Hindustan Unilever Ltd

NSE:HINDUNILVR

Q1-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to the Hindustan Unilever Limited Conference Call for the results of Quarter ended 30th June 2025. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Yogesh Murlakar, Head of Investor Relations and Head of Finance, Personal Care. Thank you, and over to you, sir.

[Yogesh Kumar Mishra, executive]

Welcome to the conference call of Hindustan Unilever Limited. This evening, we will be covering the results for quarter ended 30th June 2025. On the call with me is Rohit Jawa, CEO and Managing Director; Priya Nair, who has been appointed as the next CEO and Managing Director; and Ritesh Tiwari, our CFO. We will start with prepared remarks from Rohit and Ritesh.

We expect this to take around 30 minutes, leaving us approximately an hour for the Q&A session. We will look to end the call by 5:30 p.m. Before we get started with the presentation, I would like to draw your attention to the safe harbor statement included in the presentation for good order sake. With that, over to you, Rohit.

[Rohit Jawa, executive]

Thank you, Yogesh. Good afternoon, everyone. Thank you for joining us on the call today. I'll begin with an update on the operating context. followed by a summary of our performance and key highlights of the quarter.

Subsequently, Pritesh will present a detailed walk-through of our quarterly performance and conclude with the near-term outlook. As indicated in the previous earnings call, we are seeing encouraging macroeconomic conditions. The Reserve Bank of India has reduced repo rate by 100 basis points since January 2025, injecting greater liquidity into the system. Retail inflation primarily influenced by food prices has moderated to 2.1% as of June, its lowest level since 2019. This, along with the recent income tax relief measures are expected to positively impact disposable income and consumer sentiment.

Additionally, the Indian Met Department's forecast of an above-average monsoon bodes well for rural demand. Collectively, these tailwinds are helping to sustain the gradual recovery in consumption demand in the country. Consequently, consumption demand trends for the last 3 months reflected a sequential improvement. However, at the MAT level, the consumption environment remains stable with rural demand continuing to grow ahead of urban demand.

This trend remains consistent even when e-commerce data is factored in. Commodities continue to display divergent trends year-on-year. However, on a sequential basis, we are beginning to observe signs of softening across key raw materials, which has influenced our pricing strategy for the quarter.

Ritesh will elaborate on this later in the presentation. Over the past few years, we've accelerated our portfolio transformation journey by making sharper, more strategic portfolio choices. This has included divesting noncore businesses while simultaneously acquiring or scaling up businesses such as Minimilist, OZiva and exports.

As a result, we have substantial and strategically important businesses beyond the stand-alone entity. In light of this, we believe it's both timely and relevant to present our progress from a consolidated perspective, offering our investors a more holistic view of the company's performance. Therefore, while we have always reported both stand-alone and consolidated performance, we will now lead our results narrative from a consolidated perspective.

Our consolidated results incorporate the performance of 7 subsidiaries, Unilever India Exports Limited, Unilever Nepal Limited, Lakmaililever Private Limited, Unilever India Limited, Hindustan Unilever Foundation, Zig Ventures Private Limited, which houses the brand of OZiva and Uprising Science Private Limited, home to the brand Minimilist.

While the results of Appraising Science Fiber Limited is included in both the top line and bottom line, it is excluded from USG and UVG calculations for comparability. With this, let me move on to our quarter results. With a turnover of INR 16,323 crores, we've delivered an underlying sales growth of 5%, driven by an underlying volume growth of 4%. We have stepped up investments across lines of the P&L, resulting in an EBITDA margin of 22.8%. While this is 130 basis points year-on-year decline, it remains in line with our guidance.

We believe these investments are timely and strategic aligned with the execution of our broader portfolio transmission agenda. As a result of these investments, our profit after tax before exceptional items declined by 5%. However, reported profit after tax increased by 6%, primarily due to reestimation of certain tax provisions pertaining to prior years. Ritesh will elaborate this shortly.

As this marks the first quarter of transition to consolidated narrative, we are also presenting our stand-alone results to ensure clarity and transparency. Our stand-alone performance for the quarter reflects a USG of 4% with UVG of 3%. EBITDA margin stood at 22.6%, representing a year-on-year decline of 120 basis points.

