HINDUNILVR

Hindustan Unilever Limited Unilever House B D Sawant Marg Chakala, Andheri East Mumbai 400 099 Tel: +91 (22) 3983 0000 2nd August, 2019 Web: www.hul.co.in CIN:L15140MH1933PLC002030 Stock Code BSE: 500696 NSE: HINDUNIL VR /SIN: INE030A01027 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 a1 Executive Director, Legal & Corporate Affairs and Company Secretary OIN:00050516 / FCS No.: 3354 u-r 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 DATA •We have the capability to pick up consumer signals real time. We can use our own channels to read the consumer feedback. AUGMENTED GENERATING DEMAND DECISION MAKING •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 Y of data for the business and helps in creating cohorts and traits. B D NEW E L BUSINESS DEMAND CAPTURE B A MODEL N E •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. •OurHumrashopprogram has evolved and we are now focusing on how we can PEOPLE, improve shopper experience even more through faster delivery and great user interface. CAPABILITY & CULTURE 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 AUTOMATION and will work with the distributors to ensure we are able to build assortment​. 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 Foods & Refreshment Sudhir Sitapati, Executive Director F&R FY 2018-19 PERFORMANCE HIGHLIGHTS Strong Brands Net Sales Operating Margin 4 Brands with Double Digit Turnover 17% Operating Margin* Turnover > 500 Crores Growth ~180 Bps # * Segment Margins (EBIT) FY 2018-19 excludes exceptional items 2 # Operating margin improvement in one year (FY’19 Vs. FY’18) STRONG POSITION IN ALL KEY CATEGORIES #1 #2 #1 Tea Coffee Ketchup #1 #2 Jams* Ice Creams* 3 Source: Nielsen & *Euromonitor 2018 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. 4 OUR STRATEGY Growth Segments Growth Channels M&A Purposeful Brands *Subject to regulatory approvals 5 OUR STRATEGY GGrroowwthth S eSgemgemntesnts Growth Channels M&A Purposeful Brands *Subject to regulatory approvals 6 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 7 DEVELOPING THE KETCHUP MARKET IN INDIA Underpenetrated category Communication aimed at market Leading the market development development 4 out of every 5 category AV 03: Kissan TVC entrants through kissan Users 30% Non Users 70% 8 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 Kulfi Stick Rs. 10 2014 2019 BOP stands for Bottom Of Pyramid 9 OUR STRATEGY Growth Channels Growth Segments Growth Channels M&A Purposeful Brands *Subject to regulatory approvals 10 UNILEVER FOOD SOLUTIONS Huge opportunity Our strategy 8 quarters of strong growth Food Pharmaceuticals TV 3.5X Service 23 USD Bn 12 USD Bn 48 USD Bn Local Chain Accounts 2X Huge headroom to grow Bring global successes to India Star Hotels 11 TEA: BRILLIANT BASICS UNLOCKED MASSIVE OPPORTUNITY IN RURAL Rural opportunity Our strategy Significant results in last 3 years AV 04: Brooke Bond Taaza TVC 3X HUL Tea market share 2.5X X 2X HUL Tea Direct Coverage 2.2X Urban India Rural India X Under indexed rural share MQ 16 MQ 19 HUL TEA PORTFOLIO 12 OUR STRATEGY Growth Segments Growth Channels MM&&AA Purposeful Brands *Subject to regulatory approvals 13 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 14 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 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 ADITYA ACQUISITION GIVES US FOOTHOLD IN NEWER MARKETS Enabled us to play BOP Mini cone Rs. 10 Unlocked physical availability in new markets 3x X 2018 2019 HUL + Adityaa cabinets in key markets* 17 *Kerala, Rest of Karnataka & Rest of Maharashtra OUR STRATEGY Growth Segments Growth Channels M&A Purposeful Brands Purposeful Brands *Subject to regulatory approvals 18 RED LABEL: TASTE OF TOGETHERNESS Purpose at the heart of all communications Topics of relevance Market leadership External recognition AV 05: Red Label Purpose MARKET LEADERSHIP IN TEA UNDERPINNED BY