Extreme hikes: Hindustan Unilever reports ‘unprecedented levels’ of inflation in soap category – CFO

By Amanda Lim

- Last updated on GMT

HUL has reported seeing “extremely unprecedented levels” of inflation in the soap category. [HUL]
HUL has reported seeing “extremely unprecedented levels” of inflation in the soap category. [HUL]
Indian consumer goods giant Hindustan Unilever has reported seeing “extremely unprecedented levels” of inflation in the soap category, said the firm’s CFO.

HUL is the India-based maker of a wide range of beauty and personal care products, including Dove, Lakme, LUX, Lifebuoy and Simple.

CFO Ritesh Tiwari highlighted that inflation was a significant challenge for the firm during its latest quarter earnings conference.

“As you can see, market prices of most of the commodities have further increased sequentially in June quarter 2022 and are at very high levels,”​ he said.

He added that soap was one of the categories that has been severely impacted.

“Soap as a category, we have seen much higher impact in terms of – if I talk about the market to start with, soap as the category have seen much higher inflation and extremely unprecedented level of inflation and which has had an impact on overall market category volume which have declined,”​ said CFO Ritesh Tiwari, during the firm’s latest quarter earnings conference.

“We have 5% to 6% volume decline of market, FMCG market, in June quarter and categories like soap are a good contributor to that decline; just the sheer amount of inflation which has happened.”

The firm has observed two different buying behaviours emerging: downgrading and down trading.

“Down trading is where a consumer who is buying the larger pack, buys smaller pack and hence that’s down trading where smaller amount of volume gets consumed and gets sold in the period and consumers do tighten consumption in that time – and that's down trading,” ​explained Tiwari.

On the other hand, the company has not observed much downgrading, which is consumers opting for a lower-priced brand or product.

“We have not seen many examples of downgrading where the consumer goes down the price sphere. Point in case, we had quoted for financial year 2021-22, including our current June quarter, our premium portfolio has grown at twice the pace as the rest of the portfolio. So, we have seen premium portfolio growing ahead,”​ said Tiwari.

Despite the headwinds, the firm is confident in its ‘Winning in Many Indias’​ strategy, which caters to consumers across the board with its many brands and products.

“There are many puts and takes in the portfolio and that is a benefit of having a business like HUL has which has multiple categories, multiple brands and multiple price points and we are able to use our portfolio to get best outcome for our stakeholders,”​ said Tiwari.

Overall, the firm’s beauty and personal care category grew by 17% to INR5,364cr (USD671.3m).

This was attributed to the strong performance of its premium products across all categories, including soaps.

In particular, its hair care portfolio grew by double digits.

“Our premium brands TRESemme and Dove are performing very well and are at the forefront of driving consumer upgradation to higher order benefits. Further, we are seeing good performance from our innovations such as and TRESemme serums and masks, Dove masks, Sunsilk Onion and Clinic Plus egg protein variants,” ​said Tiwari.

In the skin care category, brands such as Ponds and Lakme delivered strong growth to put the brand above pre-COVID levels. On the other hand, while there was growth in make-up, the category was still “marginally below pre-COVID levels”.

Related news

Show more

Related products

show more

Empowering natural barrier function for future-proof skin

Empowering natural barrier function for future-proof skin

Content provided by Lucas Meyer Cosmetics | 29-Aug-2024 | White Paper

Corneopeptyl™ is a new patented peptide biomimetic to the LCE6A protein, obtained by green chemistry-based synthesis. By mimicking the LCE6A protein activity,...

Calendula Cellular Elixir: Alchemy in a cell

Calendula Cellular Elixir: Alchemy in a cell

Content provided by Naolys | 11-Jun-2024 | Product Brochure

Get ready to experience a cellular evolution in skincare with InnerLift Calendula's advanced Plant Cell biotechnology.

Follow us

Products

View more

Webinars

Podcast