Unilever Consumer Care weathers inflation storm
Unilever Consumer Care Limited has managed to weather the inflation storm as people keep buying Horlicks – a health drink which is not essential in the food list – despite the pressure of rising commodity prices.
Currently, Unilever Consumer Care Limited, a subsidiary of Unilever which bought Horlicks from GSK, sells the product.
According to Unilever, people include Horlicks in their diet to meet their nutritional needs. As such, sales of Horlicks did not decline amid the inflationary pressure. Sales of its mini packs have been emphasised.
Despite the increase in production costs, the price of mini packs has not been increased, whereas the prices of its larger packets have been raised by about 5%. And by relying on the sale of the mini packs, the company did not allow inflation to affect the sales of Horlicks, it added.
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According to data from the Bangladesh Bureau of Statistics (BBS), inflation was more than 9% in August and September this year.
In May 2011, the highest rate of inflation was 10.20%. Since then, inflation had not exceeded 9%.
Unilever Consumer Care's July-September quarter revenue fell by just 5% to Tk107.74 crore. However, despite the increase in production costs, the company's profit increased by 15% to Tk18.72 crore.
And in the first nine months of 2022, its revenue increased by 1% to Tk319 crore and profit rose by 40% to Tk54 crore.
Masud Khan, chairman of the company, told The Business Standard that the high inflation pushed average consumers to prioritise their food and beverage items and a large number are spending less on health drinks nowadays.
"Still, a glass of Horlicks with milk and sugar is costing consumers 23% more than that a year ago. However, the Horlicks programme to reach 4-5 million new households in a year is helping the company offset declining sales by focusing on the stressed segment of consumers," he added.
Masud Khan said that due to its nutrition commitments to the masses, the company has refrained from increasing the retail price of its mini packs from Tk10 a piece.
Since last year, the mini packs have steadily been expanding their share in total Horlicks sales. The share has already reached the nearly one-third mark, he added.
He said volume was almost flat compared to a year ago, while a less than 5% average price increase helped the company see some revenue growth.
During the hard times for consumers, the company, despite its market dominance, is not passing on all the costs on to consumers, he said, adding it instead is focusing on maximum operational efficiency to control costs.
About the one-off benefit amounting to Tk40 crore coming out of a reassessment of past liabilities and obligations in light of recent business development, he said, "We had some provisions for VAT (value-added tax) and we feel that it might not be needed in the present context."
In 2021, Unilever Consumer Care made a profit of Tk52.76 crore and paid a 440% cash dividend to its shareholders.
Its shares price is stuck at the floor price, at Tk2,849 each, at the Dhaka Stock Exchange (DSE).
