Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — Investor Presentation (August 2019)
52 slides from Hindustan Unilever's investor presentation, Aug 2, 2019
Slide 1: Investor Presentation filing letter
Hindustan Unilever Limited Unilever House B D Sawant Marg Chakala, Andheri East Mumbai 400 099 Tel: +91 (22) 3983 0000 2nd August, 2019 Web: www.hul.co.in CIN:L15140MH1933PLC002030 Stock Code BSE: 500696 NSE: HINDUNIL VR /SIN: INE030A01027 BSE Limited, National Stock Exchange of India Ltd Corporate
Slide 2: Re-imagining HUL: Digital Transformation to Build a Future Fit HUL
ANNUAL INVESTOR MEET 2019: BREAKOUT SESSION RE-IMAGINING HUL: DIGITAL TRANSFORMATION TO BUILD A FUTURE FIT HUL With a population 1.3 billion and a GDP of ~US$2.6 trillion, India’s ascend to the world economy is a well-known story. However, critical to India’s next growth trajectory will be the surge
Slide 3: Foods & Refreshment
Foods & Refreshment Sudhir Sitapati, Executive Director F&R
Slide 4: FY 2018-19 Performance Highlights
FY 2018-19 PERFORMANCE HIGHLIGHTS Strong Brands Net Sales Operating Margin 4 Brands with Double Digit Turnover 17% Operating Margin* Turnover > 500 Crores Growth ~180 Bps# * Segment Margins (EBIT) FY 2018-19 excludes exceptional items # Operating margin improvement in one year (FY’19 Vs. FY’18) 2
Slide 5: Strong Position in All Key Categories
STRONG POSITION IN ALL KEY CATEGORIES #1 #2 #1 Tea Coffee Ketchup #1 #2 Jams* Ice Creams* Source: Nielsen & *Euromonitor 2018 3
Slide 6: To Help Shape India's Food Revolution
OUR PURPOSE TO HELP SHAPE INDIA’S FOOD REVOLUTION As one of India’s largest Foods & Refreshment companies, we will use science & expertise to serve the majority of Indians by preserving the goodness of farm in a healthy, hygienic and sustainable way. 4
Slide 7: Our Strategy
OUR STRATEGY Growth Segments Growth Channels M&A Purposeful Brands *Subject to regulatory approvals 5
Slide 8: Our Strategy: Growth Segments
OUR STRATEGY Growth Segments Growth Segments Growth Channels M&A Purposeful Brands *Subject to regulatory approvals 6
Slide 9: Natural Care Has Successfully Leveraged the Trend of Health and Wellness
NATURAL CARE HAS SUCCESSFULLY LEVERAGED THE TREND OF HEALTH AND WELLNESS Persuasive communication with Iconic brands Consistent results strong claims AV 02: Red Label Natural Care Natural Care ~2X in the last 3 years Source: Nielsen MAT March’19 7
Slide 10: Developing the Ketchup Market in India
DEVELOPING THE KETCHUP MARKET IN INDIA Underpenetrated category Communication aimed at market Leading the market development development 4 out of every 5 category AV 03: Kissan TVC entrants through kissan Users 30% Non Users 70% 8
Slide 11: Revised Strategy Has Helped Double Growth Rates in Ice Creams
REVISED STRATEGY HAS HELPED US DOUBLE OUR GROWTH RATES IN ICE CREAMS IN LAST 2 YEARS Organic expansion Entering BOP Blockbuster innovations X Towns 6X Towns Kulfi Stick Rs. 10 2014 2019 BOP stands for Bottom Of Pyramid 9
Slide 12: Our Strategy: Growth Channels
OUR STRATEGY Growth Segments GrowthChannels Growth Channels M&A Purposeful Brands *Subject to regulatory approvals 10
Slide 13: Unilever Food Solutions
UNILEVER FOOD SOLUTIONS Huge opportunity Our strategy 8 quarters of strong growth Food Service 48 USD Bn Pharmaceuticals 23 USD Bn TV 12 USD Bn 3.5X Local Chain Accounts 2X Huge headroom to grow Bring global successes to India Star Hotels 11
Slide 14: Tea: Brilliant Basics Unlocked Massive Opportunity in Rural
TEA: BRILLIANT BASICS UNLOCKED MASSIVE OPPORTUNITY IN RURAL Rural opportunity Our strategy Significant results in last 3 years AV 04: Brooke Bond Taaza TVC HUL Tea market share 3X 2.5X 2X X HUL Tea Direct Coverage 2.2X Urban India Rural India X Under indexed rural share MQ 16 MQ 19 HUL TEA PORTFOLIO