Profit after tax grew by 8%, while profit after tax before exceptional items declined by 3%. Our performance reflects the disciplined execution of our Aspire strategy. The strategic framework serves as a cornerstone for accelerating portfolio transformation with agility, pivoting investments towards emerging demand drivers and accelerating the future readiness of our distinctive capabilities. All of this is underpinned by our unwavering commitment to sustainability and strengthening of our organizational culture.

Our segmented portfolio strategy empowers us to allocate resources with precision. By challenging investments into high-growth segments, we are seeing an accelerated pace of innovations, sharper execution and more agile responses to market shifts. To give you a sense of scale, under 50% of our portfolio is classified as core, but slightly above 50% is split between future core and market makers. Let me take you through some of the key actions that we are driving across each portfolio. In our core portfolio, our objective is to keep our brands healthy, contemporary and competitive.

With strong brand equities and unmatched reach, we continue to leverage these strengths to elevate consumer experiences. Harnessing our data-led predictive pricing platforms and agile capabilities, we have ensured consumers receive the right price value equation. We have continued to strengthen our brands through breakthrough technologies and innovations.

We've also expanded our brands into new benefit spaces with that of Glow & Lovely Glass Bright, freshness and soaps and ready-to-drink formats to name a few. Combined, these actions have driven sequential improvement in the performance of our core portfolio of Lifestyle Nutrition, Glow & Lovely and Lifebuoy.

Let me demonstrate our strategy in action with the example of the tea business. In tea, we have market leadership and a comprehensive portfolio that spans the price benefit pyramid, focused on product upgrades powered by our meni-driven deep consumer insights and differentiated technology. Innovations, renovations and expansion into new spaces continue to be a critical aspect of this.

For instance, we launched the Taj Mahal Deckim Rose in this quarter. Equally important is our pricing agility. As market leaders, we have proactively aligned tea pricing to reflect replacement cost dynamics during the quarter. We also employed evolving demand drivers to deepen our consumer engagement, whether through social-first demand generation like the recent 3 Roses Atthala campaign or Taj Mahal Jaibansuri installation in Vijayvadand also won us an award Ather Kans 2025.

Driven by actions, 100% of our tea portfolio is rated superior tool competition under the unmissable brand superiority framework, and we have delivered high single-digit growth driven by both price and volume in this quarter. In our FutureCore portfolio, our strategic focus is on premiumizing offerings that elevates consumer experiences and enables consumer upgradation to higher order benefits.

This is complemented by market development efforts aimed at unlocking access for our consumers. Recognizing the rising importance of channels of the future, we have strategically invested across our Future Core portfolio guided by sharp shopper acquisition playbooks. A brand that exemplifies this ambition is Dove, where we are creating desire at scale.

We have positioned Dove as an expert-led beauty brand, both in hair care and skin cleansing, introducing science-backed innovations rooted in deep consumer insights such as scalp therapy, peptide airborne strengthening range and the expert range of soaps that provide face care-like benefits ranging from nourishment to rents and hydration.

To broaden reach, we have introduced access packs across key Dove offerings, making superior care more affordable. We have also scaled up distribution of multi variant packs and soaps catering to diverse consumer needs and usage occasions. And on media, we have pivoted spend to digital platforms, leveraging performance marketing and influencer ecosystem to drive precision engagement, boost conversion and future-proof our go-to-market strategy.

As a result of these actions, we have consistently strengthened the brand, positioning it for sustained growth. DAB has delivered 2 consecutive quarters of double-digit growth. Moving to Market Makers portfolio. We've identified 6 segments that we believe are poised for disproportionate growth in the years ahead. These segments represent strategic growth vectors where we are investing with intent and speed.

Our approach is anchored in high-velocity innovation, market development through social first demand generation and focused investments towards building a digital-first ecosystem. These pillars collectively enable us to unlock new demand spaces, accelerate premiumization and build future-ready brands. Let me illustrate this with the example of OZiva, a brand that embodies our market maker strategy in action.

A little more than 2 years ago, we entered the health and wellbeing space through a majority acquisition of OZiva, a plant and science brand. Since then, the business has accelerated from a mere INR 100 crores ARR to INR 50 crores ARR. This transformation was made possible by unlocking synergies with the founding team and accelerating critical levers of the business. We sharply defined what OZiva stood for and intersection of nature and science.

