The consumer packaged goods industry is set to see a lot of action as both Unilever Plc. and Procter and Gamble Co. (P&G) are drawing up plans to double their revenue in India.
Paul Polman, chief executive of Unilever, the maker of Surf, Dove and Lux, had announced in March that he would like to create another Hindustan Unilever Ltd in a few years. They took 78 years to build the company. For the fiscal year ending March, its turnover was Rs. 17,523 crore.
Deb Henretta, group president, Asia, Procter and Gamble Asia Pte Ltd, which has brands such as Ariel, Tide and Head and Shoulders, is even more aggressive. She plans to double revenue from India every two years.
India is the third largest market in Asia for P&G. Its three Indian subsidiaries have revenue of under $1 billion (Rs.4,430 crore), according to a 24 February New York analysts call with the company. In an interview with Mint, Henretta spoke about the company's strategy and challenges in India. Edited excerpts:
You are known for turning around ailing brands. What's the task ahead for India?
While stepping into the Asia job (in 2007), there were a couple of things that I needed to do out here. The first big challenge was actually taking P&G from a three-Asia operation to a one-Asia operation, and we did that; so we could better leverage synergies and scale in the business. Several years ago, P&G was running three-Asia operations-we had northeast Asia, which was Japan and Korea; greater China, which was China, Taiwan and Hong Kong; and balance of Asia. I am happy to say that we have delivered and I am sure that is really helping us to leverage the synergy and scale of Asia without losing sight of the important local differences that are needed to drive the consumers. The second challenge was to develop a business model by which P&G could accelerate its business in Asia and make Asia a growth engine for the company. I believe that we have developed that business model and accelerated the Asia model. I don't want to go into the details of that because it's working for us. We believe that we have a lot of intellectual properties in that model right now.
How did it pan out in India?
We piloted that model first in India as a market and in haircare as a category. We then moved to a couple of other markets and categories that we call our fast follower markets and we have now broadly deployed it across Asia. That business model is helping us accelerate growth in every market and every category we take the business model to.
Why did you test market this in India?
One of the things about India is that it has incredible diversity as is Asia. So, doing things in India that appeals to a diverse spectrum of consumers and then taking that learning and insights to Asia helps us. Asia just introduces another dimension to diversity. I think meeting the diverse needs of consumers is a way to accelerate business growth. Diversity is an important business strategy even when building a workforce because we want our workforce to reflect the diversity of consumers that we serve. So, it is a lesson of how to work within the diversity and also simplify it. It is an important learning that India can teach Asia and Asia can teach the rest of the world.
Can you elaborate on this?
We are trying to tackle and accelerate growth in India by looking at developing products that cater to different price tiers-from premium to mid and low tier. We believe we have design philosophies and design approaches that help us meet the different needs in these tiers. A good example here is our Gillette business. For the premium price consumers, we have got Mach3; for the middle-income consumers we have got the Vector series; and for the lower end of consumers-where we need a value proposition-we have got the recently introduced Gillette Guard proposition.
But this strategy is no different from that of your competitors in India.
I think we have some proprietary programmes that are helping us better expand our portfolio faster. One advantage that we have in India that my competitors don't have is that we didn't start with a broad portfolio. We have added eight new product categories in the last six years and that is helping us build our business and expand our business quite extensively. The other thing we are doing is growing our distribution and we are very happy with it. We believe that is proving to be a successful tenet to our growth strategy in India. To be honest, this has helped us improve our coverage in terms of number of stores. We increased coverage by 100% in the past two years.
How do you replicate it in other markets?
It goes back to the same thing. Asia is a bit light on the portfolio. We have exploded the number of categories and country combinations that we have today versus five years ago.
Can you give us some examples?
One of the things is the basic components of our Asia Accelerate Growth Programme being replicated by the globe is propositions at the low-end like Gillette Guard. These will be extended beyond India. We are also looking at higher-end products that are developed in Asia like Pantene Clinicare Hair in Japan. These ideas qualify to apply in different markets.
Where does India figure in your target for reaching 5 billion consumers by 2015 from the 4.2 billion now?
We are looking to increase the number of consumers whose lives we touch by half a billion. We are working in all of these strategies to increase our portfolio both horizontally and vertically getting into new price tiers. They all help us to bring in more consumers into the fold.
Will these new consumers come from India largely?
As we look at how the incremental consumers will play out for India and Asia, most of them will come from the emerging markets. And India is one of those priority emerging markets for P&G and for Asia.
Has the global products portfolio been replicated in India?
We are working very hard to that. That is one of our goals as I would like to see our markets in Asia have a fuller participation in the P&G portfolio.
How would the India operations look three years from today?
We would have added the consumers that we have spoken about adding. We will do that by continued portfolio expansion and better meeting those consumer needs with our existing products. We would like to double our India business every couple of years.
Your former boss Paul Polman, who heads Unilever, is a 26-year veteran at P&G. Is it a concern?
I think the company has evolved to certain different strategies since Paul has left.