Unilever in India - Building and Nurturing Brands

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Case Details:

Case Code : MKTA003
Case Length : 33 Pages
Period : 2000-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Unilever, Hindustan Lever Limited (HLL)
Industry : Fast Moving Consumer Goods (FMCG)
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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In the last couple of years we have put in a new strategy to deal with the changing environment. There are two changes that I would highlight in the environment. One is the slowdown in markets, leading to, in some cases, a negative growth. The second change has been the opening up of global markets, and therefore the globalization of competition. We have developed a three-pronged strategy. Our first thrust is to grow by focusing on our 30 leading brands out of 110. Our second thrust is to improve profitability of these brands, and our third thrust is to secure value for our non-FMCG businesses to make sure that we protect the long-term interest.

- M. S. Banga, Non-Executive Chairman, HLL¹

Introduction

In 2003, Hindustan Lever Limited (HLL), Unilever's Indian subsidiary was India's largest Fast Moving Consumer Goods (FMCG) company with a turnover of Rs. 10138 crores, an employee strength of 40000 and more than 110 brands. HLL was a market leader in almost all the product categories in which it had a presence - soaps and detergents, hair care, skin care, household products, dental products and foods and beverages.

HLL classified 30 of its brands as power brands (Exhibit: I). These were the best selling brands and contributed about 80% of the revenues.

Brands like Surf, Fair & Lovely, Kissan, Pepsodent, Close Up, Sunsilk, Clinic, Lux, Lifebuoy, Wheel, Lakme, all of which belonged to HLL had become household names.

HLL had decided to focus on its power brands and sharply prune its brand portfolio. HLL's distribution network was considered to be one of the strongest in the country.

The company's products were available in over one million retail outlets throughout India.

HLL derived over 50% of its sales from rural areas. In the Businessworld - CMIE (Centre for Monitoring Indian Economy) survey of 500 companies for 2003, HLL had an overall rank of 16.

HLL ranked ninth in terms of sales, sixth in terms of profits and third by ROCE (Return on Capital Employed). But despite these strengths, HLL had found it difficult to generate growth in the past three years.

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1] In an interview with Sourav Majumdar and Namrata Singh of 'The Financial Express', 9^th September 2002.


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