Last week India’s biggest FMCG company Hindustan Unilever Ltd. revealed its strategy to focus on premiumization. The company anticipates growth in personal care and convenance products, driven by rising incomes and evolving consumer preferences. This, they expect, will results in a shift towards more premium purchased and advanced formulations. The focus areas include sun care, facial cleansing, serums, light moisturisation, weatherproof body care and masstige beauty segment. Traditionally FMCG companies have relied on rural demand to keep the momentum as a major portion of the products are targeted towards the mass market segment. The slowdown in rural demand may have pushed the change in strategy. Besides products this strategy will also be dependent on a differentiated go-to-market strategy, as many premium products have more finely tuned GTM’s. HUL’s unparalleled offline distributorship will have to be complimented with far more serious on-line presence over and above the e-com majors. Naturally, this new premiumization strategy will have an impact on smaller players and D2C brands like Mamaearth, The Man Company, SUGAR Cosmetics, The Moms Co. | Good Glamm Group, 82°E, Alphavedic etc. My take in this afaqs! article by Ubaid Zargar along with Inexgro Brand Advisory’s shivaji dasgupta #FMCG #Premiumization #D2C #HUL | Marico Limited | Dabur India Limited | Godrej Consumer Products Limited | Procter & Gamble India | Nestle India | Nykaa
Lloyd Mathias Its about penetrating the other side of the markets. Premium products companies are working on launching low ticket size products for India 3 ( or Bharat) while Companies saturated in India 3 are working on reaching India 1 ( Premium ) .
The move towards premiumization is a strategic response to evolving consumer tastes. It aligns with organizations that adapt to the shifting market dynamics and consumer preferences. In contrast, organizations lacking maturity may struggle in such situations. The effect on smaller entities will undoubtedly alter the market landscape.
Interesting insights on HUL's shift towards premiumization! 🌟 As consumer preferences evolve, balancing traditional rural demand with a robust premium and digital-first strategy will be crucial. It will be fascinating to see how smaller D2C brands navigate this competitive landscape, leveraging agility and innovation to stand out. Exciting times are ahead for the FMCG sector! 🚀 #FMCG #Premiumization #Innovation"
the focus on increasing value makes sense [consumer trends, consumer sophistication] .. however it does raise some questions re the mass market growth, in an emerging market [and that to the size of India] one would expect a bell weather org like HUL to double down on mass market segment or is it a case of the sachet economy not firing and paying enough dividend [demogs]... sizing the potential still remains an Achilles heel.
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2wGood points Lloyd Mathias The ability to take on the D2C brands will mean a change/shift in culture from being a centralised decision making unit which most MNCs are as compared to the nimbleness of fail fast, owning up failure as a part of growing the portfolio. The case in point is it took nearly 3 decades to shed the ice cream business. To me that’s the nub of the issue. The current portfolios are annuity driven equivalents which rake in the Moolah but cannot drive growth.