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Sales and

Distribution
Of

Submitted to: Prof. Baldev Raj

Presented by: Ankit Patodia


Roll No.: 9019

MET

Sales and Distribution of HUL Page 2


Sales and Distribution of HUL Page 3
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

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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.

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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.

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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

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Vision of HUL

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

Product Portfolio of HUL

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Sales Hierarchy

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Distribution Network for General Trade

REDISTRIBUTION STOCKIST

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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.

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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

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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

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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

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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

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Conclusion

HUL leads distribution foray in India

Followed up more than 80% of the company

Has wide distribution network

HUL’s success = Its Distribution

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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.

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