IIM INDORE

Portfolio Analysis of Personal Care Industry

Strategic Management II
3/28/2012

Section C

Submitted By: Group 2

Name Ashish Kumar Debayan Ghosh Deepak Sudhakar Janmajit Das Manoj Verma Piyali Sarkar Sudeep Mokal

Roll Number PGP2011578 PGP2011613 PGP2011617 PGP2011662 PGP2011712 PGP2011779 PGP2011900

Portfolio Analysis

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Table of Contents
Personal Care .......................................................................................................................................... 3 Market Structure................................................................................................................................. 3 Industry analysis ................................................................................................................................. 4 Hindustan Unilever Ltd ........................................................................................................................... 4 SWOT .................................................................................................................................................. 4 Category Analysis .................................................................................................................................... 5 Bath and Shower Category ................................................................................................................. 5 Skin Care ............................................................................................................................................. 6 Deodorants Category .......................................................................................................................... 7 Oral care Category .............................................................................................................................. 8 Hair Care category .............................................................................................................................. 9 Portfolio Analysis .................................................................................................................................. 10 McKinsey/GE Matrix ......................................................................................................................... 10 Analysis of McKinsey/GE Matrix ....................................................................................................... 11 BCG Matrix ........................................................................................................................................ 11 Unilever Global and HUL ....................................................................................................................... 13 Exhibits .................................................................................................................................................. 14 References ............................................................................................................................................ 25

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Personal Care
Personal Care Industry has shown significant growth in the past decade owing to growing conspicuous consumption by the burgeoning youth population of the country. The industry, segmented into sub-categories like Skin Care, Hair Care, Oral Care, Deodorants and Bath and Shower, grew at 13% CAGR between 2005 and 2010. The following points summarise the latest trends in the industry. Market Attractiveness Trends Overall market size of Rs 331 billion with a double-digit growth rate in 2010 69% of the business comes from urban India while rural India accounts for 31% of the business Shift towards more herbal and natural products owing to increased awareness about effects of chemicals on the skin and hair Mens grooming products see a growing trend as men become more conscious about looking good (sales of fairness creams for men, razors etc increase) Direct selling brands like Amway and Oriflame see an increase in sales as customers increase their acceptance levels these brands now account for more than 10% of total value sales Good economic growth, increase of middle class consumer base, higher disposable income of youth help the industry to grow Premium brands grow at a higher rate than mass products premium cosmetics grew at the rate of 25% and premium skin care products grew at the rate of 22% compared to mass products which grew at 18% Multinational companies shares rise owing to customers search for better perceived quality brands like Dior, Elca, Mac have started expanding

Market Structure
Number of independent sellers Seller concentration Product differentiation Seller Entry barrier Buyer Number Buyer Entry barrier Many Non-existent Low / based on perception No Many No

The market structure of the personal care industry is analysed using the factors mentioned above. Seller concentration is low because no firms collude to influence the market. Also the product differentiation within each category is low or based on perception only. We do not consider this a perfect competition because: In perfect competition each firm is so small that it cannot affect the market in any significant way. However, HUL with 46% of market share can influence the market to a certain extent Also in perfect competition no firm can have higher profits since all products are identical. In this case HUL due to its brand name can charge premium prices for its products. However, in the long run no firm can have excess profits from market. Page 3

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Industry analysis
5 forces Bargaining power of buyers Bargaining of suppliers Features Consumers have a wide variety of choices. Most raw materials are available easily with a number of suppliers. New companies can easily manufacture but the marketing and distribution is very hard to copy Substitute products are not available Competition is fierce for market share. Result High Low

Threat of new Entrants

Medium

Threat of substitute products Competition

Low Very High

Overall, it is a moderately attractive industry

Hindustan Unilever Ltd

HUL was formed in 1956 as a subsidiary of Unilever Group. Since then, it has grown both organically and through mergers and acquisitions to become one of the key players in the FMCG industry. The company invests heavily in product innovation and launches products which are locally accepted, unlike some of its competitors like P&G (which launches global products in local markets). It has a deep distribution network and over 200 production facilities. The company receives some help in R&D from its parent company Unilever Group and exports products to Unilever companies all over the world. Being one of the dominant players in the personal care industry, the company owns some of the most respected brands in the country like Fair & Lovely, Ponds, Lakme, Pepsodent, Lifebuoy, Axe etc. Business Competitiveness of HUL HUL is a dominant player in the Personal care industry accounting for 33% of sales of the industry Strong product portfolio and a deep distribution system helps it stay competitive in both urban and rural markets In 2010, the company saw a slight overall decline in its market share from 34% to 33% due to minor declines in product sales in its various sub-categories Even though bulk of its revenues comes from mass products, the company continues to invest in the masstige products which show the fastest growing trends in the industry

SWOT
HUL products are widely used throughout the country because of its flanked product portfolio. Approximately one out of every three products used by consumers is an HUL product. Due to this, the company enjoys a high bargaining power and thus, an exceptional competitive advantage. However, recently it has seen a decline in sales due to foreign players coming into the industry and Section C Page 4

