With the merger of GlaxoSmithKline Consumer Healthcare with Hindustan Unilever (HUL) last week, HUL is finally set to grab the crown in the one consumer goods segment it has failed to dominate -- food and refreshment. With the merger bringing under the HUL fold iconic and highly lucrative brands like Horlicks, Boost and Eno, HUL is likely to become the undisputed king of India’s fast moving consumer goods segment. Take a look at how the combined food business of HUL looks post-merger compared to its rivals.
Britannia and Nestle, for instance, made revenues of Rs 9,830 crore and Rs 9,952 crore in 2017-18, respectively. HUL post-merger is expected to make in excess of Rs 10,000 crore from this segment. Its largest rival ITC meanwhile, does not disclose standalone revenues for this segment, but its entire fast moving consumer goods (FMCG) business including home and personal care, lifestyle and stationery stood at around Rs 11,339.3 crore in 2017-18.
With its immense distribution network, HUL is likely to make much more of the revenue potential of the new brands under its fold, especially in the health foods segment. JM Financial’s analysts, for instance, believe this potential is huge. “Our earlier analysis of the category, based on GSK’s data, suggested that even amongst user households, actual consumption of HFD is not even one-third of the estimated potential for the category.
HUL’s ability to get this gap bridged is, we believe, far higher vs GSK’s. Other growth drivers are to upgrade and premiumise, unlock potential in North and West India, and introduce future-ready formats,” they said.