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

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

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Hindustan Unilever Limited presentation to be made to a group of investors at Mumbai today. Mumbai - 400 001 Mumbai - 400 051 Dear Sir, Sub: Investor Presentation Pursuant to the Regulation 30 of the Securities and Exchange Board of India

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SLIDE 1 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:L15140MH1933PLC012030

Stock Code BSE: 500696 NSE: HINDUNIL VR /SIN: INE030B01027 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

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Executive Director, Legal & Corporate Afgairs and Company Secretary OIN:00050516 / FCS No.: 3354

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SLIDE 2

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
  • wn 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
  • f data for the business and helps in creating cohorts and traits.

DEMAND CAPTURE ENABLED BY 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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SLIDE 3

Foods & Refreshment

Sudhir Sitapati, Executive Director F&R

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SLIDE 4

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)

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SLIDE 5

STRONG POSITION IN ALL KEY CATEGORIES

#1 #2 #1

Tea Coffee Ketchup

#1

Jams*

#2

Ice Creams*

Source: Nielsen & *Euromonitor 2018

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SLIDE 6

4

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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SLIDE 7

OUR STRATEGY

Growth Segments Growth Channels M&A Purposeful Brands

*Subject to regulatory approvals

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SLIDE 8

Growth Segments

OUR STRATEGY

Growth Channels

Growth Segments

Purposeful Brands M&A

*Subject to regulatory approvals

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SLIDE 9

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

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SLIDE 10

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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SLIDE 11

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

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SLIDE 12

Growth Channels

OUR STRATEGY

Growth Segments M&A

Growth Channels

*Subject to regulatory approvals

Purposeful Brands

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SLIDE 13

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

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SLIDE 14

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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SLIDE 15

M&A

OUR STRATEGY

Growth Segments Growth Channels Purposeful Brands

M&A

*Subject to regulatory approvals

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SLIDE 16

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

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SLIDE 17

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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SLIDE 18

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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SLIDE 19

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

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SLIDE 20

Purposeful Brands

OUR STRATEGY

Growth Segments Growth Channels M&A

Purposeful Brands

*Subject to regulatory approvals

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SLIDE 21

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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SLIDE 22

OUR STRATEGY

Growth Segments Growth Channels Purposeful Brands M&A

*Subject to regulatory approvals

TO HELP SHAPE INDIA’S FOOD REVOLUTION

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SLIDE 23

THANK YOU

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SLIDE 24

TRANSFORMING DISTRIBUTIVE TRADE WITH TECHNOLOGY

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SLIDE 25

2

INDIA CD LANDSCAPE

3K+

4000+

19k+

30k+

5000+ Sales Logistics Beauty Distributors Merchandisers Representatives Manpower Advisors

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SLIDE 26

3

LELED TIONS

1.6x 1.3x 1.05x 1x

UNPARAL SCALE OF OPERA

120k+

Shakti Entrepreneurs

WIDEST RURAL REACH

600k Sq. Ft

  • f 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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SLIDE 27

4

E-COMMERCE MODERN TRADE

MARKET SHARE GROSS MARGIN

GENERAL TRADE

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SLIDE 28

Image Image

5

Pilla illars s of f CD D Strategy y

DEMAND CAPTURE cover the right outlets at the right frequency with the right assortment DEMAND FULFILMENT speedy delivery of

  • rder(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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SLIDE 29

6

DEMAND CAPTURE

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SLIDE 30

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More Stores More Assortment

Increase Direct Reach Distribution

Democratize Ordering

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SLIDE 31

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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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SLIDE 32

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More Stores More Assortment

Increase Direct Reach Distribution

Democratize Ordering

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SLIDE 33

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Better Replenishment is our biggest lever to grow assortment

Spread of Replenishment Across our Universe

30% 15% 11% % Contribution 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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SLIDE 34

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Leveraging Bayesian networks for improved replenishment modelling

Will the

A probabilistic model which learns

Pack Type

  • utlet 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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SLIDE 35

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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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SLIDE 36

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More More Stores Assortment

Increase Direct Reach Distribution

Democratize Ordering

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SLIDE 37

Democratize order taking from Salesman : B2B App

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RAPID SCALE UP

Any time Business

  • rdering

Transparency

4 Cities Q1’ 18 15 Cities Q4’ 18

Customized Promotions

Q2’ 19 50 Cities

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SLIDE 38

15

DEMAND FULFILMENT

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SLIDE 39

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  • N+2 Delivery
  • Back end

Automation

automation

Delivery Transparency

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SLIDE 40

n+2 delivery % D+F Key Retail PRS Kiosk % return as per delivery date

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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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SLIDE 41

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AV : Demand Fulfilment

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SLIDE 42

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  • N+2 Delivery

Delivery

  • Back end

Transparency

automation

Automation

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SLIDE 43

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Handling Complexity through Robotization

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SLIDE 44

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DEMAND GENERATION

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SLIDE 45

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  • Wiring up

Program Stores

Wire Up Stores Direct to Consumer

  • Activate B2C
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SLIDE 46

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Wiring Up Stores & winning at scale

Billing Solution Shopper Retargeting Loyalty Program Cashless Payments

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SLIDE 47

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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SLIDE 48

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  • Wiring up

Program Stores

  • Activate B2C

Wire Up Stores Direct to Consumer

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SLIDE 49

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B2B2C : Humarashop – The power of Hyperlocal

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SLIDE 50

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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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SLIDE 51

Image Image

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CD D Strategy y : : Summary ry

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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SLIDE 52

THANK YOU