The Premium Beauty Business Unit is an incubator set up within the HUL ecosystem.
“The Premium Beauty Business Unit is not just about building brands, but this is also about incubating capabilities. Some of these are having an agile innovation model to pick up trends on the fly, launch the product in minimal time, scaling it up as it succeeds, building a supply chain for small like nano-factory setups and flexible supply chain to provide agility,” said Sanjiv Mehta, chairman and managing director, Hindustan Unilever (HUL)
This unit has launched products such as booster serums under Simple and a sulphate-free hair care range with onion and apple cider vinegar under Love Beauty and Planet.
He said that the company is planning to ramp up innovation in this space. “Dialling up our innovation intensity in this space, we have charted an aggressive plan to launch new and on-trend innovations.”
In the long run, the company intends to build upon the success of the existing brands by extending them with new categories, such as it did with Dove.
“If you recall, [Dove] started with skin cleansing, then it went to hair. In hair, it's done such a remarkable job that it is now one of the biggest brands in hair. And it will become, I would definitely say, one of the largest brands in hair care. And it would become one of the largest brands in beauty,” said Mehta.
One brand it intends to focus on is Indulekha, which it first acquired in 2016. Indulekha is a personal care brand based on Ayurvedic ingredients.
“We are looking at also how we can extend Indulekha. It’s such a great Ayurvedic property. We have grown from hair oil and have gone to shampoo. And now we are looking at going to other places,” said Mehta.
The extension aligns with the company’s focus on natural beauty, which it has done with Simple and Love Beauty and Planet.
“Naturals is a secular trend. It's not going to go away. And if you look at in the premium beauty unit, some of the brands that we are building, whether it is Simple, which is clean beauty, or Love Beauty & Planet, these are all under the naturals platform,” said Mehta.
However, it is cautious not to rush the process and will follow the previous example set by Simple and Love Beauty and Planet.
“We first focus on the few categories or on the core, build the property over there, then we look at it whether the brand has the muscle to extend into other categories or adjacencies. Otherwise, if you do it too soon and too fast, you'll end up diluting it,” said Mehta.
For its latest quarter, Hindustan Unilever (HUL) reported that its beauty and personal care division grew by 10% led by skin care, colour cosmetics and hair care.
It benefitted from the acceleration of its digital capabilities with a focus on building ‘digital-first’ beauty brands.
The firm developed dedicated D2C platforms for brands such as Lakme, Simple and Love Beauty and Planet, and Dermalogica which have been thriving. It also launched an online multi-brand platform, U Shop.
“We are accelerating growth in this channel by building a future-fit portfolio, marketing capabilities and by driving everyday great execution. In the D2C space, our multi-brand platform, U Shop, continues to gain more traction from the consumer. We've started U Shop in Mumbai and Delhi and will be expanding further soon,” said Mehta.
In particular, Lakme’s saw 30% of its sales come through digital platforms.
“We are very clear, wherever consumers find safer and convenient to go shopping, we will be there, be it the beauty counters in a mall when things are opening up and life's looking healthier and more comfortable for people to visit or, for that matter, on an online experience of shopping our portfolio and then getting benefit from the range that we offer,” said Ritesh Tiwari, CFO and executive director, finance and IT, HUL.
While the company has experienced tremendous success with e-commerce, it emphasised that brick-and-mortar retail will make a strong return.
“COVID-19 has given a big lift to e-commerce, and we believe these habits will continue to stick with consumers as they get used to the convenience and assortment available online. Modern trade stores, which were impacted due to closure of malls, have come back strongly in the quarter as the country opened. And rightly so, as a country, shopping is considered an outing and an experience,” said Mehta.