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rivals launching products at cheaper price-points. Also, the changing demography of India is forcing the company to constantly innovate and change according to the consumers needs. Strengths Strong brand portfolio Wide product range with presence in all price points Focus on innovation Distribution Opportunities Higher per capita income Youth population with varied choices Rural penetration Weakness Protection of market share at the cost of near-term profit deterioration

Threats Local brands and private labels Intense competition Changing trends

HUL has also divided its Personal Care category into 5 business units: Bath and Shower, Skin Care, Deodorants, Hair Care and Oral Care. A brief analysis of these categories is given below

Category Analysis
Bath and Shower Category
Bath and Shower category consists of mass products like soaps and premium products like shower gels etc. This category has a market size of around 31.6% of the total sales revenue in the Personal Care category, i.e. around Rs 104 billion in 2010 Market Attractiveness Trends Overall, bath and shower value sales continued to see double-digit value growth in 2010, of almost 11% This was, however, a slight slowdown compared to 2009s growth, which was over 12%. Bath and shower is projected to grow by a constant value CAGR of 4% between 2010 and 2015 Liquid soap is forecast to be the star growth performer in the forecast period with a predicted constant value CAGR of 21% All the bar soap players increased prices in 2010, by an average of 6% in current terms, partly to offset increases in prices of raw materials like palm oil, and to counter high inflation Industry rivalry is high. Hindustan Unilever Ltd continued to dominate the competitive landscape in 2010, with almost 51% of Godrej Consumer Products was placed second, with over 10% of value sales, followed by Wipro, Reckitt Benckiser, with its Dettol brand, and ITC Ltd, with Vivel Macro Factors include the general demographic shift of the Indian population and the forecasted economic environment. India's per capita income is projected to grow by 17.3% The rising incomes of Indian households, coupled with strong distribution, particularly in modern grocery retailers such as supermarkets/hypermarkets, helped masstige bar soaps The market in India is at a stage where new products trial is very likely to occur if there is enough visibility for the product. New products are more probable to come from already established companies rather than new entrants Page 5

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Portfolio Analysis Business Competitiveness of HUL

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Hindustan Unilever Ltd continued to dominate the competitive landscape in 2010, with almost 51% of value sales. The company has a strategy of straddling all price points and deploying a full portfolio, supported by advertising for all of its brands HULs market share in this category has decreased over the past few years, from 54.3% in 2008 to 51% in 2010 Lux and Lifebuoy are the leading brands in the Indian market followed by Santoor and Dettoal HUL's distribution network comprises 6.4 million retail outlets reaching over 700 million consumers. Its distribution network is one of the major strengths During 2010-11, HUL significantly increased its direct retail coverage by adding over 600,000 outlets. Project Shaktimaan, the second phase of Project Shakti was launched and was a key enabler for this rural expansion HULs production facilities are split between its own facilities and those of third party manufacturers. The company owns over 40 manufacturing units, and it ties up with approximately 150 third party manufacturers to which it contracts out the manufacturing of various products Profit margins for bar soaps have decreased from 14% to around 7.5-9% in the past few years Customer loyalty for some of HULs brands like Lifebuoy, Pears, Dove etc is very high

Skin Care
HUL is the overall the market leader in the Skin Care Category, and is thriving because of the wide range of products it has, targeting various strata. Also important is the innovations that they present in the products, which form the key to customer retention. Their aggressive marketing and distribution network has enabled various products to be the masstige products. Market Attractiveness Trends Skin Care value sales grow by 18% in 2010, to almost Rs41 billion Market size of Skin Care corresponded to 12.68% of the total Sales Revenue in the PC Category in 2010 Premium category sees the fastest growth of almost 22% in 2010, compared to growth of mass category of 18% Unit prices of mass products shows little variance, price of premium products expected to marginally rise Skin Care is projected to grow by a constant value CAGR of 10% between 2010 and 2015 Hindustan Unilever remains the top player in 2010, due to its strength in innovation Hindustan Unilever Ltd continued to dominate the competitive landscape in 2010, with almost 56.2% of value sales. LOreal India was placed second, with over 10% of value sales, followed by Amway and CavinKare Pvt Ltd Prices are kept in check due to stiff competition and economic downturn restricting consumers budgets

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Portfolio Analysis Business Competitiveness Trends

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HUL is the market leader in Skin Care Category followed by LOreal India and Amway India Fair & Lovely and Ponds are the leading brands in the Indian market.(Figure 3) HULs market share has decreased over the years due to increasing competition from LOreal, Amway, ITC etc HUL's distribution network comprises 6.4 million retail outlets reaching over 700 million consumers. Its distribution network is one of the major strengths Project Shakti helped in increasing HULs direct retail coverage by adding over 600,000 outlets Profit margins for skin care products have decreased from 5% to around 2-3% in the past few years Customer loyalty for some of HULs brands like Fair & Lovely, Dove etc is very high Anti-ageing ,anti-cellulite and firming gels are the new product concepts that HUL and other competitors are getting into to differentiate