OZiva uses modern science to extract potent plant actives that delivers transformative results. We focused on delivering bigger and better innovations driven by early trend spotting, robust R&D and distinctive superior product offerings. The brand build deep consumer resonance through authentic storytelling that address key consumer concerns while also guiding our product science to build trust and credibility.

Importantly, OZiva concentrated on building a winning portfolio built for the digital ecosystem. This included designing products optimized for online discovery and conversion, leveraging data-driven insights to refine targeting and deploying agile content strategies. As a result, the brand continues to deliver stellar growth, having tripled its turnover year-on-year. As you've seen, every brand action we undertake is intentionally designed to strengthen key drivers of demand, ensuring our portfolio remains relevant and competitive.

Strengthening unisled brand superiority is a core measure to drive competitiveness. We evaluate each brand across 21 strategic drivers, enabling targeted interventions that reinforce brand equity and consumer relevance. Over 80% of our turnover consistently outperforms eyeball competition. In Personal Care, for instance, Luxe is at the forefront of the UBS agenda, driven by the superior products, superior packaging and superior pricing, delivering high single-digit growth this quarter.

We have accelerated our innovation powered by 3 breakthrough platforms: microbiome, next-gen materials and biotechnology, fueling market-making innovations. Our Market makers portfolio with an annual turnover of INR 7,000 crores continues to deliver high double-digit growth with a long runway for sustained high performance. For instance, we launched Surf Excel Matic Express in the quarter, a game-changing innovation in liquid detergent that delivers expert clean in as short as 15 minutes.

Powered by proprietary technology, this product will cater to growing demand for speed, convenience and care in everyday laundry. Our digital media investments are scaling rapidly, led by our proprietary tool Sun, which enables real-time automated optimization. Today, over 50% of our media spend is digital, a sharp rise from 32% just 2 years ago. Influencer marketing plays a key role. The recently launched Globe Academy of Glow & Lovely is aimed at empowering the next generation of women influencers across the country with the ambition to nurture digital creator in each of the 19,000 pin codes of the country. Our investments in the channels of the future are yielding robust results.

Organized trade delivered double-digit growth this quarter and strengthened our market shares. Within this, e-commerce grew at strong double digits as we continue to expand our portfolio. The channel delivered competitive growth driven by strong share gains in our Beauty and Wellbeing segment. Quick commerce continues its growth momentum, doubling its turnover year-on-year.

Under the Bini 2.0 framework, we are sharpening our focus on building dedicated go-to-market routes to serve niche specialized in evolving consumer needs. The Beauty Pro organization is one such example where we established a specialized go-to-market structure for premium beauty. The structure is already reaching outlets that account for over 70% of B Beauty sales in the health and beauty channel, ensuring focused distribution and tailored execution. The actions we have undertaken are translating into consistent volume-led growth. We have systematically reshaped our portfolio to focus high-growth categories and future-ready segments aligned with the evolving consumer aspirations.

Through disciplined execution and strategic choices, we have initiated a strong transformation journey marked by a significant circa 500 basis point shift towards future Core and Market Makers portfolio in the last 2 years. As a result, our growth trajectory has steadily improved with mid-single-digit absolute volume growth sustained over the last 5 quarters, even amidst a moderating consumption environment.

In March last year, we spoke to you about how we saw a marginal dip in market shares in the deflation cycle. Over the last few quarters, we have strengthened our market shares driven by sharp focus on channels of the future and acceleration in performance of large categories such as laundry, skin cleansing and hair.

Over a period of 5 years, we have gained circa 250 basis points of turnover based on market share, reinforcing our leadership and equipping us to work stronger through the inflation deflation cycle and intense competitive heat. Looking ahead, we remain firmly committed to driving competitive volume-led growth while creating long-term value for our shareholders. Before I hand over to Ritesh to take you through the results in detail, I want to take this opportunity to express my heartfelt gratitude for the bond and support we have extended to HUL and to me personally over the last 2 years. It's truly been a privilege to lead the company as CEO and Managing Director.

After spending more than 37 years in Unilever across 8 countries with more than 12 years in CEO roles across strategic markets in Asia, I will now move on to the next phase of my personal and professional journey. I also want to take this moment to introduce Priya, who is on the call with us today.

