Mumbai | New Delhi: Two years ago, Hein Schumacher, former chief executive of Unilever, and Rohit Jawa, managing director of Hindustan Unilever, took the corner office the same week in London and Mumbai, respectively. Even their mandates were similar-shift away from price-led growth after a period of high inflation and instead sharpen focus on expanding sales volume. For Unilever, it also meant restructuring its business worldwide, cutting costs, and shedding unviable businesses.
However, when Schumacher was ousted after little more than a year and a half at the helm, the forewarning was clear for the top leadership across Unilever's key markets-perform or perish. Especially in India, its second biggest market, where Jawa's predecessor Sanjiv Mehta had set a high performance bar. Mehta's decade-long stint saw HUL attain its highest-ever market share in soaps, shampoo, and skin care, with sales more than doubling to ₹58,000 crore from ₹25,000 crore, while market cap soared fourfold.
The trend reversed during Jawa's two-year tenure as MD, with HUL adding about ₹2,500 crore incremental sales-just about a fifth of the nearly ₹13,500 crore added in the two years prior.
"Usually during such top level changes at MNCs, transition also comes with one cartel or group of people moving out to accommodate newer ones within the system," said a senior HUL executive.
Inconsistent Strategy at Parent
“But in HUL’s case, Unilever seems to have panicked and had no patience for tepid growth quarter after quarter and needed more aggression. Priya Nair is seen as someone who has consistently delivered her target numbers,” according to the executive.
Also Read: HUL denies reports on CFO Ritesh Tiwari’s exit to global role
On Thursday, HUL named Nair, 53, as its first woman MD and CEO effective August 1, replacing Jawa, who will leave after the shortest stint for any CEO at India’s largest consumer goods maker.
People familiar with the matter said HUL chief financial officer Ritesh Tiwari will also move into a global role in the next few months. An HUL spokesperson said the company consistently nurtures talent and grooms leaders as part of its ongoing talent development process. “If there are any developments in this regard, necessary disclosures will be made,” the spokesperson said.
“There was hearsay inside the system of a management shakeup for almost a year, but the situation did not look so alarming since the entire fast moving consumer goods market is under pressure with most rivals underperforming,” a second HUL executive said. “There could be more top level exits or people shifting to global roles.”
“Priya has grown through the ranks within HUL and has clout within the system unlike Jawa who was seen as an outsider, at least initially,” the executive emphasised.
With revenue growing at 2% compounded annually during his tenure, albeit on a high base, amid a broader demand slowdown, Jawa focussed on boosting volumes, even taking to cutting margin forecasts to achieve the aim. While volumes or the number of products consumers bought grew 2%, his margin guidance at 22-23% was more than 2 percentage points less than HUL’s average performance in previous years.
HUL’s share price also echoed the sluggish performance, slipping 10% during Jawa’s term. On Friday, the stock rose 4.6%, indicating investors’ bullishness on Nair’s appointment.
A former HUL director noted it is crucial for the company to restore growth and confidence through four vectors. “Its core business has to grow at least in line with the market growth while it needs to double down on new age and premium categories. Also, HUL was the leader in digital transformation, which now needs to accelerate. At the same time, cost savings while keeping the rhythm on margins and reducing attrition should be the main focus,” said the official.
Apart from sparking a volume-led growth, Nair’s biggest challenge will be to achieve HUL’s stated goal of growing the share of the premium product portfolio by nine percentage points in the beauty and wellbeing business—its biggest profit generator in India.
“Although a surprising development, we remain positive on HUL. Priya is seen as an aggressive MD and has a strong blend of both sales and marketing across categories. She is a more aggressive leader and will be a welcome value addition to HUL at this juncture,” said Abneesh Roy, executive director at Nuvama Institutional Equities.
Experts also blame inconsistent strategy and instability at parent Unilever, which has seen exits of three CEOs in the last six years.
“When changes happen at such speed, it means the company is floundering. The acquisition of Horlicks was an unmitigated disaster,” said the CEO of a rival company, referring to HUL’s purchase of GSK Consumer Healthcare, the owner of brands like Horlicks and Boost, in a share swap deal for Rs 31,700 crore in 2018. “Many small acquisitions did not help in improving value. Rohit bore the brunt of his predecessor’s decisions and two years is a short time for any course correction.”
On Friday, the All India Consumer Products Distributors Federation (AICPDF), representing over 450,000 distributors across the country, said the HUL CEO exit was a long-overdue leadership change, and follows three years of “continuous turmoil, disconnection, and disregard for the very trade network that built the company’s strength in Indian market.”
“Under the outgoing CEO leadership, the once-thriving general trade ecosystem was pushed into the dusk. The absence of dialogue with core stakeholders like distributors and retail partners, combined with impractical policies and unrealistic performance benchmarks, led to a sharp deterioration in business viability,” it said in a statement.
