consider product innovation as an opportunity to boost
business performance. It is recommended that the company must use its strengths, such as
economies of scale, for product innovation to address competition and the threat of
imitation.

 HUL needs to focus more on advancing its supply chain system and manufacturing
department.
 HUL needs to focus on the quality and also quantity of the product
 HUL needs to launch more ayurvedic products and more.

44