With over 30 years of experience across HUL and Unilever, Priya rejoins us after a successful ste as the President of the Global Beauty and Wellbeing business. She succeeds me as the CEO and Managing Director of HUL. I am sure you will continue to extend your support of her and to HUL. Priya, you may want to say a few words only to you.

[Priya Nair, executive]

Thank you, Rohit. I am honored to be back. HUL is an exceptional business with a rich legacy, and I'm truly excited to shape the next chapter together with the team. I look forward to connecting and engaging with all of you soon.

[Rohit Jawa, executive]

I will now hand over to Ritesh to follow the next section.

[Ritesh Tiwari, executive]

Thank you, Rohit. Thank you, Priya. Good evening, everyone. I will now cover quarter results in more detail before closing with our outlook. We delivered a competitive performance this quarter with an underlying sales growth of 5%, driven by an underlying volume growth of 4%. Gross margin stood at 49.5%, lower 190 bps year-on-year, reflecting our investments to maintain an optimal price value equation across the portfolio. I will dwell deeper into gross margin movement in the following slide.

A&P at 10.1% has increased 40 bps sequentially. EBITDA margin remained healthy at 22.8%, in line with the guidance shared previously. Profit after tax grew at 6%, primarily led out of a reestimation of tax provision pertaining to prior years. I will provide further details on this later in the presentation. We witnessed gross margin dilution led out of transitory price versus cost gap in the quarter.

The chart on the left illustrates the comparison between our net material inflation or NMI and the pricing actions undertaken in response. As evident in June quarter '25, our pricing has trailed NMI, contributing to this margin compression. We have made deliberate investment choices by offering the right price value equation to focus on maximizing growth.

Let me walk you through 3 categories where this price-to-cost dynamics has played out in the quarter. First, in Home Care, we decreased prices not only on account of deflation, but also in response to competitor pricing. This enabled the category to further strengthen its competitive position in the quarter. Second, in tea, we adopted a pricing strategy based on replacement costs rather than on consumption cost. A substantial portion of our tea was procured seasonally between June and September last year when commodity prices were at its peak.

Over December and March quarter, tea prices have sequentially softened. Consequently, while the cost of the tea consumed during the quarter was higher, we decided not to pass on the full cost to consumers. This strategy supported our high single-digit USG with a positive UVG in tea for the quarter. Third, in our holvest portfolio, as highlighted last quarter, we made interventions to incentivize consumption. We narrowed the price gap between sachets and large packs in order to accelerate pack upgradation journey of consumers.

While we are seeing early positive signs, we anticipate it will take a few more quarters to fully assess the long-term impact of these interventions. Looking ahead, we remain committed to sequentially strengthening our gross margin through a combination of actions, including narrowing the price cost gap, accelerating our end-to-end net productivity program and driving a favorable mix.

Gross margin is a critical enabler of our ability to invest in the business, fueling innovation, market development, digital transformation and other strategic priorities. These investments are essential to ensure the long-term health of the business and to strengthen our competitive edge. In the near term, we will continue to reinvest the benefits of gross margin improvement into the business.

Coming to our segment-wise performance for the quarter. Home Care delivered another quarter of robust volume growth. High single-digit UVG in the segment translated to 4% USG as we continue to pass on the benefits of lower commodity prices to our consumers and ensure competitive pricing. Fabric Wash delivered mid-single-digit UVG. Our liquids portfolio continued to perform well, delivering sustained double-digit growth.

Disciplined focus on product superiority and innovation-led premiumization strategy and consistent execution of market development initiatives has enabled the category to continue strengthening its market leadership despite an intense competitive environment. Household Care delivered double-digit UVG. This was driven by broad-based performance across Dishwash and liquids. Growth in channels of the future has seen acceleration over the past last year, driven by expansion of liquids portfolio. We continue to advance our Home Care liquids portfolio through purposeful technology-led innovation.

We relaunched Vim Liquid range powered by revolutionary Rannoech. This technology combines the power of nature and science to deliver superior performance, cutting through grease, eliminating odor and leaving vicious sparking clean. The upgraded formula not only enhances efficacy but also elevates consumer experience, making dishwashing more effortless and sensorially rewarding. Beauty Wellbeing delivered a 7% USG, driven by low single-digit UVG in the quarter.

