Hindustan Unilever Bets on Evolving Household Habits and Gen-Z for Growth

Mumbai: A gas cylinder, a water tap, and a 20-year-old with a smartphone may have more to do with Hindustan Unilever's next growth cycle than India's broader economic performance. That is the exact bet managing director Priya Nair is making as the country's largest consumer goods maker hunts for new pockets of consumption amid subdued demand.

At its capital markets day interaction with analysts, made public on Sunday, Nair said LPG adoption is changing household behaviour.

With LPG, consumers have greater control over cooking and no longer have the same levels of ash available from wood-fired stoves that could be used for cleaning utensils, she said, adding that wider access to tap water is also changing household cleaning habits, creating opportunities for dishwashing products. India's 377 million Gen-Z consumers are similarly changing how categories are discovered and how brands engage with consumers, Nair said.

But investors were less willing to take HUL's consumption headroom at face value.

"The outcome does not triangulate with the opportunity," Mihir Shah of Nomura told Nair, pointing to the gap between the company's recent performance and the large growth opportunity it continues to highlight. He asked what problem areas had been anchoring that growth down or negating the good work HUL is doing, and what the company has done to fix them.

"The demand environment was different," said Nair, describing the consumer packaged-goods market as a very subdued demand environment and acknowledging that there were some segments and brands on which it needed to do work.

The maker of Rin and Dove was also undertaking a portfolio transformation, both by making brands more desirable and by shifting the portfolio towards higher-growth areas, said Nair. Analysts also questioned why thousands of new brands were able to capture consumer needs before established players.

Industry estimates that 11,000 brands were launched between 2020 and 2025, with about 230 crossing ₹150 crore in revenue.

Nair said the impact of those brands needs to be assessed category by category. In home care, tea and soaps, she said, the economics require scale. But she acknowledged that HUL, too, is transforming its portfolio where it believes it needs it. The bigger challenge, she said, is that scale itself is becoming harder.

"The barriers to scale in this country have never been higher because it is getting more complex," she said, pointing to different economics across the income pyramid and the need for different skills depending on where consumers live and which channel they use. Nair cautioned against judging India's potential only against per-capita consumption in other countries, saying food and consumption habits vary widely. Instead, HUL is studying how consumption changes within India as consumers move up the income ladder. Dove is HUL's fastest-growing premium brand, and Nair expects it to become the company's second-biggest brand as it expands beyond soap and shampoo.