Deodorants Category
In the past few years, deodorants have started becoming daily use products. Hence, the growth in this category is expected to be high in the coming years. This category contributed to around 2.39% of the total sales in the personal care segment Market Attractiveness Trends In 2010, deodorant value sales grew by almost 40%. Growth was driven by company advertising campaigns, supporting higher penetration across India. Growth in 2010 was, however, slightly slower than in 2009, when sales grew by over 44% Deodorant sprays saw growth of 40% in 2010, while roll-ons increased by only 13% Deodorant sprays will retain their dominance in the forecast period, with an 18% constant value CAGR between 2010 - 2015 In 2010, the market size was 2.39% (% of sales) of the total personal care segment. It is forecasted to grow to around 8.35% in the coming years (w.r.t to sales) Premium deodorants accounted for less than 2% of value in 2010, reflecting the fact that deodorants are a daily use product Deodorant sales are led by Hindustan Unilever Ltd, with the Axe brand; Paras Pharmaceuticals Ltd, with Set Wet; and McNroe Chemicals Pvt Ltd, with Wild Stone. These three manufacturers held a combined value share of over 49% in 2010 Domestic companies improved their position in the latter part of the review period through the launch of a number of new deodorant products, aggressive promotion as well as leveraging the increased presence of chained modern grocery retailers, such as supermarkets/hypermarkets Unit prices of deodorant sprays are expected to grow only minimally, as companies aggressively pursue volume growth The increasing availability of domestic and international brands, and greater product availability at affordable prices has led consumers to move away from using products from the unorganised channel

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Portfolio Analysis Business Competitiveness of HUL

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HUL is the market leader in Deodorants Category with 29.4% market share followed by Paras and McEnroe The leading brand is Axe, with 25% of value in 2010, followed by Set Wet and Wild Stone with 10% and 9%, respectively. Axe is a well-established and widely distributed brand, and is heavily supported by advertising across India HULs market share has decreased over the years from 39% in 2008 to 29.3% in 2010, due to increasing competition from Park Avenue, Set Wet and private labels Profit margins of deodorants is relatively high around 15-20% Customer loyalty for deodorants brands like Axe and Dove is very high Unit prices of deodorant sprays are expected to grow only minimally over the forecast period, as companies aggressively pursue volume growth Sure an antiperspirant brand which was launched by Hindustan Unilever Ltd in the middle of 2010 is expected to carve a niche in the forecast period The number of Private Labels in the category has been increasing over the years and is a cause of concern for HUL. For example, Future Group with its private label called John Miller

Oral care Category

Market Size Market Growth rate HULs share Growth in market share Major competitors Major Brands Rs. 47 billion (2010) Avg. rate 10.23% (CAGR 8%) (2005-10) 19.7% -4.3% Colgate-Palmolive, P&G (International) Dabur, Anchor (domestic) Pepsodent, Close-Up

Market Attractiveness Trends In 2010, oral care value sales grew by almost 13%. Growth was driven by sale of herbal products from Vicco, Dabur etc. Also the increasing penetration of toothbrush and toothpaste fuelled the growth. Growth in 2010 was slightly better than in 2009, when sales grew by 11% Mouthwash/Dental rinses grew by over 70% in 2010 followed by toothbrushes by 18% Major chunk of sales comes from selling of tootpastes which is around 82% of total sales in oral care. In 2015, the oral care market is forecasted to be at Rs. 60billion growing at a CAGR of 5%(201015) Premium toothpastes like Total Care and Total Whitening saw impressive growth. Also potential of gel toothpastes looks promising Competition intensified as a number of domestic companies introduced herbal products like Amar remedies, Jaikaran, Smyle Herbal etc. Although majority of sales took place through local retailers, private labels like Sach is expected to make a mark in future. Industry profitability remained constant. Although inflationary pressures were present but intense competition stopped prices from going up. Section C Page 8

Portfolio Analysis Business Competitiveness of HUL

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HUL is No.2 in market with a market share of 19.7% (following Colgate-Palmolive at 46%) The leading brands are Pepsodent (11.2%) and Close-Up at 8% HULs market share has decreased from over 23% in 2005 to 19% in 2010. Last year it declined by 0.6% from 20.3% to 19.7%. Profit margins in oral care is relatively high around 15% Unit prices of oral care are expected to grow only minimally over the forecast period, as companies aggressively try to gain market share HUL lacks products in the most growing segments of mouthwash and electric toothbrushes which is hampering its growth The distribution, technology and management are the strong points of HUL which it needs to leverage to start growing again in this category

Hair Care category

Market Size Market Growth rate HULs share Growth in market share Major competitors Major Brands Rs. 80 billion (2010) CAGR 9% 19.7% Constant with 2009 Dabur, Marico, P&G (Mass) LOral India Pvt Ltd,(Premium) Clinic Plus, Sunsilk, Dove

Market Attractiveness Trends Hair care sales grow by 13% to 80 billion INR with Salon hair care sales growing by 22% in 2010. Conditioners -accounted for around 42% of value sales Hair colorant was one of the best performing categories in 2010, with value growth of over 20%. Overall unit prices of hair care rose minimally in 2010, as companies pushed for volume growth rather than higher margins. Hair care remains dominated by mass products, with almost 97% of all value sales derived from this segment. Premium brands, like LOral Professional and Schwarzkopf Professional, did, however, gain share between 2005 and 2 010, to over 3%. HUL dominated with 19.4 % of share, it is a highly competitive market with the top four companies accounting for over 49% of value

Business Competitiveness of HUL HUL is the market leader with 19.4 % of market followed by Dabur India Ltd, Marico Ltd and Procter & Gamble Home Products Ltd. The major Brands of HUL in hair care are Clinic Plus, Sunsilk, Dove Conditioners and Shampoo and Clear. Its overall market share in this segment is constant Page 9

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However, it is losing market due growth of premium brands like LOral Professionnel and Schwarzkopf Professional. Dove achieved a value share of almost 4% in 2010, up from less than 1% in 2007 this is due to a trend of people inclining and going towards premium products and brands.