Hair care grew in mid-single digit, further strengthening its market share. The performance was driven by our premium brands, Drave, esameé and Love Beauty & Planet.

On-trend and science-backed innovations continue to propel our market makers portfolio, delivering strong double-digit volume growth. We launched Nexus in India, elevating our portfolio and making an entry into India's prestige and professional beauty segment. The brand embodies the future of hair care, precise, effective and powered by science. It is designed to offer Indian consumers transformative results while indulging them in a luxurious experience.

Bringing Nexus reinforces our commitment to promoting our portfolio to premium and high-growth spaces. Skin care and color cosmetics grew in low single digit, led by a strong performance in our Future Core and Market Makers portfolio. Our investments in channels of the future continue to deliver competitive double-digit growth. Glow & Lovely recorded a sequential uptick in performance supported by its key innovation, Gal Glass Beauty. Glow & Lovely's March quarter relaunch has been actively reinforced through culturally resonant digital-first initiatives such as Nor Music Video, which has reached over 100 million views.

We have continued to expand our Health and Wellbeing portfolio, underpinned by a robust pipeline of innovations in OZiva and introduction of Liquid IV, our hydration brand.

This category is at a nascent stage in India, but is gaining strong momentum, and we remain committed to building a substantial and scalable business in the years ahead. With the completion of Minimalis acquisition and acceleration in performance of OZiva, we have now further added an annualized INR 1,000 crore portfolio in high-growth demand spaces. Personal Care grew 6%, driven by pricing. Skin cleansing delivered mid-single-digit growth. We continue to accelerate performance in non-hygiene segment, resulting in double-digit growth.

Lifebuoy has seen a sequential improvement in performance, underpinned by the momentum of its recent relaunch effort. Body wash continued to deliver competitive double-digit growth. Oral Care grew in mid-single digit led by Closeup. We relaunched Closeup with an upgraded formulation powered by Zinc Fresh technology designed to deliver up to 18 hours of long-lasting freshness.

The new formulation has multiple natural extracts, offering a dual benefit of intense freshness and holistic oral health protection, delivering both functional and sensorial superiority. In the quarter, Foods delivered a 5% USG driven by mid-single-digit UVG. Our beverages portfolio consisting of tea and coffee delivered double-digit growth.

Within that, tea grew in high single digit with positive UVG. Coffee continues to deliver double-digit growth, driven by strong performance in channels of the future. We continue to strengthen our market leadership in lifestyle nutrition and have seen a sequential improvement in performance. We expanded the strong equity of Boost to enter the adult protein drink segment with Boost Protein.

Boost Protein has a clean formulation with higher protein and zero-added sugar, while being attractively priced. It is designed for adult men and women who want the same love taste of Boost, but with more protein. Packaged Foods delivered mid-single-digit volume-led growth.

Future Core and Market Makers portfolio delivered strong growth, supported by portfolio expansion, enhanced distribution and impactful collaboration with organized trade partners. Ice cream business saw a volume-led high single-digit growth for the quarter. The performance was impacted by early monsoon.

Moving on to a summary of our performance for this quarter. I've taken you through top line growth and margins. The year-on-year moderation in other income primarily reflects reduced cash reserves post special dividend payout in November and Minimalis acquisition in April, alongside softer interest rate trends. Exceptional items saw an increase on account of restructuring expenses incurred to optimize supply chain network and drive net productivity.

Tax expense is lower this quarter as the company has reassessed risk of potential disallowance of expenses and resulting tax exposure pursuant to an outcome under income tax dispute resolution mechanism. Accordingly, we have reestimated tax provision pertaining to prior years. Consequently, our PAT grew 6%, while PAT BI declined 5%. Effective tax rate for the quarter was 16.2% after taking into consideration the tax adjustment for the quarter.

Excluding this, the effective tax rate for the quarter was 26.4%. Next, let me share an update on the Ice cream demerger and acquisition of Bimalist. We have received a no objection letter from the stock exchanges regarding the proposed demerger of our Ice cream business.

