Unilever Wagers Billions on India Economic Revival

Monday, May 6, 2013

In 1888, when Queen Victoria ruled India, the company that would become Unilever (UNA) decided the country was the future. More than a century on, it’s staking $5.4 billion that it still is.
The Anglo-Dutch maker of Dove shampoo and Lipton tea, successor to one of the first multinationals in India, plans to spend as much as 292 billion rupees ($5.4 billion) to increase its control over Indian unit Hindustan Unilever Ltd. (HUVR)

The early entry gave Unilever, based in London and Rotterdam, a lead on rivals such as Procter & Gamble Co. (PG) in the world’s second-most populous country. The latest investment would help it gain greater influence over a business that boosted earnings by 37 percent last year selling brands tailored to Indians, such as Fair & Lovely skin lightening cream and shampoo sachets at about 3 rupees (6 cents) apiece.

At stake is a $42 billion market for beauty and home-care products and packaged foods where competitors from P&G to Colgate-Palmolive (CL) Co. are making a bigger push to win shoppers. Hindustan Unilever has so far held its ground as India’s biggest consumer-products maker by catering to local tastes and building a distribution system of 6.3 million sales outlets, more than double P&G’s 2.5 million.

Unilever’s latest investment in India comes as economic growth is weakening and government bureaucracy slows the expansion of international companies from Wal-Mart Stores Inc. (WMT) to Ikea. India’s economy expanded 5 percent in the year through March, the national statistics agency estimates, versus an average of about 8 percent annually for the past decade.

Source: Bloomberg (link opens in a new window)

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Base of the Pyramid, consumer products, multinational corporation