NSE: HINDUNIL VR BSE Limited, National Stock Exchange of ... · technology and data-led...

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Hindustan Unilever Limited Unilever House B D Sawant Marg Chakala, Andheri East Mumbai 400 099 Tel: +91 (22) 3983 0000 Web: www.hul.co.in 2nd August, 2019 CIN:L15140MH1933PLC2030 Stock Code BSE: 500696 NSE: HINDUNIL VR /SIN: INE0301027 BSE Limited, National Stock Exchange of India Ltd Corporate Relationship Department, Exchange Plaza, 5th Floor, 2nd Floor, New Trading Wing, Plot No. C/1, G Block, Rotunda Building, P.J. Towers, Sandra - Kurla Complex, Dalal Street, Sandra (E), Mumbai - 400 001 Mumbai - 400 051 Dear Sir, Sub: Investor Presentation Pursuant to the Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing herewith a copy of the presentation to be made to a group of investors at Mumbai today. You are requested to take the above information on your record. Thanking You. Yours faithfully, For Hindustan Unilever Limited a1 Executive Director, Legal & Corporate Affairs and Company Secretary OIN:00050516 / FCS No.: 3354 u

Transcript of NSE: HINDUNIL VR BSE Limited, National Stock Exchange of ... · technology and data-led...

Page 1: NSE: HINDUNIL VR BSE Limited, National Stock Exchange of ... · technology and data-led decision-making. We are choreographing an integrated end-to-end organization change program

Hindustan Unilever Limited Unilever House B D Sawant Marg Chakala, Andheri East Mumbai 400 099

Tel: +91 (22) 3983 0000 Web: www.hul.co.in2nd August, 2019 CIN:L15140MH1933PLC002030

Stock Code BSE: 500696

NSE: HINDUNIL VR

/SIN: INE030A01027

BSE Limited, National Stock Exchange of India Ltd

Corporate Relationship Department, Exchange Plaza, 5th Floor,

2nd Floor, New Trading Wing, Plot No. C/1, G Block,

Rotunda Building, P.J. Towers, Sandra - Kurla Complex,

Dalal Street, Sandra (E),

Mumbai - 400 001 Mumbai - 400 051

Dear Sir,

Sub: Investor Presentation

Pursuant to the Regulation 30 of the Securities and Exchange Board of India (Listing Obligations

and Disclosure Requirements) Regulations, 2015, we are enclosing herewith a copy of the

presentation to be made to a group of investors at Mumbai today.

You are requested to take the above information on your record.

Thanking You.

Yours faithfully,

For Hindustan Unilever Limited

a1

Executive Director, Legal & Corporate Affairs

and Company Secretary

OIN:00050516 / FCS No.: 3354 u-r

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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 in the digital ecosystem that will catapult it to a US$ 10

trillion economy. Today the country has 1.2 billion* mobile phone subscriptions and 560 million* internet subscribers, making

it one of the fastest digitising country. A mammoth 8.3 GB* per capita data consumption/ month is making it one of the highest

data consuming market. In 2018, Indians have downloaded 12 billion* apps, changing the dynamics of consumer experience.

Despite these staggering numbers, only ~50% of Indians are online, speaking volumes of the huge disparity across India. We

call it ‘the Great Divide’, which is making it imperative for us to serve all of India.

With disruption becoming par for the course, we observe different retailer and distributor’s business models and a non-linear

consumer journey. To be at the forefront of such a changing ecosystem, we continue to put a big thrust on leveraging

technology and data-led decision-making. We are choreographing an integrated end-to-end organization change program

across functions as encapsulated in our vision ‘Re-imagining HUL’. Today we don’t have full visibility to the extent of growth

potential in the market due to asymmetry of information across the value chain. An integrated solution will bring information

together in a more harmonised manner which we believe will help us leverage the full potential of growth.

The ‘Re-imagining HUL’ program in summary:

PICKING UP CONSUMER SIGNALS

• We have the capability to pick up consumer signals real time. We can use our

own channels to read the consumer feedback.

GENERATING DEMAND

• Driving precision marketing to bring alive how we communicate with consumers, how we identify their aspiration space and how we curate the cohort and content based on that.

• We also have two strong content hubs Be Beautiful and Cleanipedia running across Beauty & Personal Care and Home Care; which work as a great source of data for the business and helps in creating cohorts and traits.

DEMAND CAPTURE

EN

AB

LE

D B

Y

DATA

AUGMENTED

DECISION

MAKING

NEW

BUSINESS

MODEL

PEOPLE,

CAPABILITY

& CULTURE

• Our Connected Stores Program is now coming of age as we are creating a complete eco system across shoppers, stores and retailers covering demand generation, capture and fulfilment.

• Our Humrashop program has evolved and we are now focusing on how we can improve shopper experience even more through faster delivery and great user interface.