Portfolio Analysis
McKinsey/GE Matrix
The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix used to perform business portfolio analysis as a step in the strategic planning process. The aim of the GE/McKinsey Matrix Portfolio Analysis is to: Analyse the current business portfolio and decide which businesses should receive more or less investment Develop growth strategies for adding new products and businesses to the portfolio Decide which businesses or products should no longer be retained

The GE/McKinsey matrix is based on 2 factors: Industry Attractiveness and SBU Business Strength. These factors are further divided into various parameters and based on the different weightages given to each parameter the weighted average is used to calculate the position of the SBU along the X and Y Axis. For the Personal Care segment, the different SBUs decided were: Bath and Shower, Skin Care, Hair Care, Oral Care and Deodorants. Various parameters were chosen to differentiate between the different categories and analyze their attractive and the strength of HUL in each of these categories. Industry Attractiveness Parameters Parameter Market Size Market Growth Market Diversity Pricing Trends Industry Rivalry Distribution Industry Profitability Entry/Exit Barriers Inflation Rate Differentiation Global Opportunities Macro Environment Demographic Shift

S.No 1 2 3 4 5 6 7 8 9 10 11 12 13

Weightage (%)

35

30 15 10 15

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SBU Strength Parameters S.No Parameter Weightage (%) 1 Market Share 30 2 Growth in Market Share 3 Distribution 30 4 Brand Equity 5 Finance 10 6 Profit Margin relative to Competitors 7 Technology 8 Research and Development 20 9 Production Capacity 10 Customer Loyalty 10 Using these factors the weighted average was used to find the industry attractiveness and business competitiveness for each of the 5 categories in Personal Care.

Analysis of McKinsey/GE Matrix

The GE/McKinsey Matrix was plotted for HUL and its portfolio and is displayed in Fig ___, Appendix. Looking at the matrix the following points can be concluded: Skin Care Category: This is the only category in the high industry and high business strength cell. Hence, HUL should invest and grow in this sector. This sector is driven by innovation and high distribution, hence, HUL should invest in R&D and continue its stronghold in this category Bath and Shower and Deodorant Category: These 2 categories are in the medium high industry attractiveness and high SBU strength cell. This means these categories are selective growth segments. Because of the high competitive strength in this industry, HUL should continue its dominance in these categories. Selective brands in each of these categories should be invested in and brands with low growth prospects can be divested from. The revenue from these categories can be used to invest in the growth of the Skin Care Category Hair Care and Oral Care Category: These 2 categories are in the medium growth and medium SBU strength cells. The growth prospects of these 2 categories are not attractive and HUL should consider divesting from these. However, if there is a strategic advantage in these categories, the company should consider investing only in certain brands or segments of these categories.

BCG Matrix
An analysis of the BCG matrix for the four categories under Personal Care, in the context of the business units of Hindustan Unilever, reveals the strengths and weaknesses of the units in its portfolio. Analysis of Business Units Figure I.1 shows the BCG matrix drawn in for HULs SBU (Personal Care).Many of its products, especially in Skin Care, are the market leaders and thus make this as a star performer. Having star performers in its Deodorants business has spruced the division up, making it as a star. The company

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observed modest growth in market share in the Hair Care segment as well and hence was more or less a question mark. The bath and shower was the category where the products of HUL were a winner in the market share- a large part of the revenues of HUL come from this division. However, dearth of premium products in its portfolio stands as an obstacle for the growth. Nonetheless, this category is a cash cow and hence provides other products in the portfolio, especially the question marks. The oral care, as a sector has seen a pretty good advancement and innovations, with a wide range of products, varying from mouth washes to floss coming up in the market. Though the growth of these products has not been high as of now, but a shifting demographic trend indicates a future growth in this sector. However, HUL did not have many products in this segment and hence needs to consider its policies and strategic stand on this part of its portfolio. All in all, this analysis presents with the picture that HUL has a strong portfolio. Its Stars are good performers and hence provide good competitiveness in the short term. Its cash cows are pretty strong to provide for the sufficient short development of its stars and future growth of its question marks. A detailed analysis of its individual brands presents a better picture of its performance of the business units. Analysis of Brands The results of Figure I.2 match with those of figure 1. HUL skin care business, as mentioned previously, falls in the category of star, as it has some of the most competitive brands in its portfolioFair & Lovely, which is a Masstige product and leads the market, and Vaseline, which deals largely in the lower segment of the market. Ponds has a considerable market share, and shows high prospects of getting converted to a star. Others in the category are Lakme and Pears. Whereas Lakme has a small share, after Loreal and currently is a question mark, the changing demographics of the nation, coupled with the increasing population with higher dispensable income, and preference for premium products present considerable growth opportunity. HUL also has advanced products, where the focus of the industry is said to be shifting: Anti Cellulites and Firming products. As far as the deodorants are considered, HULs AXE is the market leader, but the other product in the portfolio, Rexona, is equally lagging and is a question mark. However, deodorants have become a daily use product for the population and hence the growth expected in this category is very high. The segment should, however, see other product developments from HUL so as to be able to sustain the benefit that t has achieved from its brand AXE. Unilevers portfolio previously had Calvin Klein Cosmetics, which was later divested. Considering the growth that the Premium segment is observing, such products will add another dimension to the portfolio. In the hair care segment, the company has three brands, Sunsilk, Clinic Plus and Clear with Clinic Plus leading the sale amongst the three of them and is the star in the category. Sunsilk, though a question mark, has a huge customer base, and has shown strong capabilities through innovations in the product, like Sunsilk Co-creations. Also, the brand being present in the parent portfolio provides with its advantage of innovations. Clear, on the other hand has a small share of the market and targets the lower segments, with not many innovations. If the product doesnt serve any strategic purpose, it can be divested. Section C Page 12