Slide 15: Our Strategy: M&A
OUR STRATEGY Growth Segments Growth Channels M&A M&A Purposeful Brands *Subject to regulatory approvals 13
Slide 16: HUL F&R Conundrum Was Strong Existing Business
HUL F&R CONUNDRUM WAS STRONG EXISTING BUSINESS … BUT PLAYED IN SLOWER GROWING PARTS ~7000 Crore Double digit growth Market leaders / winning shares HUL was playing in a relatively smaller, slower growing highly penetrated part of the market 14
Slide 17: Health Food Drinks (HFD) Market in India
HEALTH FOOD DRINKS (HFD) MARKET IN INDIA Large & consolidated Yet under-penetrated Brands with strong equity Having strong margins 1 Billion Euro Market 25% Penetration With scope for even With GSK dominance in higher margins Shares * Subject to regulatory approvals coming through; proposal pending
Slide 18: HUL-GSK Deal
HUL-GSK DEAL Portfolio HFD deal contours OTC/OH Broad portfolio of Deal is global in scope Nourishing Malt-based Drinks $ 3.8 Bn - India OTC Portfolio High EBIT margin 20 Markets IPR & Commercial Op. On commission selling agent ON TRACK AS PER PLAN ON THE REGULATORY APPROVALS FOR THE MERGER * Subjec
Slide 19: Aditya Acquisition Gives Us Foothold in Newer Markets
ADITYA ACQUISITION GIVES US FOOTHOLD IN NEWER MARKETS Enabled us to play BOP Mini cone Rs. 10 Unlocked physical availability in new markets 3x X 2018 2019 HUL + Adityaa cabinets in key markets* 17 *Kerala, Rest of Karnataka & Rest of Maharashtra
Slide 20: Our Strategy: Purposeful Brands
OUR STRATEGY Growth Segments Growth Channels M&A Purposeful Brands Purposeful Brands *Subject to regulatory approvals 18
Slide 21: Red Label: Taste of Togetherness
RED LABEL: TASTE OF TOGETHERNESS Purpose at the heart of all communications Topics of relevance Market leadership External recognition AV 05: Red Label Purpose MARKET LEADERSHIP IN TEA UNDERPINNED BY PURPOSE-LED ENGAGEMENTS 19
Slide 22: Our Strategy
OUR STRATEGY Growth Segments Growth Channels M&A Purposeful Brands *Subject to regulatory approvals TO HELP SHAPE INDIA’S FOOD REVOLUTION 20
Slide 23: Thank You
THANK YOU PP eae clever tad ENJOY [) 6RU> INTERNATIONAL © mo Ie ig BRU TASTES AT HOME. / vat #dipspreadcook y a , i ReaD ‘Ok (=
Slide 24: Transforming Distributive Trade with Technology
TRANSFORMING DISTRIBUTIVE TRADE WITH TECHNOLOGY
Slide 25: India CD Landscape
2 INDIA CD LANDSCAPE 3K+ 19k+ 30k+ 4000+ 5000+ Sales Logistics Beauty Distributors Merchandisers Representatives Manpower Advisors
Slide 26: Unparalleled Scale of Operations
3 140 Mn 120k+ 600k Sq. Ft Units Sold per Day 1.6x UNPARALLELED SCALE OF OPERATIONS Shakti Entrepreneurs of Trade Assets Many brands reach over 1.3x WIDEST RURAL REACH 3 Units sold to every BIGGEST IN STORE 1.05x million outlets MERCHANDIZING 1x Indian Citizen monthly
Slide 27: Market Share and Gross Margin by Channel
4 GENERAL TRADE MODERN TRADE E-COMMERCE MARKET SHARE GROSS MARGIN
Slide 28: Pillars of CD Strategy
5 Pillars of CD Strategy Image Image DEMAND CAPTURE DEMAND FULFILMENT DEMAND GENERATION cover the right outlets at speedy delivery of world class in store the right frequency with the order(s) to outlets at the execution & shopper right assortment most optimal cost loyalty to win at the point of pur
Slide 29: Demand Capture
6 DEMAND CAPTURE
Slide 30: Increase Direct Reach, Distribution
7 More More Stores Assortment Increase Direct Reach Distribution Democratize Ordering
Slide 31: Adding Stores – following the sustainable rhythm
8 Adding Stores – following the sustainable rhythm Building a Rhythm of outlet addition Streamlining the process of outlet addition – making it repeatable, scalable & efficient Scouting Salesman OL Addition Service Mix GPS Fixing Addition Upgrade Month 1 Month 2 Month 3-5 Month 6-9 Month 9-12