Distributors have been alleging unfair treatment by FMCG companies, saying companies are offering more favourable trade terms to ecommerce platforms.
However, when Schumacher was ousted after little more than a year and a half at the helm, the forewarning was clear for the top leadership across Unilever's key markets-perform or perish. Especially in India, its second biggest market, where Jawa's predecessor Sanjiv Mehta had set a high performance bar. Mehta's decade-long stint saw HUL attain its highest-ever market share in soaps, shampoo, and skin care, with sales more than doubling to ₹58,000 crore from ₹25,000 crore, while market cap soared fourfold.
The trend reversed during Jawa's two-year tenure as MD, with HUL adding about ₹2,500 crore incremental sales-just about a fifth of the nearly ₹13,500 crore added in the two years prior.
"Usually during such top level changes at MNCs, transition also comes with one cartel or group of people moving out to accommodate newer ones within the system," said a senior HUL executive.
Inconsistent Strategy at Parent
“But in HUL’s case, Unilever seems to have panicked and had no patience for tepid growth quarter after quarter and needed more aggression. Priya Nair is seen as someone who has consistently delivered her target numbers,” according to the executive.
Also Read: HUL denies reports on CFO Ritesh Tiwari’s exit to global role
On Thursday, HUL named Nair, 53, as its first woman MD and CEO effective August 1, replacing Jawa, who will leave after the shortest stint for any CEO at India’s largest consumer goods maker.
People familiar with the matter said HUL chief financial officer Ritesh Tiwari will also move into a global role in the next few months. An HUL spokesperson said the company consistently nurtures talent and grooms leaders as part of its ongoing talent development process. “If there are any developments in this regard, necessary disclosures will be made,” the spokesperson said.
“There was hearsay inside the system of a management shakeup for almost a year, but the situation did not look so alarming since the entire fast moving consumer goods market is under pressure with most rivals underperforming,” a second HUL executive said. “There could be more top level exits or people shifting to global roles.”
“Priya has grown through the ranks within HUL and has clout within the system unlike Jawa who was seen as an outsider, at least initially,” the executive emphasised.
With revenue growing at 2% compounded annually during his tenure, albeit on a high base, amid a broader demand slowdown, Jawa focussed on boosting volumes, even taking to cutting margin forecasts to achieve the aim. While volumes or the number of products consumers bought grew 2%, his margin guidance at 22-23% was more than 2 percentage points less than HUL’s average performance in previous years.
HUL’s share price also echoed the sluggish performance, slipping 10% during Jawa’s term. On Friday, the stock rose 4.6%, indicating investors’ bullishness on Nair’s appointment.
A former HUL director noted it is crucial for the company to restore growth and confidence through four vectors. “Its core business has to grow at least in line with the market growth while it needs to double down on new age and premium categories. Also, HUL was the leader in digital transformation, which now needs to accelerate. At the same time, cost savings while keeping the rhythm on margins and reducing attrition should be the main focus,” said the official.
Apart from sparking a volume-led growth, Nair’s biggest challenge will be to achieve HUL’s stated goal of growing the share of the premium product portfolio by nine percentage points in the beauty and wellbeing business—its biggest profit generator in India.
“Although a surprising development, we remain positive on HUL. Priya is seen as an aggressive MD and has a strong blend of both sales and marketing across categories. She is a more aggressive leader and will be a welcome value addition to HUL at this juncture,” said Abneesh Roy, executive director at Nuvama Institutional Equities.
Experts also blame inconsistent strategy and instability at parent Unilever, which has seen exits of three CEOs in the last six years.
“When changes happen at such speed, it means the company is floundering. The acquisition of Horlicks was an unmitigated disaster,” said the CEO of a rival company, referring to HUL’s purchase of GSK Consumer Healthcare, the owner of brands like Horlicks and Boost, in a share swap deal for Rs 31,700 crore in 2018. “Many small acquisitions did not help in improving value. Rohit bore the brunt of his predecessor’s decisions and two years is a short time for any course correction.”
On Friday, the All India Consumer Products Distributors Federation (AICPDF), representing over 450,000 distributors across the country, said the HUL CEO exit was a long-overdue leadership change, and follows three years of “continuous turmoil, disconnection, and disregard for the very trade network that built the company’s strength in Indian market.”
“Under the outgoing CEO leadership, the once-thriving general trade ecosystem was pushed into the dusk. The absence of dialogue with core stakeholders like distributors and retail partners, combined with impractical policies and unrealistic performance benchmarks, led to a sharp deterioration in business viability,” it said in a statement.
Distributors have been alleging unfair treatment by FMCG companies, saying companies are offering more favourable trade terms to ecommerce platforms.
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