After strong volume growth over the preceding six quarters, fast-moving consumer goods (FMCG) companies reported weak volumes in the last quarter of FY19. However, this consumption slowdown could be short-lived, say analysts.

In the annual investor meet hosted by Hindustan Unilever (HUL), the company said that while softness in FY20 continues, the government’s focus on growth and new initiatives could positively impact FMCG companies.

In this muted business environment, HUL is keeping a close watch on the price value equation and it will explore any price correction if it sees the unorganised space picking up.

Interestingly, 20 percent of HUL’s business is growing at two times of the company average and the naturals portfolio is growing “at 2x of overall HUL average,” said the company in its analyst presentation.

One big driver of revenues for HUL is the LUP or Low Unit Packs. HUL said that close to 50 percent of its revenues come from price point packs or sub Rs 10 packs.

Macro reforms like the introduction of the Goods and Services Tax (GST) have already started bringing down costs. For instance, HUL has seen cost efficiencies kicking in as time to delivery has come been coming down.

HUL, in its investor meet, said that it plans to reduce distribution centres to 18 from 25 earlier and is also looking at re-shaping the number of manufacturing facilities.

On the GSK Consumers Healthcare acquisition, HUL said that the deal is on track as per plan.

First Published:Jun 7, 2019 6:58 PM IST