Slide 32: Increase Direct Reach, Distribution
9 More More Stores Assortment Increase Direct Reach Distribution Democratize Ordering
Slide 33: Better Replenishment is our biggest lever to grow assortment
Better Replenishment is our biggest lever to grow 10 assortment Spread of Replenishment Across our Universe 30% “ % Contribution Assortment is not just about 15% 11% 8% the sale of new packs but also 7% 6% 5% 5% 4% 3% 3% 2% their subsequent replenishment 1x 2x 3x 4x 5x 6x 7x 8x 9x Frequency of Reple
Slide 34: Leveraging Bayesian networks for improved replenishment modelling
Leveraging Bayesian networks for improved 11 replenishment modelling A probabilistic model which learns Will the outlet and pack behavior trends to Pack Type line sell Outlet this Type provide more relevant tasks to the Month? Salesman in the given month Purchase Purchase Quantity Frequency
Slide 35: Simplified KPIs, Simplified Interface
12 Simplified KPIs Simplified Interface 1 2 Total Lines Sold Per Day Total Assortment Easy to Sell Set of packs an outlet regularly buys Easy to Earn Set of incremental packs which have a priority
Slide 36: Increase Direct Reach, Distribution
13 More More Stores Assortment Increase Direct Reach Distribution Democratize Ordering
Slide 37: Democratize order taking from Salesman: B2B App
14 Democratize order taking from Salesman : B2B App RAPID SCALE UP Q1’ 4 18 Cities Any time Business ordering Transparency Q4’ 15 18 Cities Customized Promotions Q2’ 50 19 Cities
Slide 38: Demand Fulfilment
15 DEMAND FULFILMENT
Slide 39: N+2 Delivery and Back end automation
16 - N+2 Delivery Delivery - Back end Transparency Automation automation
Slide 40: Faster & on-time deliveries key for growth
17 Faster & on-time deliveries key for growth Delivery Optimization is key to improve last mile efficiency Higher the delay in Larger is the Cost of Lesser is the delivery Delay Productivity 52% 54% 90% 39% 18% 88% 10% 81% 8% 5% Mass Retail n+2 Key delivery Retail % Chemists Kiosks n+2 n+3 n+4 N+2 N
Slide 41: AV: Demand Fulfilment
18 AV : Demand Fulfilment
Slide 42: N+2 Delivery and Back end automation
19 - N+2 Delivery Delivery - Back end Transparency Automation automation
Slide 43: Handling Complexity through Robotization
20 Handling Complexity through Robotization
Slide 44: Demand Generation
21 DEMAND GENERATION
Slide 45: Wiring up Program Stores and Activate B2C
22 - Wiring up Program Stores Wire Up Direct to - Activate B2C Stores Consumer
Slide 46: Wiring Up Stores & winning at scale
23 Wiring Up Stores & winning at scale Billing Solution Cashless Payments Shopper Retargeting Loyalty Program
Slide 47: Benefits from Wired Stores
24 Benefits from Wired Stores Shopper Customized Stronger Premiumizing Zero response Improved transaction level promotions retailer shoppers and time on Shopper insights relationship wider competitive loyalty assortment actions
Slide 48: Wiring up Program Stores and Activate B2C
25 - Wiring up Program Stores Wire Up Direct to - Activate B2C Stores Consumer
Slide 49: B2B2C: Humarashop – The power of Hyperlocal
26 B2B2C : Humarashop – The power of Hyperlocal
Slide 50: B2B2C: Humarashop – The power of Hyperlocal
27 B2B2C : Humarashop – The power of Hyperlocal PARTNER DELIVERY DELIVERS PARTNER/STORE PICKUP RETAILER CLICKS DELIVERY DISPATCH SHOPPER ORDER RETAILER GETS PLACES ORDER NOTIFIED SHOPPER IT PLATFORM RETAILER SHOPPER SEES MASTERS SHOP & PROMOTER REAL TIME UPDATES PRICES
Slide 51: CD Strategy: Summary
28 CD Strategy : Summary Image Image DEMAND CAPTURE DEMAND FULFILMENT DEMAND GENERATION More Stores Delivery Transparency Wire up Stores More Assortment Automation Direct to Consumer Democratize Ordering
Slide 52: Thank You
THANK YOU
Hindustan Unilever — Investor Presentation (August 2019) on 6ix