Hindustan Unilever to take further price hikes despite volumes taking a hit

Country going through probably the most difficult economic situation, says chairman

Hindustan Unilever (HUL) will continue to increase prices of its products as inflation remains high even as market growths have moderated and volume growth has declined, Nitin Paranjpe, chairman of the company, told shareholders at its 89th annual general meeting (AGM) on Thursday.

Paranjpe said the company was working towards cost-efficiency and the rate of annual cost savings was about seven. He said the country was going through “probably the most difficult economic situation due to high inflation and supply chain disruptions”.

Pointing out that India was getting to a situation where there have been 14 consecutive months of double-digit wholesale price inflation, Paranjpe said,

“The level of inflation is such that, after that (cost-saving initiatives) it is inevitable that we will have to raise prices. When that’s required, we do it in as calibrated a manner as possible… and we will continue to do so,” Paranjpe told shareholders of the company while answering questions. 

“There are price point packs that we have to be watchful of and we will follow appropriate strategies, sometimes reducing volumes of fill levels, sometimes taking up prices, but I don’t want to pretend it is not an easy moment for our people.” 

He also said the inflation rate for various ingredients such as palm oil, crude oil, along with plastic and logistics, is in excess of 50 per cent. 

Paranjpe also said the immediate future was challenging, and it will require some astute handling and a balancing act to make sure that growth does not stop and the company is able to contain inflation.

However, he said he was confident that the country will navigate through the crisis. “It’s not just my saying, the World Bank believes that India will remain (among) the fastest growing economies in the coming years.”

Paranjpe admitted to the short-term pain for the fast-moving consumer goods (FMCG) industry, but remained confident of the medium- to long-term future. He pointed to India’s low per capita consumption at the moment, which has scope for growth. “Also, India has a large and young population, a growing middle class… We see growth opportunities for your company, both in the core, given how low the penetration levels are. We see opportunities in new areas that are developing based on the penetration, market development competence that has been built,” Paranjpe said.

Adding that the company saw opportunities in new platforms, which includes the fast-evolving digital channel. 

Paranjpe said the shoppers’ journey has become phygital due to which brands need to be present everywhere and communicate consistently to stay on top of the consumer’s mind.

“HUL’s journey is to build an intelligent enterprise that is data-led, machine-augmented and is fit for the heterogeneous nature of the country,” he said.

“Artificial intelligence and machine learning are being leveraged for better forecasting and planning. To deliver an unbeatable customer experience in terms of delivery reliability and real-time feedback, HUL has launched Samadhan, a tech-enabled customer delivery mechanism. All these will collectively result in an improved customer service, better efficiency, and reduced costs,” he said.