Financial Daily from THE HINDU group of publications
Wednesday, Jan 23, 2002
Corporate - Outlook
HLL to focus on power brands for ad spend
MUMBAI, Jan. 22
POWER brands, which accounts for 90 per cent of Hindustan Lever Ltd's advertising spend, will continue to be the focus area for the company, Mr. M.S. Banga, Chairman, has said.
"We have a robust strategy in pushing for growth in our 30 power brands. This strategy has begun to deliver,'' Mr. Banga said.
Apart from the 30 power brands, HLL was also focussing on 10 local `jewels', which were doing very well in a single State, Mr. Banga said.
While the overall markets remain depressed, the outlook for 2002 is still evolving. A call on rural income growth could be possible only after the rabi season, he said. Rural India accounts for 50 per cent of HLL's sales.
The company will continue with its three-pronged strategy of focussing on power brands, foods business and securing the future of its non-FMCG business. In the process of restructuring foods business, HLL has a whole host of products in wheat waiting to hit the markets. So far, the company has launched its ready-to-eat chapatis under the brand name Annapurna.
Within the foods business, Knorr is an important brand with a huge potential. Under this brand, HLL is test marketing a rice-at-ease product at Chandigarh.
"We have made a decisive move to make our ice cream business profitable,'' Mr. Banga said adding that HLL would focus on six major cities for its ice cream business. "We are working on a new strategy which will begin to deliver direction. The focus of this strategy is to introduce premium profitable ranges in key markets,'' he said.
HLL will continue to upgrade the quality of Modern Foods business which grew by 60 per cent in 2001. The big challenge in Modern Foods is fixed costs.
HLL, planning to enter the water segment, is expected to begin test marketing shortly. "We will not enter the water business in a conventional sense,'' Mr Banga said, adding that this project could find application outside India.
In the healthcare segment, HLL is looking at products for everyday care, mainly OTC products.
Product quality is another area being pursued by the company. In 2001, HLL spent Rs 100 crore in improving the quality of some of its brands. HLL, which contributes 5.5 per cent to Unilever's sales, is looking for a strategic direction to the agricultural sector in the Budget of 2002-2003.
HLL, which launched a wheat-related pilot project in Madhya Pradesh with Rallis and ICICI, is extending it to another State.
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