Q: Everybody is trying to understand what kind of change or shift the pandemic will bring about when it comes to consumer behaviour. I think there are 2 or 3 things that are absolutely clear and perhaps irreversible – one is digital transformation, every company that we speak with is very clear about the fact that digital is the way forward and we are going to see an extreme acceleration. The other trend that one is picking up on and you alluded to that as well, is the whole business of DIY, which has now become much more of a common tread across different consumer categories. Health and wellness and the spending capacity and the spending power on health and wellness is something that the pandemic has clearly thrown up as a trend. The quantum may vary depending on where we are with the infection spread, but this is also likely to be a big shift in consumer behaviour. What to your mind will be the structural shifts which are more permanent in nature?
A: First, I will share with you a few discernible trends that have come into play and I would pick a handful of them that are very important. First is what we call as COVID cocooning or the home cocooning. This is a mass behavioural change we have never seen before – Stay at Home Economy. That means, home cooking, home exercise and working from home. This I do not think will continue once we have a vaccine, the way it is today. I also firmly believe that let us not write the obituary of working from the office. However, very importantly there will be a hybrid model which will come into play.
Second, you rightly said, e-everything – online connecting, working, shopping, informing, educating, entertaining and this I believe is a massive opportunity for the country. If you recall during the Y2K crisis it gave a massive fillip to the Indian IT industry. Similarly, when you had the SARS virus in China, it gave a massive fillip to Alibaba and this is an opportunity for us to digitise the whole nation. This is an opportunity we shouldn’t let go of waste.
The other discernible trend is value seeking. In times of uncertainty, fear, anxiety, consumers do gravitate towards value-based volume shopping. We are very clearly seeing a trend where low unit priced packs are growing at a much faster pace.
The other trend is contactless culture, touch-free. Human touch instead of being cherished, it is being feared. So social distancing, self-isolation- this has again become a very clear trend. The other important bit which I believe is bound to stay and will not go away is clean living. Clean has become a kind of a cult during this period. There is a fetish for cleaning, cleansing, clean living. So there are products and services which are offering sanitizing, sterilising, disinfecting, anti-bacterial, anti-viral etc.
As a consumer goods company we used to spend crore of rupees every year trying to inculcate the habit of washing hands with soap, at least 5 times a day at the right moments. I think the world has conspired to bring about a change without our investment. I believe this is the right thing for the society because it would prevent you from even normal illnesses like flu etc and make you much more healthy. So, this is something that I don’t think will remain at an obsessive level but it is bound to continue.
Q: Many important trends that you have outlined for us from the COVID cocooning not being sustainable once we return back to a degree of normalcy, work from office resumes and so on and so forth. However, I want to pick-up on the clean living aspect that you spoke off. The boom and the explosion that we have seen for instance in the sanitizer market and even assuming that we start to see a tapering off as people get back to work and as the infection spread starts to trend lower, what will it mean for things like the sanitizer category, what is the market size that you believe we can expect going forward?
A: First it was a very small market in India, there were a few players like us who were selling sanitizers before COVID. Now it has gone up by 150x of what it was before. Let us be absolutely clear it is not going to remain at this obsessive level. Once things become more normal, it will come down to somewhere in the vicinity of 15-20 per cent of where it is today because some habits will change. Normally it takes about 60 days to inculcate a habit and we are much beyond 60-day phase now. So I wouldn’t be surprised if people carry a small bottle of sanitizer in their pocket or in their purse and whenever you sit in a Uber or in a public space, you touch a surface, then you would like to take it out but the obsession will go and this is also very visible – if we were to ask our China business the obsession with sanitizer has come down to much more normal now.
Q: The other category that has seen explosion is ready to cook, ready to eat, do you believe that, that category is also likely to see a significant tapering off because many players that we have spoken to have said what you just told me that we have tried for so long for people to wash their hands and this pandemic has done what we couldn’t do and ready to eat and ready to cook players say the same that what we have been trying to do for a decade, the pandemic has done it in just the last 4 months. How much of this do you believe is sustainable and is this going to be a big focus area for you?
A: One very important bit is that human beings are social animals. They like to interact with other human beings. So if we say that the habits of going out to a good restaurant and enjoying a meal or a drink with your friends or dear ones is going to go away, the answer is no. Look at Europe what has happened, look at what happened in China in the month of March after it became much better over there, there were long queues outside KFC. So I do not think again that it will continue at this level but very important people have inculcated new habits, they have developed new tastes and they have very importantly also got themselves new skills. So you would still like to experiment with food at home which you weren’t doing earlier but which you have now started doing in a very big way. However there will be moderation, I am absolutely certain about that and life will go back to what it used to be earlier albeit within a nuanced way.
Q: You are now seeing this big shift towards health and wellness and you believe that a lot of this is going to be structural and not completely irreversible, what will it mean as far as HULs plans for this segment is concerned? How much of revenue growth is going to come in from this specific category? Are you looking at more M&A options here, what are the themes that you are going to play within the health and wellness space?
A: I believe that this is a marriage made in heaven. It is one of the best brands in this space of nutrition and we had an eye on it for many years. When the opportunity came up and we got it, we were absolutely delighted with it. We have to understand why I say that it is a marriage made in heaven because it is a unique opportunity for India’s largest FMCG company to join the journey of helping the country in its nutrition battle. Here we have great brands, a business at scale Rs 4500-5000 crore and then you have the huge power of HUL which is so adept at building categories and distributing it at making it accessible that it is aligned with a larger goal of nourishing a billion lives.
Q: Speaking about nourishing a billion lives, what is this going to mean in terms of portfolio innovation when it comes to fortification, new launches, how are you looking at a whole segment of immunity boosters?
A: Our initial plan is to integrate this business. This business is the largest merger in the consumer FMCG space in the country. We are talking about 3000 employees who are working for GSK and who have come into our fold. We consummated the merger during the lockdown, so right now our entire focus is on making this great talent who has come from GSK settle down well, make them very comfortable, align our systems and processes and very importantly get the synergy that we had built into our business case both from a topline perspective and from a bottom-line perspective. While at the same time our teams have been working on plans on what the innovation should be in the foreseeable future and one of the best things that they did is to launch a variant with added zinc because it boosts the immunity and true to character the first thing we did is we distributed 1,50,000 packs with added zinc to the healthcare workers in the country. So I am very optimistic, we will draw up our plans, we have great scientists on both sides looking at it as to how do we make the best use of this absolutely stunning brands which are into an ideal space as far as the company is concerned and the country is concerned.
Q: You talked about the process of integration, so would I be right in assuming that at this point in time there is enough on your plate and you won’t be looking out for any interesting opportunities that might come your way in this business?
A: Just after the GSK acquisition, we acquired V-Wash and this we acquired from Glenmark. This is an intimate hygiene and again a very important category. It is a niche category today that we believe is absolutely right for us to grow this category. So we will always be in the lookout for the nice opportunities that come our way not only in foods and refreshments but also in beauty and personal care and home care, we are always in the lookout. If you look at it in the last few years, we have done some very good acquisitions.
