Hindustan Unilever Limited (HUL), India’s largest FMCG player, is setting its sights on a growing segment of premium consumers. With a clear roadmap, the company plans to upgrade its offerings across various categories by focusing on premiumisation. This move comes as India’s economic landscape shifts, creating a larger middle class with higher disposable incomes.

According to HUL’s recent presentation, households earning between $8,500 and $40,000 annually are expected to increase significantly by 2030. At the same time, households earning less than $4,000 are likely to decline, setting the stage for a more affluent consumer base. Recognizing this shift, HUL aims to reposition itself as a dominant player in the premium market while leveraging its existing strengths.

Business strategist and angel investor Lloyd Mathias points out that HUL’s strategy comes at a time when direct-to-consumer (D2C) brands have disrupted the market. Brands like MamaEarth, The Moms Co., and Sugar have gained traction with evolved consumers by offering niche, premium products. However, Mathias believes that HUL’s scale, deep resources, and cutting-edge R&D capabilities make it well-equipped to challenge these players—and possibly outdo them.

HUL’s portfolio already includes over 50 well-known brands spanning detergents, personal care, foods, and beverages. The company has identified categories such as premium face care, hair care, body wash, home care liquids, condiments, and well-being products as high-potential areas for premiumisation. To spearhead this initiative, it has earmarked ten flagship brands—Dove, Surf Excel, Pond’s, Lakme, Lux, Pears, Vim, Brooke Bond, Horlicks, and Kissan—as key drivers of this transformation.

Shivaji Dasgupta, founder of INEXGRO Brand Advisory, explains that HUL’s focus on premiumisation is a logical progression. “HUL has always been about scale, but with premiumisation, they are looking at brands that will deliver higher profitability,” he notes. He also highlights the company’s unparalleled distribution network, which ensures its products are available virtually everywhere—a significant advantage in a competitive market.

Beyond its existing portfolio, HUL plans to introduce several global premium brands in its beauty and well-being segment over the next two years. This calculated expansion aims to tap into the aspirations of Indian consumers while leveraging the credibility and appeal of its international brands. For instance, beauty and personal care—a segment already crowded with D2C players—will see HUL stepping up its game. This will undoubtedly pressure smaller brands, which have thrived on agility and direct consumer engagement.

Mathias acknowledges the challenge for HUL, which has traditionally operated as a mass-market player. Competing against nimble D2C brands requires a level of adaptability that may not come naturally to a large corporation. However, HUL’s robust supply chain, superior manufacturing capabilities, and extensive R&D give it an edge. Dasgupta adds that premiumisation for HUL might also involve smart repackaging and minimal product tweaks, allowing it to leverage its marketing strength effectively.

The broader market dynamics also work in HUL’s favor. The rising middle class, growing digital penetration, and evolving consumer preferences create a fertile ground for premium products. Mathias points out that premiumisation also sends a strong message to investors, signaling the potential for higher margins and better profitability.

Interestingly, HUL’s plans also extend to categories like condiments and mini meals—areas that cater to the urban consumer’s need for convenience without compromising on quality. This segment is poised for significant growth as more consumers look for easy-to-prepare options with a touch of sophistication.

However, the road ahead won’t be without challenges. HUL will need to balance its long-standing reputation as a mass-market brand with its aspirations for premium positioning. This transformation will require careful execution to avoid alienating its existing consumer base while attracting new, more affluent customers.

The next two to three years will be critical in determining the success of HUL’s premiumisation strategy. While the company has the resources and scale to disrupt these markets, its ability to stay nimble and innovative will be tested. As Dasgupta aptly sums up, “HUL has everything it needs to dominate, but for smaller D2C brands, this is not going to be an easy fight.”

With a calculated approach, HUL is poised to redefine the premium segment in India, creating opportunities for growth and setting new benchmarks in consumer expectations. Whether it can seamlessly integrate its mass-market legacy with its premium aspirations remains a story to watch.

Author: Sonali kamble