DEMAND FULFILMENT

• A big shift in this space is going from a “Service” mindset to a “Fulfilment” mindset. Key to our disruption will be that we will look at each line of the order and will work with the distributors to ensure we are able to build assortment .

AUTOMATION

Collectively, these initiatives will strengthen our data moat, and build an organization which is purpose led and

future fit.

*Digital India – Technology to transform a connected nation; McKinsey Global Institute, March 2019

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Foods & Refreshment Sudhir Sitapati, Executive Director F&R

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FY 2018-19 PERFORMANCE HIGHLIGHTS

Strong Brands Net Sales Operating Margin

17% Operating Margin*

~180 Bps#

4 Brands with Turnover > 500 Crores

Double Digit Turnover Growth

* Segment Margins (EBIT) FY 2018-19 excludes exceptional items

# Operating margin improvement in one year (FY’19 Vs. FY’18) 2

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STRONG POSITION IN ALL KEY CATEGORIES

#1 #2 #1

Tea Coffee Ketchup

#1

Jams*

#2

Ice Creams*

Source: Nielsen & *Euromonitor 2018 3

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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.

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OUR STRATEGY

Growth Segments Growth Channels M&A Purposeful Brands

*Subject to regulatory approvals

5

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Growth Segments

OUR STRATEGY

Growth Channels Growth Segments Purposeful Brands M&A

*Subject to regulatory approvals

6

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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

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DEVELOPING THE KETCHUP MARKET IN INDIA

Underpenetrated category Communication aimed at market Leading the market development development

Users

30%

Non

Users

70%

4 out of every 5 category entrants through kissan AV 03: Kissan TVC

8

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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

2014 2019

Kulfi Stick Rs. 10

BOP stands for Bottom Of Pyramid 9

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Growth Channels

OUR STRATEGY

Growth Segments M&A Growth Channels

*Subject to regulatory approvals

Purposeful Brands

10

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UNILEVER FOOD SOLUTIONS

Huge opportunity Our strategy 8 quarters of strong growth

Food Service

48 USD Bn

TV 12 USD Bn

Pharmaceuticals 23 USD Bn

2X Star Hotels

3.5X Local Chain Accounts

Huge headroom to grow Bring global successes to India

11

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TEA: BRILLIANT BASICS UNLOCKED MASSIVE OPPORTUNITY IN RURAL

Rural opportunity Our strategy Significant results in last 3 years

2.5X

X

Urban India Rural India

HUL Tea market share

AV 04: Brooke Bond Taaza TVC

3X

2X

HUL TEA PORTFOLIO Under indexed rural share

X

2.2X

MQ 16 MQ 19

HUL Tea Direct

Coverage

12

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M&A

OUR STRATEGY

Growth Segments Growth Channels Purposeful Brands M&A

*Subject to regulatory approvals

13

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HUL F&R CONUNDRUM WAS

STRONG EXISTING BUSINESS … BUT PLAYED IN SLOWER GROWING PARTS

~7000 Crore Market leaders / winning shares Double digit growth

HUL was playing in a relatively smaller, slower growing highly penetrated

part of the market

14

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HEALTH FOOD DRINKS (HFD) MARKET IN INDIA

Large & consolidated Yet under-penetrated Brands with strong equity Having strong margins

1 Billion Euro Market With scope for even 25% Penetration With GSK dominance in higher margins

Shares

* Subject to regulatory approvals coming through; proposal pending with NCLT 15

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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

20 Markets IPR & Commercial Op. On commission selling agent High EBIT margin

ON TRACK AS PER PLAN ON THE REGULATORY APPROVALS FOR THE MERGER

* Subject to regulatory approvals coming through; proposal pending with NCLT 16

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ADITYA ACQUISITION GIVES US FOOTHOLD IN NEWER MARKETS

Enabled us to play BOP

Mini cone Rs. 10

2018 2019

X

3x

Unlocked physical availability in new markets

HUL + Adityaa cabinets in key markets*

*Kerala, Rest of Karnataka & Rest of Maharashtra 17

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Purposeful Brands

OUR STRATEGY

Growth Segments Growth Channels M&A Purposeful Brands

*Subject to regulatory approvals

18

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RED LABEL: TASTE OF TOGETHERNESS