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The bath and shower care segment is lead by Lux, which is a cash cow. Following Lux is lifebuoy which is on the verge of becoming a cash cow. The change is Lifebuoy has come about as a change in the preference of the consumer towards products with germ fighting capabilities. Pears, Breeze and Hamam follow. Pears, though low in market share, but has a wide customer base and loyalty. The company should take proper decisions regarding the investment in the brands, and if need be can divest a few of them. As mentioned earlier, the Oral Care, as a portfolio itself, stands as a dog, as the products lack in the development, as the segment is expecting to grow with technology innovations, where the company hasnt exhibited anything in this regard. Strategic review of the investment in this part of the portfolio is required.

Unilever Global and HUL

Unlike PnG, HUL has both Global and country-specific brands depending on acceptance by local people. Unilever places high priority on emerging markets (around 50% of business generated by emerging countries) Portfolio Difference o o Global brands not present in India St.Ives, Radox, VO5, Simple, Tresemme, Fissan Indian brands Ayush, Clear, Clinic Plus, Hamam, Fair & Lovely etc

Parental Advantage HUL leverages Unilevers scale in global procurement to manage commodity costs Receives technology and brand development inputs from Unilever

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Exhibits
A. Personal Care Industry
Table A.1 Y-o-Y growth of Personal Care Industry Year 2005 2006 2007 2008 2009 2010 Revenues 1,78,152.10 1,97,745.20 2,21,603.80 2,55,783.50 2,91,134.90 3,31,496.30 Figure A.1 Y-o-Y growth of Personal Care Industry

Beauty and Personal Care

4,00,000.0 3,00,000.0 2,00,000.0 1,00,000.0 0.0 2005 2006 2007 2008 2009 2010 Beauty and Personal Care

Table A.2 Company Shares in Personal Care Industry, 2010(%)

Companies Unilever Group Colgate-Palmolive Co Procter & Gamble Co, The Dabur India Ltd Godrej Group L'Oral Groupe Reckitt Benckiser Plc Wipro Ltd Marico Ltd Johnson & Johnson Inc CavinKare Pvt Ltd Amway Corp Emami Ltd ITC Ltd Nirma Ltd Revlon Inc Oriflame Cosmetics SA Anchor Health & Beauty Care Pvt Ltd Henkel AG & Co KGaA Hygienic Research Institute Bajaj Sevashram Ltd SuperMax Corp 2005 36.6 6.4 4.2 4.7 3.9 1.8 1.5 2.1 1.7 2.4 1.8 1.4 0.9 2.9 0.8 0.3 0.5 1.0 0.5 0.7 0.8 2006 35.4 6.6 4.5 4.8 4.0 2.2 1.7 2.3 2.6 2.4 1.8 1.5 1.1 2.4 0.9 0.5 0.5 0.9 0.5 0.8 0.8 2007 34.9 6.8 4.7 4.9 4.1 2.6 1.8 2.5 2.5 2.3 1.9 1.5 1.3 2.2 1.0 0.7 0.4 0.9 0.6 0.7 0.7 2008 34.9 6.8 4.8 5.0 4.2 3.0 2.1 2.5 2.3 2.1 1.9 1.5 1.3 0.7 1.9 1.1 0.8 0.6 0.8 0.6 0.7 0.7 2009 33.7 6.9 5.0 5.0 4.4 3.3 2.7 2.7 2.3 2.1 1.9 1.6 1.4 1.2 1.7 1.1 1.0 0.8 0.7 0.6 0.6 0.6 2010 33.1 6.8 5.4 4.9 4.7 3.6 2.9 2.9 2.3 2.1 1.8 1.7 1.5 1.4 1.4 1.2 1.1 0.9 0.7 0.6 0.6 0.6

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Portfolio Analysis Figure A.2 Company Shares in Personal Care Industry, 2010

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2010
Unilever Group 31% 2% 2% 3% 3% 4% 5% 5% 5% 7% 33% Colgate-Palmolive Co Procter & Gamble Co, The

