Sales and Distribution

Of

Submitted to: Prof. Baldev Raj

Presented by: Ankit Patodia

Roll No.: 9019

MET

Sales and Distribution of HUL Page 2

INDEX

Sr. No. Title Page No.

1. Indian FMCG Market – Overview 4

2. Hindustan Unilever – Company Overview 6

3. Sales & Distribution System – HUL 8

4. New Innovative Distribution Channels adopted by HUL 11

5. Conclusion 15

6. Recommendations 16

Sales and Distribution of HUL Page 3

Indian FMCG Market – Overview

The Indian FMCG sector is the fourth largest in the economy and has a market size of

US$13.1 billion. Well-established distribution networks, as well as intense competition

between the organised and unorganised segments are the characteristics of this sector.

FMCG in India has a strong and competitive MNC presence across the entire value chain. It

has been predicted that the FMCG market will reach to US$ 33.4 billion in 2015 from US $

billion 11.6 in 2003. The middle class and the rural segments of the Indian population are the

most promising market for FMCG, and give brand makers the opportunity to convert them to

branded products. Most of the product categories like jams, toothpaste, skin care,

shampoos, etc, in India, have low per capita consumption as well as low penetration level,

but the potential for growth is huge.

The Indian Economy is surging ahead by leaps and bounds, keeping pace with rapid

urbanization, increased literacy levels, and rising per capita income.

The big firms are growing bigger and small-time companies are catching up as well.

According to the study conducted by AC Nielsen, 62 of the top 100 brands are owned by

MNCs, and the balance by Indian companies. Fifteen companies own these 62 brands, and

27 of these are owned by Hindustan Lever. Pepsi is at number three followed by Thums Up.

Britannia takes the fifth place, followed by Colgate (6), Nirma (7), Coca-Cola (8) and Parle

(9). These are figures the soft drink and cigarette companies have always shied away from

revealing. Personal care, cigarettes, and soft drinks are the three biggest categories in

FMCG. Between them, they account for 35 of the top 100 brands.

The market growth over the past 5 years has been phenomenal, primarily due to consumers’

growing disposable income which is directly linked to an increased demand for FMCG goods

and services. Indeed, it is widely acknowledged that the large young population in the rural

and semi-urban regions is driving demand growth, with the continuous rise in their

disposable income, life style, food habits etc. On the supply side, the wide availability of raw

materials, vast agricultural produce, low cost of labor and increased organized retail have

helped the competitiveness of players.

Sales and Distribution of HUL Page 4

At a time when the economy and other large industrial sectors such as automobiles, aviation

and financial services are reeling from the global slowdown, the consumer goods sector in

India has managed to defy the trend. According to the recent reports by Zeus Consulting,

India's FMCG industry has so far been resilient to the slowdown in the economy and a dip in

consumer sentiment, with most companies posting double-digit growth in net profits in the

first half of fiscal 2009, backed by healthy sales.

While a price hike and cost-cutting were the first lines of defense in a bid to protect margins,

Indian manufacturers were able to let logic rather than bottom lines dictate measures, with

increased marketing efforts, a well-thought product mix and new launches helping them

emerge unscathed from the turmoil. The prospects going forward also remain promising.

Sales and Distribution of HUL Page 5

Hindustan Unilever – Company Overview

The Company was incorporate in 1933, but the products of the company are sold in India

since 1888. The company has always operated with the belief that “What is Good for India is

good for HUL”.

HUL is a subsidiary of Unilever, one of the world’s leading suppliers of fast moving consumer

goods with strong local roots in more than 100 countries across the globe with annual sales

of about €40 billion in 2009 Unilever has about 52% shareholding in HUL.

Hindustan Unilever was recently rated among the top four companies globally in the list of

“Global Top Companies for Leaders” by a study sponsored by Hewitt Associates, in

partnership with Fortune magazine and the RBL Group. The company was ranked number

one in the Asia-Pacific region and in India.

The mission that inspires HUL's more than 15,000 employees, including over 1,400

managers, is to help people feel good, look good and get more out of life with brands and

services that are good for them and good for others.  It is a mission HUL shares with its

parent company, Unilever, which holds about 52 % of the equity.