PURPOSE-LED ENGAGEMENTS 19 OUR STRATEGY Growth Segments Growth Channels M&A Purposeful Brands *Subject to regulatory approvals TO HELP SHAPE INDIA’S FOOD REVOLUTION 20 TRANSFORMING DISTRIBUTIVE TRADE WITH TECHNOLOGY 2 INDIA CD LANDSCAPE 3K+ 19k+ 30k+ 5000+ 4000+ Sales Logistics Beauty Distributors Merchandisers Representatives Manpower Advisors 3 140 Mn 120k+ 600k Sq. Ft Units Sold per Day UNPARALLELED SCALE OF O1.6xPERATIONS of Trade Assets Many brands reach over Shakti Entrepreneurs 1.3x BIGGEST IN STORE million outlets 1.05x WIDEST RURAL REACH 3 Units sold to every MERCHANDIZING 1x Indian Citizen monthly 4 GENERAL TRADE MODERN TRADE E-COMMERCE MARKET SHARE GROSS MARGIN 5 Pillars of CD Strategy Image Image DEMAND CAPTURE DEMAND FULFILMENT DEMAND GENERATION cover the right outlets at speedy delivery of world class in store the right frequency with the order(s) to outlets at the execution & shopper right assortment most optimal cost loyalty to win at the point of purchase 7 More More Stores Assortment Increase Direct Reach Distribution Democratize Ordering 8 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 Addition Upgrade Month 1 Month 2 Month 3-5 Month 6-9 Month 9-12 9 More More Stores Assortment Increase Direct Reach Distribution Democratize Ordering Better Replenishment is our biggest lever to grow 10 assortment Spread of Replenishment Across our Universe 30% “ n o i t u Assortment is not just about b 15% i 11% the sale of new packs but also r t 8% 7% n o 6% 5% 5% 4% 3% 3% 2% their subsequent C % replenishment ” 1x 2x 3x 4x 5x 6x 7x 8x 9x 10x 11x 12x Frequency of Replenishment Leveraging Bayesian networks for improved 11 replenishment modelling A probabilistic model which learns Will the outlet and pack behavior trends to Pack Type line sell Outlet this Type provide more relevant tasks to the Month? Salesman in the given month Purchase Purchase Quantity Frequency 12 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 13 More More Stores Assortment Increase Direct Reach Distribution Democratize Ordering 14 Democratize order taking from Salesman : B2B App RAPID SCALE UP Q1’ 4 18 Cities Any time Business ordering Transparency Q4’ 15 18 Cities Customized Promotions Q2’ 50 19 Cities 16 - N+2 Delivery Delivery - Back end Automation Transparency automation 17 Faster & on-time deliveries key for growth Delivery Optimization is key to improve last mile efficiency Higher the delay in Larger is the Cost of Lesser is the delivery Delay Productivity 52% 54% 90% 18% 88% 39% 10% 81% 8% 5% Mass Retail Kney+ R2e tdaiel l i vCheermyi s%ts Kiosks n+2 n+3 n+4 N+2 N+3 > N+3 D+F N K + ey 2 R D et e a l i i l ver P y R S Kiosk %age % R re e tu tu rn r n as a p s e r p e de r li d ve e r l y iv d e a r t y e Probability of billing in next salesman visit date 19 - N+2 Delivery Delivery - Back end Automation Transparency automation 20 Handling Complexity through Robotization 22 - Wiring up Program Stores Wire Up Direct to - Activate B2C Stores Consumer 23 Wiring Up Stores & winning at scale Billing Solution Cashless Payments Shopper Retargeting Loyalty Program 24 Benefits from Wired Stores Shopper Customized Stronger Premiumizing Zero response Improved transaction level promotions retailer shoppers and time on Shopper insights relationship wider competitive loyalty assortment actions 25 - Wiring up Program Stores Wire Up Direct to - Activate B2C Stores Consumer 26 B2B2C : Humarashop – The power of Hyperlocal 27 B2B2C : Humarashop – The power of Hyperlocal PARTNER DELIVERY DELIVERS PARTNER/STORE PICKUP RETAILER CLICKS DELIVERY DISPATCH SHOPPER RETAILER GETS ORDER PLACES ORDER NOTIFIED RETAILER SHOPPER IT PLATFORM SHOPPER SEES SHOP & PROMOTER MASTERS REAL TIME UPDATES PRICES CD Strategy : Summary 28 Image Image DEMAND CAPTURE DEMAND FULFILMENT DEMAND GENERATION More Stores Delivery Transparency Wire up Stores More Assortment Automation Direct to Consumer Democratize Ordering