B. HUL
Figure B.1 Y-o-Y growth of HUL in Personal Care Industry

HUL
38.0 36.0 34.0 32.0 30.0 2005 2006 2007 2008 2009 2010 Unilever Group

C. Bath and Shower Category

Table C.1 YoY Sales Figures in Bath and Shower (%)
Categories Bath and Shower Premium Bath and Shower Mass Bath and Shower 2005-06 10.7 10.7 10.7 2006-07 10.6 24.4 10.5 2007-08 16.8 10.3 16.8 2008-09 11.6 18.2 11.6 2009-10 10.5 16.6 10.5

Figure C.1 YoY Sales Figures in Bath and Shower (%)

25 20 15 10 5 0 2006 2007 2008 2009 2010 Bath and Shower Premium Bath and Shower Mass Bath and Shower

Sales Growth YoY

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Portfolio Analysis Table C.2 Company Share in Bath and Shower Category
Companies Unilever Group Godrej Group Wipro Ltd Reckitt Benckiser Plc Nirma Ltd ITC Ltd Anchor Health & Beauty Care Cholayil Pharmaceuticals Pvt Ltd Johnson & Johnson Inc Henkel AG & Co KGaA Amway Corp Emami Ltd CavinKare Pvt Ltd Heinz Co, HJ Oriflame Cosmetics SA Dabur India Ltd Colgate-Palmolive Co Marico Ltd Fem Care Pharma Ltd Oriental Extractions Pvt Ltd Muller & Philips India Ltd Others Total 2005 54.4 8.3 6.0 4.4 8.6 3.0 1.9 2.4 0.8 0.4 0.4 0.7 0.1 0.2 0.2 0.2 0.2 7.7 100.0 2006 53.7 8.7 6.8 4.6 7.3 2.8 1.8 2.1 0.8 0.5 0.5 0.7 0.1 0.3 0.2 0.2 0.2 8.8 100.0 2007 53.5 8.9 7.3 5.0 6.6 2.8 1.7 1.9 0.8 0.5 0.6 0.6 0.2 0.4 0.2 0.2 0.1 8.6 100.0 2008 54.3 9.3 7.4 5.5 5.6 1.7 0.4 2.7 1.5 1.7 0.8 0.5 0.6 0.5 0.2 0.1 0.2 0.2 6.9 100.0 2009 51.8 10.0 8.2 7.0 5.1 2.9 1.1 2.0 1.4 1.4 0.8 0.6 0.6 0.5 0.3 0.2 0.2 0.1 5.9 100.0

Group 2

2010 51.0 10.3 8.8 7.9 4.3 3.4 1.6 1.5 1.4 1.3 0.9 0.8 0.5 0.4 0.4 0.2 0.2 0.1 5.1 100.0

Figure C.2 Company Shares in Bath and Shower, 2010

2010
ITC Ltd Nirma Ltd 4% 4% Reckitt Benckiser Plc 8% Godrej Group 10% Others 14%

Unilever Group 51%

Wipro Ltd 9%

Table C.3 Brand Shares in Bath and Shower

Brand Lux Lifebuoy Santoor Dettol Godrej Pond's Cinthol Hamam Breeze Dove Company name (GBO) Unilever Group Unilever Group Wipro Ltd Reckitt Benckiser Plc Godrej Group Unilever Group Godrej Group Unilever Group Unilever Group Unilever Group 2005 14.4 12.6 5.7 4.4 4.6 7.7 3.5 3.8 6.3 0.7 2006 14.4 12.6 6.4 4.6 4.9 7.3 3.5 3.7 6.2 0.8 2007 14.6 12.7 6.9 5.0 5.2 6.9 3.6 3.5 6.2 1.2 2008 15.3 13.3 7.1 5.5 5.4 6.3 3.7 3.8 5.6 1.5 2009 13.8 12.6 7.9 7.0 5.8 5.8 4.0 4.0 4.0 2.6 2010 13.7 11.8 8.5 7.9 6.0 5.3 4.0 4.0 3.6 3.6

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Portfolio Analysis
Pears Nima Nirma Vivel Dyna Medimix Johnson's Liril Margo Himani Total Unilever Group Nirma Ltd Nirma Ltd ITC Ltd Anchor Health & Beauty Cholayil Pharmaceuticals Johnson & Johnson Inc Unilever Group Henkel AG & Co KGaA Emami Ltd Total 2.3 4.1 4.5 2.8 1.5 1.5 1.0 0.4 100.0 2.3 3.5 3.8 2.7 1.5 1.3 0.9 0.5 100.0 2.3 3.1 3.5 2.7 1.4 1.1 0.9 0.5 100.0 2.7 2.6 3.0 0.9 0.4 2.5 1.3 1.0 0.8 0.5 100.0

Group 2
2.8 2.7 2.3 1.3 1.1 1.8 1.3 1.0 0.9 0.6 100.0 2.9 2.3 2.0 1.6 1.6 1.3 1.2 1.1 0.9 0.8 100.0

Figure C.3 Brand Shares in Bath and Shower, 2010

Others, 36.7 Lux, 13.7 Lifebuoy, 11.8

Pears, 2.9 Dove, Breeze, 3.6 3.6

Santoor, 8.5 Pond's, Godrej, Dettol, 5.3 6.0 7.9

Figure C.4 Decrease in Market Share of HUL, 2005-10

Unilever Group
56.0 54.0 52.0 50.0 48.0 2005 2006 2007 2008 2009 2010 Unilever Group