The Honorable National Company Tribunal has directed that the meeting of HUL shareholders be convened to consider and approve the demerger scheme on 12th August 2025. The voting will begin on 7th August. To recap, a mirror demerger is being proposed. That is for every 1 share held in HUL, shareholders will receive 1 share in Quality Walls India Limited. This will unlock value for all the shareholders of HUL and give them the flexibility to stay invested in the growth journey of ice cream business.

Comprehensive details of the scheme, including all requisite annexure, have already been issued and are available on our website for reference. We are on track to complete the demerger process by quarter 4 of financial year '26, subject to necessary approvals.

Moving on to Minis. We successfully concluded the acquisition of 90.5% stake with a total payout of INR 2,706 crores. HUL, along with the founders are now working closely to chart the future course of brands growth trajectory. We have identified 4 key synergy work streams: R&D innovations, supply chain optimization, international expansion and off-line distribution scaleup. Execution across each of these is underway. Miniminis continues to demonstrate strong business momentum.

In this quarter as well, the brand delivered robust double-digit growth. We remain confident in Milliminis potential to contribute significantly to our premium beauty portfolio. Moving to our near-term outlook. Our growth guidance remains unchanged. We expect first half of this financial year to be better than second half of last financial year.

If commodity prices stay within the current range, we anticipate low single-digit price growth. As stated before, we are committed to driving sequential improvement in gross margin to fuel investment. We will sustain our investments across the P&L, particularly in channels of the future, multiyear market-making platforms and strategic capabilities to execute our portfolio transformation.

Consequently, we expect EBITDA to be in the range of 22% to 23%. We remain focused on driving competitive volume-led growth across our business by transforming our portfolio into high-growth spaces and investing behind our brands and strategic priorities. With this, we conclude our prepared remarks, and we'll now hand back to Yogesh to commence the Q&A session.

[Yogesh Kumar Mishra, executive]

Thank you, Rohit, Riya and Ritesh. With this, we now move to Q&A. The Q&A session today will be led by Rohit and Ritesh. With that, I would like to hand the call back to you, Nirav, to manage the next session for us.

[Operator]

[Operator Instructions]

The first question is from the line of Abneesh Roy from Nuvama.

[Abneesh Roy, analyst]

Congrats on good recovery in many of your categories. My first question is on the beverage portfolio. You made a very interesting comment, which you have not heard earlier very regularly, pricing in tea based on replacement cost. Now tea buying is a multi-month phenomena.

So deciding in Q1 on a multi-month buying, which will say happen 1 month down the line, what are the risks involved there? And do you use this kind of a strategy, buying on replacement cost in many of your other categories? Or this was a onetime usage in tea.

Similarly, if you see coffee cost has also crashed 30%. Is there a similar strategy there also? And coming back to tea, is next 1 year taken care of in terms of raw material? Because in Q1, if you are not taking the desired price hike, is that a proof of your higher aggression or next 1 year is taken care of in terms of the teaRM? That is the first question.

[Ritesh Tiwari, executive]

Yes. Thanks, Abneesh. Let me pick this up. So beverage, as you know, the tea buying season is typically between June and September, October. This is when we end up buying bulk of the commodities that we end up using to making our teas. And of course, different kind of teas have different peaking in terms of when season comes in, but the premium tea, which we are over-indexed, that's the key buying season.

So typically, when you're operating in December quarter, March quarter, you by and large know the price levels at which we bought the tea. And then you also see sequentially prices, if at all, they come off, which is what happened this time between December quarter and March quarter of the tea pricing. Now we had 2 choices.

We could have priced our June quarter product price portfolio at consumption cost, which we bought between June and September or from September onwards as the prices came down, we price to replacement. We made a choice of pricing to replacement to ensure that we are competitive. Tea is a category, as an exception, we had mentioned quite a few times, is going through a downgradation cycle. where we have seen consumers downgrading.

And hence, it's a very price-sensitive category at this point in time, which is why our decision to price at replacement cost. Now to your point, sitting today, would we know where the season and the price levels of the season would be. Now there's a pretty good understanding sitting today that this is a crop, the new crop, which has started as we speak last month.

The crop is a good production crop. And all things points now that sequentially prices will come off. So that is the lens that we have taken in terms of holding up current pricing levels. Now nothing stops us for us to titrate our pricing 1 quarter down the line, up or down as required to respond to commodity. It's a little different scenario when we talk about other commodity-driven categories that you spoke about. And let me give you 2 different examples.

