Riders of the rural storm

When IIPM comes to education, never compromise

They are slowly emerging from the mess of the last four years. Now they are combining CSR with their rural business agenda.

Remember the legendary Steel Authority of India Ltd. (SAIL) tagline: “There’s a little bit of SAIL in everybody’s life.” Apply the thought to the FMCG segment and the tagline sits perfectly on the shoulders of global FMCG behemoth, Hindustan Unilever (HUL). From soaps to salt, toothpastes to tomato sauce, HUL has got the unique distinction of touching everyday lives of consumers, with its battery of brands targeted at the affluent, as also the price conscious segments.

Ask any housewife – in this case, Sujata Singh, a homemaker for the past 12 years, and she swears by Surf (a leading HUL brand), a brand which even her mother used in her time. “Hindustan Lever cannot be equated to just another company,” says the elderly owner of a local supermarket, Mangesh Tarole, in Mumbai’s Malad area, adding that HUL brands are deeply entrenched into her life. She is succinctly hinting at Unilever’s success at transforming mere soaps and shampoos – Hamam, Dove, Lifebuoy, Liril, Lux – into products with a deep societal connect, in other words, making them household names.

What’s more, the beating that the company had taken over the last four years, both in its financial performance as also in its market share, is now visibly subsiding. Compared to 2004-05, the years 2006-07 have been particularly invigorating for HUL. A result perhaps, of enhanced focus on innovations, both marketing and social, that seem to be paying dividends to the company.

In as much, HUL is more or less secure, so far as its stranglehold in the urban households is concerned. Rivals, both big and small, like P&G, Marico and Nirma, are decisively behind in the race. The last frontier for this global Goliath is India’s rural hinterlands. HUL is now going the whole hog to tap rural markets, slated as a $1 billion opportunity for FMCG sector.

HUL’s rural thrust is not new. They have been there, done that. Remember how in the early 90s, little known Chik shampoo sachets, priced at Re.1, completely usurped the rural market from HUL? The company had to re-strategise, re-group, attack afresh and steal back the sachet advantage from Chik. Thanks to a more powerful distribution network, HUL was successful in this attempt. But now, their latest opponent is the cigarettes – FMCG major ITC, which definitely has a comparable distribution muscle, thanks to its vast distribution network of over two million tobacco retailers. ITC, in fact, is also creating a parallel distribution network (grocery stores & modern retail formats) for its FMCG range, through its e-Chaupal network. If that was not enough, rivals P&G, Marico, Dabur and Godrej are also flexing their rural muscles.

So though HUL is already present in the hinterland, it has now put rural propaganda at the forefront of its corporate blueprint. Harish Manwani, Chairman, HUL, believes that the best way to do this is to bring social responsibility to the heart of HUL’s business, by putting their respective brands in the forefront. Here’s why? “It is because brands are at the heart of our business. It is through our brands that we engage with and build relationships with our consumers and communities,” he said at the company’s annual meet this August, adding that HUL’s business success depends on how well the company’s brands are able to integrate with the socio-economic agenda.

Take Lifebuoy – a brand which is being marketed in India since 1895 – that has forged a renewed bond with the masses through HUL’s Lifebuoy Swasthya Chetna project that aims to educate 200 million persons about personal hygiene. To make the soap bar widely accessible, HUL has repackaged Lifebuoy’s 50g bars, selling them at a price point of Rs.5 only.


Another big ticket rural connect is being made via the Annapurna initiative, through which HUL seeks to reduce iodine deficiency amongst those who cannot afford iodised salt in India. For the same, HUL overhauled its entire supply chain, to provide the undernourished with 100g sachets at price points as low as Rs.3 only.

In addition, Unilever’s ongoing Project Shakti (aimed at liberating rural women from financial clutches) or Pure-it – a product that delivers clean drinking water at very affordable prices – are among HUL’s far-sighted enterprising initiatives that combine business acumen with corporate social responsibility.

“The simple truth is that in the long run you cannot have a thriving business in a failing society. It is this recognition which will help drive actions that will contribute to India’s equitable growth,” says Manwani.

And if you are wondering how HUL is enforcing this rural agenda, the company has a dedicated workforce, a few of them even trained in rural farmlands. After all, it’s people that acquire centre stage when it comes to creating and sustaining a vibrant corporate culture and an ambitious outreach programme. Through its managerial prowess, the corporation has already managed to stay ahead of ruthless competition, both national and local. In fact, certain brands like Vim, Lifebuoy and Annapurna have connected to local folks in a way that others can only envy.

Corporate honchos at ITC may well be burning midnight oil to be crowned as the rural FMCG kings, but HUL will yet put up a tough fight, all the way till the last mile is covered!


Edit Bureau: Shashank Shekhar

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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