D. Skin Care Category

Figure D.1 YoY Sales Figures in Skin Care (%)

Sales Growth YoY

60 40 20 0 2006 2007 2008 2009 2010 Skin Care Premium Skin Care Mass Skin Care

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Group 2

Figure D.2 Company Shares in Skin Care, 2010

2010
Lotus Others Nivea Himalaya 1% 16% 2% 2% J&J Zydus 1% Emami 2% 3% Oriflame 3% CavinKare Amway L'Oreal 3% 5% 6%

HUL 56%

Figure D.3 Brand Shares in Skin Care, 2010

Others 43%

Fair&Lovely 43%

Pears 1% Aviance 1% Vaseline 2% Lakme 5% Pond's 6%

Figure D.4 Decrease in Market Share of HUL, Skin Care, 2005-10

Unilever Group
60 58 56 54 2007 2008 2009 2010 Unilever Group

E. Deodorants Category
Table E.1 YoY Sales Figures in Deodorants Category (%)
Categories Deodorants Deodorant Roll-Ons Deodorant Sprays 2005-06 20.0 12.8 20.2 2006-07 27.3 15.9 27.7 2007-08 38.7 14.7 39.3 2008-09 44.3 13.6 45.0 2009-10 39.8 12.9 40.2

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Portfolio Analysis Figure E.1 YoY Sales Figures in Deodorants (%)

45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0

Group 2

Deodorants Deodorant Roll-Ons Deodorant Sprays

Table E.2 Company Share in Deodorants Category

Companies Unilever Group Paras Pharmaceuticals Ltd McNroe Chemicals Pvt Ltd CavinKare Pvt Ltd Henkel AG & Co KGaA TTK Healthcare Ltd Beiersdorf AG Procter & Gamble Co, The Others Total 2005 43.0 4.8 11.9 3.2 1.1 0.7 25.6 100.0 2006 41.2 5.3 11.3 3.2 2.2 1.8 25.7 100.0 2007 38.9 3.9 5.8 10.1 3.2 2.4 2.7 24.1 100.0 2008 39.3 4.9 2.0 6.4 8.3 3.4 2.9 3.1 21.4 100.0 2009 31.7 8.8 6.9 6.6 6.7 4.4 3.9 3.2 19.8 100.0 2010 29.5 10.4 9.5 6.2 5.9 5.2 4.7 2.7 19.3 100.0

Figure E.2 Company Shares in Deodorants, 2010

Procter & Gamble Co, The, 2.7

Others, 25.9

Unilever Group, 29.5

Beiersdorf AG, 4.7 TTK Healthcare Henkel Ltd, AG & Co 5.2 CavinKare Pvt Ltd, 6.2 KGaA, 5.9

Paras Pharmaceut McNroe icals Ltd, Chemicals 10.4 Pvt Ltd, 9.5

Table E.3 Brand Shares in Deodorants

Brand Axe/Lynx/Ego Set Wet Wild Stone Spinz Fa Company name (GBO) Unilever Group Paras Pharmaceuticals McNroe Chemicals CavinKare Pvt Ltd Henkel AG & Co KGaA 2005 25.9 4.8 11.9 2006 26.6 5.3 11.3 2007 24.5 3.9 5.8 10.1 2008 26.4 4.9 2.0 6.4 8.3 2009 26.1 8.8 6.9 6.6 6.7 2010 25.2 10.4 9.5 6.2 5.9

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Portfolio Analysis
Eva Nivea Dove Oriflame Old Spice Park Avenue Yardley Rexona Others Total TTK Healthcare Ltd Beiersdorf AG Unilever Group Oriflame Cosmetics SA Procter & Gamble Co, The Raymond Ltd Wipro Ltd Unilever Group Others Total 3.2 1.1 1.5 1.8 15.9 25.6 100.0 3.2 2.2 1.5 1.0 2.2 14.3 25.7 100.0 3.2 2.4 1.0 2.1 1.9 2.2 13.1 24.1 100.0 3.4 2.9 1.5 2.0 2.4 2.4 11.2 21.4 100.0

Group 2
4.4 3.9 2.0 2.2 2.6 2.2 3.5 19.8 100.0 5.2 4.7 2.8 2.3 2.2 1.7 1.6 1.4 19.3 100.0

Figure E.3 Brand Shares in Deodorants, 2010

Axe/Lynx/E go, 25.2 Others, 30.1

Dove, 2.8 Nivea, 4.7 Eva, 5.2 Fa, 5.9 Spinz, 6.2

Set Wet, 10.4 Wild Stone, 9.5

Figure E.4 Decrease in Market Share of HUL, Deodorants, 2005-10

Unilever Group
60.0 40.0 20.0 0.0 2005 2006 2007 2008 2009 2010 Unilever Group

F. Hair care category

Figure F.1 YoY Sales Figures in Hair Care Category (%)
100 80 60 40 20 0 Premium Mass 1 2.1 97.9 2 2.5 97.5 3 2.8 97.2 4 3 97 5 3.2 96.8 6 3.5 96.5