Coffee, which you asked and Home Care, I want to add in. Now home care, for example, is exposed to crude oil. And with the pricing agility that we have in Home Care, our decision-making is depending upon what happens to crude oil and the basket of commodities that go into the laundry business. With a shorter pricing horizon, which means that increased pricing agility because you keep buying material for home care, unlike tea all across the year, you're able to take your pricing decision at a different agility compared to what you do for a tea category.

But coming to coffee, remember the conversation that we had over a couple of years, coffee has seen 70%, 80% cumulative inflation. And we had pointed out we never priced to the peak of inflation, which is why we were sitting on a price versus cost gap and hence, gross margin dilution in coffee. And like every other category when the inflation is too high compared to what we would want to take meaningful small bite chunks of price increase, we remain with the price versus cost gap.

As commodity price reduces, first, we allow for the price versus cost gap to start getting normalized. That's exactly what we're doing for coffee now. As and when required, we will, of course, pass on the benefit of lower consumption costs and on coffee as well to consumers. So a little different play, but this is -- I hope you get an understanding how we're trying to deal with pricing out here. For us, the bottom line principle, Abneesh, always remains competitive right price value equation.

[Abhishek Roy, analyst]

Understood. Very helpful. My second question is on the 2 acquisitions, recent acquisition. So generally, we see first year post the acquisition is generally tough. We have seen many cases where, in fact, the revenue goes down. In your case, Minimalist has done a good start with double-digit sales growth. So what is the confidence level on the balance 3 quarters? Second, on Oziva tripling in 1 year, very, very good numbers. Marico is also seeing very good growth in almost similar category. So if you could talk about Oziva now in terms of distribution scale up, how much has been done? In terms of Kirana, what kind of number is now coming from there? That will be my second question.

[Ritesh Tiwari, executive]

Yes. So talking about OZiva and Minimalist, both put together now, it's a INR 1,000 crore portfolio. This gets added, Abneesh to already existing INR 2,000 crore portfolio that we have in Beauty Wellbeing across the 6 big bet demand spaces. If I add all 3 put together now, the INR 2,000 crore existing portfolio 0 crores OZiva, Minimalist put together, this INR 3,000 crore portfolio, which is digital first, organized trade index is growing at more than 25 percentage.

OZiva, as you mentioned, has -- is almost 3x the business now what we had a year ago. The innovations that we have done in the business has driven the growth that we have seen. So a better job in terms of crafting the brand more precise and sharp, innovation intensity dialed up, continuous engagement on social media and performance marketing has yielded the results. OZiva's footprint even now is still by and large digital and digital first.

Offline expansion will be done at a later point in time when we start seeing more traction and more penetration for such business and categories across the country. Minimalist is the first quarter since we acquired and completed acquisitions on 21st of April. So almost a quarter of numbers get added to our reported total turnover. Of course, from a USG, underlying sales growth perspective, you will not see the impact. Once the business lasts 12 months, you will start seeing the growth coming in. But of course, a pricing Limited that we bought has its own base. The business has grown strong double digit in the quarter.

The job that we have to do out here is first, expand the portfolio beyond skin and which is what in the last quarter, the business has done, has launched business more in hair care and body care. We're seeing early very encouraging signals with that performance. Overall, there are 4 elements of synergy that we want to unlock.

Number one, R&D and innovation. Number two, supply chain synergy because we have amazing amount of supply chain systems and processes and structure that will help us to drive more synergy on cost front for Minimalis. Third, offline distribution. As and when it becomes relevant, we'll start leveraging our offline distribution, including Beauty Pro, which Rohit was talking about as part of our capabilities.

And last but not least, leveraging the network of Unilever for international expansion as needed. So those are the 4 elements. We remain very confident. It's a very sharp brand with a very good momentum. And we do believe that with the synergies that I just talked about, we should be able to create more value with this business.

[Abhishek Roy, analyst]

I'll ask a very quick question. I know I'm going into beyond my 2 questions, but this is a very small one. One very interesting development is across even modern trade players, private labels and liquid detergents are happening. You and other large powder players have come out with very affordable options in the liquid detergent. So good consumer upgrading from powder to liquid detergent will happen because of the pricing.

