During its recent earnings conference, the consumer goods giant did not appear to be phased by the many up and coming start-ups and disruptors that have bloomed domestically over the past few years.
“When we hear a lot of compliments being given to disruptors, we often forget the power of the big brands. One should never forget that the incumbent power through big brands is a very powerful force,” said Sanjiv Mehta chairman and managing director of Hindustan Unilever (HUL).
In 2021, India’s beauty and personal care space heated up with several mergers and acquisitions (M&As) and funding drives among enterprising start-ups and established names and alike.
However, HUL alluded that it would be focusing on the current suite of successful brands under its umbrella.
“We’ve brought in Love, Beauty and Planet, we’ve brought in Simple, and those are doing exceedingly well… One of the brands we are looking at very clearly is Indulekha, so watch this space on what happens with Indulekha going forward,” said Mehta.
Indulekha was acquired by HUL in 2015 for Rs300Cr (U$40m). In 2019, three years after its acquisition was completed, the company claimed that the brand was valued at Rs2,000 crores (U$268.3m).
While the company has been very successful with its acquisition of Indulekha, Mehta said the company was cautious about making more acquisitions and explained its measured approach.
“As you’ve seen over the years, we are never averse to M&A. We always look at M&A from a lens of strategy, the value that we can create and the timing at which we would like to get in… We will not go in and acquire a proposition that has not been proven… and if it’s not a distinctive property – because we know it cannot be sustained in the long run.”
He added that the company would not rush headfirst into M&A deals that could potentially endanger its leading position in the beauty and personal care market.
“We are very circumspect. We are looking at all options and we are very clear – we are the market leader in personal care, and we are not going to give up this space.”
Latest financial results
For the quarter ending December 31, HUL reported a net profit of Rs2,243Cr (U$271.1m) an increase of 17% year on year.
Its beauty and personal care division grew by 7%, led by skin cleansing, skin care and colour cosmetic categories.
Skin cleansing, in particular, delivered double-digit growth driven by the strong performances of brands Lux, Dove and Pears.
Combined, skin care and colour cosmetics delivered double-digit growth and have risen above pre-COVID levels.
“We have delivered a strong and resilient performance in the quarter despite moderation in market growths and significant levels of commodity inflation,” said Mehta.
“I am particularly pleased that the growth is extremely competitive with our market share gains being highest in more than a decade. Our performance is reflective of our strategic clarity, strength of our brands, operational excellence, and dynamic financial management of our business.”