AV 05: Red Label Purpose

Purpose at the heart of all communications

Topics of relevance

Market leadership

External recognition

MARKET LEADERSHIP IN TEA UNDERPINNED BY PURPOSE-LED ENGAGEMENTS

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OUR STRATEGY

Growth Segments Growth Channels Purposeful Brands M&A

*Subject to regulatory approvals

TO HELP SHAPE INDIA’S FOOD REVOLUTION

20

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THANK YOU

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TRANSFORMING

DISTRIBUTIVE

TRADE WITH

TECHNOLOGY

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INDIA CD LANDSCAPE

3K+ 4000+19k+ 30k+ 5000+

Sales Logistics BeautyDistributors Merchandisers

Representatives Manpower Advisors

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LELED TIONS1.6x

1.3x

1.05x

1x

UNPARAL SCALE OF OPERA 120k+

Shakti Entrepreneurs

WIDEST RURAL REACH

600k Sq. Ft of Trade Assets

BIGGEST IN STORE MERCHANDIZING

140 Mn Units Sold per Day

3 Units sold to every Indian Citizen monthly

Many brands reach over million outlets

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E-COMMERCE MODERN TRADE

MARKET SHARE

GROSS MARGIN

GENERAL TRADE

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Image Image

5 Pillars of CD Strategy

DEMAND CAPTURE

cover the right outlets at the right frequency with the

right assortment

DEMAND FULFILMENT

speedy delivery of order(s) to outlets at the

most optimal cost

DEMAND GENERATION

world class in store execution & shopper loyalty to win at the point of purchase

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DEMAND CAPTURE

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More Stores More

Assortment

Increase

Direct Reach

Distribution Democratize

Ordering

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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 Upgrade Addition

Month 1 Month 2 Month 3-5 Month 6-9 Month 9-12

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More Stores More

Assortment

Increase

Direct Reach

Distribution Democratize

Ordering

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10 Better Replenishment is our biggest lever to grow assortment

Spread of Replenishment Across our Universe

30%

15% 11%

% C

on

trib

uti

on

8% 6% 5% 5% 4%7%

3% 3% 2%

1x 2x 3x 4x 5x 6x 7x 8x 9x 10x 11x 12x

Frequency of Replenishment

Assortment is not just about the sale of new packs but also

their subsequent replenishment

“ ”

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11 Leveraging Bayesian networks for improved replenishment modelling

Will the A probabilistic model which learns

Pack Type outlet and pack behavior trends to

provide more relevant tasks to the

Salesman in the given month

Purchase

Quantity

line sell

this

Outlet

Type

Month?

Purchase

Frequency

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Simplified KPIs Simplified Interface

1 2

Total Lines Sold Per Day Total Assortment

Easy to Sell Set of packs an outlet regularly buys

Set of incremental packs which have a Easy to Earn priority

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More More Stores

Assortment

Increase

Direct Reach

Distribution Democratize

Ordering

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Democratize order taking from Salesman : B2B App 14

RAPID SCALE UP

Any time Business

ordering Transparency

4 Cities

Q1’ 18

15 Cities

Q4’ 18

Customized Promotions Q2’

19 50

Cities

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DEMAND FULFILMENT

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- N+2 Delivery

- Back end Automation

automation

Delivery

Transparency

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n+2 delivery %

D+F Key Retail PRS Kiosk % return as per delivery date

17

Faster & on-time deliveries key for growth

Delivery Optimization is key to improve last mile

efficiency

Higher the delay in delivery

Larger is the Cost of Delay

Lesser is the Productivity

39%

52% 54%

8%

Mass Retail Key Retail Chemists Kiosks

N+2 Delivery

90% 18% 88%

10%

5%

N+2 N+3 > N+3

81%

n+2 n+3 n+4

%age Return as per delivery Probability of billing in next salesman visit date

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AV : Demand Fulfilment

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- N+2 Delivery

Delivery - Back end Transparency automation

Automation

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Handling Complexity through Robotization

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DEMAND GENERATION

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- Wiring up

Program Stores

Wire Up

Stores

Direct to

Consumer- Activate B2C

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Wiring Up Stores & winning at scale

Billing Solution

Shopper Retargeting

Loyalty Program

Cashless Payments

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Benefits from Wired Stores 24

Shopper Customized Stronger Premiumizing Zero response Improved

transaction level promotions retailer shoppers and time on Shopper

insights relationship wider competitive loyalty

assortment actions

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- Wiring up

Program Stores

- Activate B2C Wire Up

Stores

Direct to

Consumer

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B2B2C : Humarashop – The power of Hyperlocal

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B2B2C : Humarashop – The power of Hyperlocal

SHOPPER RETAILER IT PLATFORM

MASTERS

ORDER

DELIVERY

SHOP & PROMOTER UPDATES PRICES

SHOPPER SEES REAL TIME

SHOPPER PLACES ORDER

RETAILER GETS NOTIFIED

RETAILER CLICKS DISPATCH

DELIVERY PARTNER/STORE PICKUP

PARTNER DELIVERS

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Image Image

28 CD Strategy : Summary

DEMAND CAPTURE DEMAND FULFILMENT DEMAND GENERATION

More Stores Delivery Transparency Wire up Stores

More Assortment Automation Direct to Consumer

Democratize Ordering

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THANK YOU