Unilever boss sets stage for a big push in India

Unilever boss sets stage for a big push in India

Author | Source: The Economic Times | Tuesday, Dec 05,2006 8:41 AM

Unilever boss sets stage for a big push in India

Unilever group CEO Patrick Cescau had one cryptic but telling message for India as a market. "I want India to be for Unilever what China has been for the other company," he said in an oblique reference to the role India's giant Asian neighbour has played in the fortunes of Procter & Gamble, Lever's great rival.

In his second visit to India after taking over as CEO, Mr Cescau was aggressive, confident, and gung-ho about opportunities in the world's second fastest-growing economy. Eloquent about the strength of Unilever's brands, he was delighted with the opportunities in the current market and pushed for greater penetration and growth in market share.

His indirect reference to P&G's enormous success in China could have been aimed at goading the current HLL management. It could also have been a wistful expression of longing for replicating the success of his rival in other great Asian market. China is an enormous success story for P&G.

It is the sixth biggest market for the company with sales of over $2 billion and contribution of turnover of about 3.5%. P&G's sales in China rose at a cumulative annual average rate of 25% between 2002 and 2005. In contrast, growth for Unilever in India has been less than 10% in the past two years.

The company has overcome some of the problems it had faced in the past, but for India to grow as fast as China, many more things need to be done.

For one, HLL needs to maintain its market share in key categories of laundry, soaps and personal care products. It also needs to revisit its strategy in foods. Hindustan Lever has surprisingly struggled in this business despite being a global leader. A high-profile acquisition of Modern Food failed to deliver returns, and a foray into branded staples also did not click with consumers.

Mr Cescau was candid about what needs to be done. "Clearly, in processed foods, the market is not mature enough in India. But we have some strong brands such as Kissan, Knorr and Annapurna. We can bring together under one banner the capabilities in foods business worldwide, the competitive strengths and cost reduction to deliver value to consumers," he added.

In its core businesses, Mr Cescau said that he saw great opportunity with the entry of modern retail formats such as Wal-Mart, Carrefour etc. He pooh-poohed suggestions that HLL's sales and margins would suffer with the entry of modern retail.

"In markets were modern trade has major presence, we have done very well. We have not suffered. It is an opportunity for us to exploit synergies and grow the business in a big way," Mr Cescau added.

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