FMCG major targets volume-led profit growth, expands premium brands and under-penetrated categories, strengthens quick commerce and specialised channels, and plans to use AI across innovation, marketing, supply chain and finance
New Delhi: Hindustan Unilever Limited (HUL), one of India’s leading fast-moving consumer goods companies, is reshaping its growth strategy to capture the changing consumption patterns of the Indian market.
The company is moving from its earlier ‘Winning in Many Indias’ approach towards ‘Winning in New India’, with a greater focus on increasing consumption, bringing more consumers into emerging categories, premiumising its portfolio and entering new growth spaces.
HUL said its primary objective will remain volume-led profit growth, while maintaining a strong focus on margins. The company has set a medium-term EBITDA margin target of 22-24 per cent.
HUL Shifts Focus Towards ‘New India’
HUL’s new strategy reflects its assessment that Indian consumers are increasingly looking for products that offer higher benefits, better experiences and greater convenience.
Instead of relying primarily on expanding its reach across different consumer segments, HUL plans to drive growth by:
- Increasing product usage and consumption frequency
- Bringing more consumers into existing categories
- Offering higher-value and premium products
- Expanding into new product categories
- Entering selected high-growth markets
- Strengthening digital and specialised distribution channels
- Using technology and artificial intelligence to improve business performance
The company believes this approach can create sustainable growth while allowing it to invest more aggressively in brands and emerging opportunities.
Premiumisation Becomes a Key Growth Driver
Premiumisation is emerging as one of the most important elements of HUL’s strategy.
The company is structurally moving its portfolio towards products with higher margins and a wider range of consumer benefits. According to HUL, this portfolio shift will create greater flexibility to reinvest in growth.
The company said its value-creation model will be driven by three major enablers:
- Crafting desirable brands
- Accelerating a future-fit go-to-market model
- Building AI as a distinctive competitive advantage
HUL is also investing disproportionately in its premium brands. The company said its investment in premium brands is around two times higher, while more than 60 per cent of its digital media spending is being directed towards these brands.
This reflects the company’s belief that premium products can deliver both stronger consumer engagement and better margins over the long term.
Premium Segment Growing Faster Than Mass Products
HUL said its market share in the premium segment is growing faster than its mass-market portfolio.
Citing NIQ (formerly Nielsen) data for May’s Moving Annual Total, the company said the pace of market-share growth in its premium segment is around 1.3 times that of its mass-segment products.
HUL believes India is entering a new phase of accelerated premiumisation, as consumers increasingly trade up to products that offer additional benefits, convenience, specialised solutions and improved experiences.
The trend could create significant opportunities for FMCG companies with strong brands and established distribution networks.
Focus on Under-Penetrated Categories
HUL is also targeting several categories where household penetration remains relatively low.
The company identified areas such as:
- Hair masks
- Suncare
- Body wash
- Dishwasher liquids
- Laundry liquids
- Face cleansing
These categories offer HUL an opportunity to increase consumption by introducing more consumers to products that are still not used widely across Indian households.
The company intends to use its existing brands, distribution network and market-making capabilities to expand these categories.
Laundry Liquid Seen at a Key Inflection Point
HUL specifically highlighted laundry liquids as a category that is approaching a critical stage of mass-market adoption.
The company described laundry liquids as being “on the tipping point for scale” and said it has a repeatable and proven market-making model for developing the category.
The opportunity is significant because laundry care represents a large and established consumption market in India, while liquid detergents can offer consumers differentiated benefits compared with traditional formats.
HUL’s strategy will therefore focus on expanding consumer adoption and moving the category towards greater scale.
Entry Into New High-Growth Spaces
Beyond its existing portfolio, HUL plans to enter selected high-growth new spaces.
The company said it intends to make decisive moves into areas where it sees strong future consumption potential.
At the same time, HUL is building a more segmented frontline organisation to address the changing needs of consumers in what it describes as New India.
This could allow the company to tailor its sales approach, product assortment and distribution strategy to different consumer groups and markets.
Quick Commerce Becomes a Major Priority
India’s rapidly expanding quick-commerce ecosystem is another major focus area for HUL.
The company plans to pursue growth in quick commerce through a dedicated cross-functional organisation and joint business planning.