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Group 2

Table F.2 Company Share in Hair Care Category

Company Hindustan Unilever Ltd Dabur India Ltd Marico Ltd Procter & Gamble Home Products Ltd L'Oral India Pvt Ltd Godrej Consumer Products Ltd CavinKare Pvt Ltd Emami Ltd Hygienic Researc Institute Bajaj Consumer Care Ltd ITC Ltd Dey's Medical Stores Others Total 2006 0 12.1 10.5 7.1 5.6 4.5 4.8 3.3 2.2 3.2 0 2 44.7 100 2007 19.4 11.8 10.4 7.7 6.1 4.5 4.9 3.7 2.4 3.1 0 1.7 24.3 100 2008 18.9 12.1 9.6 8.2 7.0 4.3 4.9 3.9 2.6 2.8 0.4 1.5 23.8 100 2009 19.2 11.8 9.3 8.5 7.3 4.4 4.6 3.8 2.6 2.6 0.8 1.3 23.8 100 2010 19.3 11.5 9.5 8.2 7.7 5.6 4.4 3.7 2.6 2.5 1.4 1.1 22.5 100

Figure F.2 Company Share in Hair Care Category (2010)

Hindustan Unilever Ltd 19.3% Others 22.5% ITC Ltd 1.4 % Dabur India Ltd 11.5 %

CavinKare Pvt Ltd Godrej 4.4% L'Oral India Consumer Pvt Ltd Products Ltd 7.7% 5.6%

Procter & Gamble Home Products Ltd 8.2%

Marico Ltd 9.5%

Table F.3 Brand Shares in Hair Care

Brand Clinic Plus Dabur Parachute Head & Shoulders Sunsilk Godrej Hair Dye Pantene Dove Dabur Vatika Chik Company Hindustan Unilever Ltd Dabur India Ltd Marico Ltd Procter & Gamble Home Products Ltd Hindustan Unilever Ltd Godrej Consumer Products Ltd Procter & Gamble Home Products Ltd Hindustan Unilever Ltd Dabur India Ltd CavinKare Pvt Ltd 2007 9.7 5.6 5.4 4.6 4.8 3.7 3.1 0.9 3.2 3.3 2008 9.6 5.7 5.1 4.8 4.7 3.5 3.4 1.4 3.4 3.4 2009 9 5.7 5.1 4.8 4.6 3.6 3.7 2.7 3.3 3.1 2010 8.7 5.7 5.2 4.5 4.4 3.8 3.7 3.5 3 2.9

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Portfolio Analysis
_ 3.1 3.2 2.1 1.3 1.2 40.2 100

Group 2

Clear Bajaj Nihar Super Vasmol L'Oral Excellence L'Oral Professionnel Others Total

Hindustan Unilever Ltd Bajaj Consumer Care Ltd Marico Ltd Hygienic Research Institute L'Oral India Pvt Ltd L'Oral India Pvt Ltd Others

_ 2.8 2.8 2.3 1.5 1.4 60.6 100

1.7 2.6 2.6 2.3 1.5 1.4 62.5 100

2.5 2.5 2.4 2.3 1.6 1.4 63 100

Figure F.3 Brand Shares in Hair care, 2010

Clinic Plus 8.7 Dabur Parachute 5.7 5.2% Head and shoulders 4.5% Sunsilk 4.4%

Others 71.5%

Figure F.4 Market Share of HUL (from 2007-2010)

HUL
19.6 19.4 19.2 19 18.8 18.6 2007 2008 2009 2010

HUL

G. Oral Care Category

Figure G.1: Growth in Market Size, 2005-2010

Market Size
50,000.0 40,000.0 30,000.0 20,000.0 10,000.0 0.0 2005 2006 2007 2008 2009 2010 Market Size

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Portfolio Analysis Figure G.2: Market Share of Companies in Oral Care, 2010
Others Amway 9% 3% Anchor J&J 3% 1% Gillette 6% Dabur 11% HUL 20%

Group 2

Market Share
ColgatePalmolive 47%

H. McKinsey/GE Portfolio Matrix for HUL

Bubbles = Revenue -- Max = 56.2

McKinsey Portfolio Analysis

Competitive Advantage

High

Skin Care

Bath and Shower

Deodorants

Hair Care Oral Care

Low

High

Market Attractiveness

Selective & divest Harvest / Grow Invest growth Selectivity Low

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Portfolio Analysis

Group 2

I. BCG Matrix Analysis of HUL

Figure H.1: BCG of HULs Business Units

Figure H.2: BCG of HULs Brands

Section C

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Portfolio Analysis

Group 2

References
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Bath and Shower Care in India 2011, Euromonitor International Report Beauty and Personal Care in India 2011, Euromonitor International Report Introduction to GE/Mckinsey Matrix Portfolio Analysis, H. Siemann 17.03.2009 Deodorants in India 2011, Euromonitor International Report Hair Care in India 2011, Euromonitor International Report Oral Care in India 2011, Euromonitor International Report Skin Care in India 2011, Euromonitor International Report HUL Annual Report, 2010-2011 HUL Beauty and Personal Care, Euromonitor International Report HUL Data Monitor Financials, 2011 Unilever Group in Personal Care, Euromonitor, August 2011

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