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer Goods Company,

touching the lives of two out of three Indians with over 20 distinct categories in Home &

Personal Care Products and Foods & Beverages. The company’s Turnover is Rs. 17,523

crores (for the financial year 2009 - 2010)

Business Presence

Home and Personal Care (HPC) – Personal Wash, Oral Care, Skin Care, Hair Care, Fabric Wash, Household Cleaning, Deodorants, Color Cosmetics and Beauty and Wellness Service.

Food and Beverages (F&B) – Tea, Jam, Flour, Sauces, Soup, Coffee, Ice Cream, Bakery Products, Salt and Recipe Mix.

Water – Pureit in-Home water purifier

Exports – HPC, F&B, Marine(Surimi and Crabstick), Rice and Leather

Hindustan Unilever Network

Sales and Distribution of HUL Page 6

Vision of HUL

“To earn the Love and Respect of India, by making a real difference to every Indian.”

Product Portfolio of HUL

Sales and Distribution of HUL Page 7

Sales Hierarchy

Sales and Distribution of HUL Page 8

Distribution Network for General Trade

REDISTRIBUTION STOCKIST

Sales and Distribution of HUL Page 9

Distribution Network

U1 and U2

The Stockists of the company are classified as U1 and U2 stoskist on the basis of the product that they stock. U1 are the once who generally stock products like Surf and Ponds whereas the U2 are the once who deal with high profile products from HUL like Lakme and Dove. Stockist in HUL system are refferd as Re Stockist (RS). The stockist is appointed for a particular region of the city. Each stockist caters to around 700-900 Retailers in his area and then these retailers provide goods to the Customers.

Sales and Distribution of HUL Page 10

New Innovative Distribution Channels adopted by HUL

Project Shakti

Rural India is spread across 627,000 villages and possesses a serious distribution challenge for FMCG Cos.

HLL has come up with a unique and successful initiative wherein the women from the rural sector market HLL products, and hence, are able to reach the same wavelength as of the common man in village.

Process

Sales and Distribution of HUL Page 11

Project Stearmline

HUL initiated a Streamline initiative in 1997- cater to the needs of the inaccessible market

Focuses on extending distribution to villages with less than 2000 people

Process

Sales and Distribution of HUL Page 12

RS Initiative

Launched in 2001

Connecting Redistribution Stockists (RSs) through an internet based system

Account for about 80% of the company's turnover

RS Net is one of the largest B2B e commerce initiatives ever undertaken in India‐

The IT powered system has been implemented to supply stocks to redistribution ‐

stockists on a continuous replenishment basis.

HUL’s Sales and Distribution channel is integrated through e-CRM software called

“UNIFY”

The software is installed on every C&F and Stockist’s Computer

The Stockist is required to maintain a Minimum level of Inventory. If the stock

position goes below that, the order is automatically triggered and the Company

sends the goods to the Stockist

Sales and Distribution of HUL Page 13

Go to the Market – Sangam Direct

Was visualized in 2001 and finally Kick started at Mumbai

Uses concept of JIT (Just In Time)

Target of 42 cities and towns across India by the end of 2009

In hands with Mahindra Logistics

Cost cutting and restructuring initiative

Sangam Operates from a Dedicated Call Centre with well trained personnel in Mumbai

The order received is then passed on to a Network of Re-Distribution Agents and there is no

need of a Physical Warehousing or a Selling Facility in this Model

Sales and Distribution of HUL Page 14

Conclusion

HUL leads distribution foray in India

Followed up more than 80% of the company

Has wide distribution network

HUL’s success = Its Distribution

Sales and Distribution of HUL Page 15

Recommendations

Looking at the Booming Retail Sector and the Success of Retail Business Players

like Future Group and Shoppers Stop, I would suggest a Distribution Channel on

Similar Lines. I would suggest a Specialty Store which Houses all the HUL

products under one roof. These stores could be strategically located so that

people don’t have to travel much to visit them. HUL has great Diverse Product

Portfolio and thus the stores could be a Huge Success and also the project would

be commercially viable as the cost of all the Middle-men will be sliced.

Sales and Distribution of HUL Page 16