Quick-commerce platforms have changed the way consumers purchase everyday products by offering deliveries within a short period. For FMCG companies, the channel provides an additional opportunity to increase product availability, improve visibility and capture convenience-driven consumption.
HUL intends to develop its approach specifically for this rapidly evolving channel rather than treating it simply as an extension of traditional e-commerce.
Expansion of Specialised Channels
HUL is also increasing its focus on specialised distribution channels.
These include:
- Open-format stores
- Chemists
- Cosmetics outlets
The company believes these channels can play an important role in reaching consumers looking for specialised personal-care, beauty and other FMCG products.
At the same time, HUL plans to strengthen its general-trade distribution network with a differentiated go-to-market strategy.
Greater Focus on Rural Markets
Rural India remains an important component of HUL’s growth strategy.
The company plans to expand its general-trade reach through a differentiated approach focused on:
- Rural distribution
- Product assortment
- Consumer-specific selling
- Improved availability
The objective is to ensure that the right products reach consumers across different markets according to local consumption patterns and purchasing behaviour.
This segmented approach is expected to complement HUL’s premiumisation strategy by allowing the company to address both emerging premium demand and mass-market consumption opportunities.
AI to Support Innovation and Business Operations
Artificial intelligence is another major pillar of HUL’s future strategy.
The company plans to use AI across several areas of its business, with the objective of improving speed, efficiency and decision-making.
Key applications will include:
Research and Development
AI can help HUL accelerate research and development and improve the speed at which new products and innovations are developed.
Marketing
The company plans to use AI to make marketing more effective by improving consumer understanding, campaign planning and execution.
Supply Chain
AI will also be used across supply-chain planning and operations, helping the company improve forecasting, planning and execution.
Go-to-Market Strategy
HUL intends to use AI to strengthen its go-to-market decisions and improve how products are distributed and sold across different channels and consumer segments.
Finance
AI will also have applications in financial functions, potentially improving analysis, planning and operational efficiency.
HUL’s objective is to make AI a distinctive competitive moat, rather than treating it merely as a technology initiative.
Three Pillars of HUL’s Value-Creation Model
HUL’s future growth strategy can broadly be understood through three major pillars.
First, stronger brands: The company wants to create brands that consumers find more desirable and relevant.
Second, a future-fit go-to-market model: HUL plans to adapt its distribution and sales strategy to new channels, changing consumer behaviour, rural markets and specialised formats.
Third, AI-led transformation: The company intends to integrate AI into innovation, marketing, planning, supply chain, finance and other operations.
Together, these initiatives are designed to support volume-led profit growth.
Higher Margins to Create Room for Further Investment
HUL’s focus on premiumisation is not only about increasing selling prices. The company is also attempting to structurally improve the quality of its portfolio by increasing the contribution of products with higher margins.
A stronger margin profile could provide the company with additional flexibility to invest in:
- Premium brands
- Digital advertising
- New categories
- Quick commerce
- Specialised channels
- Rural distribution
- Research and development
- Artificial intelligence
The company’s 22-24 per cent medium-term EBITDA margin target therefore remains an important part of its overall value-creation strategy.
What HUL’s New Strategy Means
HUL’s shift towards ‘Winning in New India’ signals a broader transformation in the company’s approach to growth.
The strategy combines premiumisation with increased consumption, category expansion, new-market entry, quick commerce, specialised distribution and AI-driven business transformation.
Rather than depending on a single growth engine, HUL is attempting to create multiple avenues for expansion across India’s evolving consumer landscape.
The company’s focus on premium brands could improve margins, while investments in under-penetrated categories could generate additional volumes. Meanwhile, quick commerce and specialised channels could provide new routes to consumers, particularly as purchasing behaviour continues to change.
Outlook
HUL’s strategy indicates that the company sees significant long-term growth opportunities in India’s evolving FMCG market.
Its emphasis on premium products, new categories and emerging channels is aimed at capturing changing consumer preferences, while its rural and general-trade initiatives seek to expand overall consumption.
At the same time, the company’s investment in AI could help accelerate innovation and improve operational efficiency across the organisation.
With volume-led profit growth as the central objective and a 22-24 per cent medium-term EBITDA margin target, HUL is positioning premiumisation, digital channels, specialised distribution and AI as key drivers of its next phase of growth.