Now we are seeing INR 170 to INR 200, 2-liter kind of liquid detergent offerings have also come. Premium are also there. My quick question here is, yes, the shift of consumer behavior happens, but what happens in terms of your pricing growth? So for example, 1 kg powder detergent versus 1 liter liquid detergent, is the time of usage similar because pricing has now almost converged. So that's my quick question.

[Rohit Jawa, executive]

What we're really saying is basically we started building liquid detergents almost more than a decade back. They were driven by the thesis that as people move to washing machines, they need a specialist and liquids were a modern format that started to sort of gain momentum. And we built, as you know, close to almost INR 3,000 crore portfolio in home care liquids, extending that also to dishwash liquids.

What really is happening now is that it's getting democratized, particularly in the South, where the washing machine penetration is high, but also now expanding to general trade channels and also to the rest of the regions. What we're now really seeing is that like in many other markets, as the cost per wash gets closer to powder, the transformation to -- or upgradation from powders to liquids starts to accelerate.

And we are seeing Surf Excel as a brand getting new users in and brands like Rim, our second-tier liquid, getting people to essentially increase the share of requirement. We also have, in some cases, an opportunity to bring sunlight in as well. We've done that with -- also in the case of dishwash with our Sun brand. So generally speaking, basically, we're paying all the price tiers, but it's really surf excellent rent that's driving the conversion for us and the game has just started.

It's only under 10% of our contribution liquids, and we expect many, many more years of conversion from powders to liquids. And as people move from batch to powders, powders to liquids and eventually to capsules, that's the journey of upgradation we have seen many times in other parts of the world, and we're essentially driving that in this country as we should as market leaders in home care.

[Operator]

Next question is from the line of Arnab Mitra from Goldman Sachs.

[Arnab Mitra, analyst]

My first question actually is on the Foods business where you've seen the largest swing in the UPG from negative mid-single digit to a positive mid-single digit. I just wanted to understand, is it the tea or the nutrition business, which is driving this mid-single-digit growth? Or are there other parts of the business which have grown strongly, which we don't normally talk about, which have driven this growth?

Why I'm asking this question is from your commentary, it seems the nutrition and the tea business is still maybe flattish to low growth. So just wanted to understand where it is coming from? And is it sustainable you think in the coming quarters?

[Ritesh Tiwari, executive]

Yes. So if I just segment the Foods business into its component. So tea has seen a high single-digit growth, driven both by volume and of course, supported by price. Coffee has seen double-digit growth. If I add tea and coffee put together, total beverages has seen a double-digit growth in the quarter.

So that is one driver which is different, especially tea compared to the growth levels we have spoken about in the last few quarters, you see a step-up in the tea overall growth, and that has helped the food growth overall. Packaged Foods, which is the Kisan Corner portfolio and the space that we are innovating continuously, we spoke about mid-single-digit growth performance there as well.

So that has also helped growth. Horlicks and Boost, which comprises our Lifestyle Nutrition business, Boost is a brand which is strong and has given good growth in the quarter, which again helps overall growth. Horlicks, we had spoken about the job that we have to do in terms of turning around the business of Horlicks and start to make the business grow.

Now Horlicks never had a challenge on competitiveness. It was always the business which we have gained shares we've spoken consistently. But the job that we had in Horlicks to do is to increase consumption. We are market leaders there, and we want to create market. and hence, driving consumption is a top priority for us. And we have called out in the past that a few quarters that business had declined. Now we have seen improvement compared to that position. The business has still declined in the quarter, but lesser, but we've seen improvement sequentially in the business for Horlicks.

The job going forward for us, we had called out, we are launching Horlicks with a more sharper proposition product. And in times to come, that's a space you should watch out for. So that's indeed the composition of total growth, which adds up to 5% growth for Foods business, the right balance between volume and price.

[Rohit Jawa, executive]

If I may add that we have seen broad-based growth in foods this time. We've seen volume-led growth in tea because we priced all our brands across the portfolio in the sweet spots. We've seen coffee growing also quite handsomely despite the price inflation.

Kisan and brand, as you said, is mid-single digit. We're gaining market shares in ketchup. And on Boost as well, we've grown by mid-single digits, a little bit above that. So if -- and Horlicks decline has reduced. In fact, if you take away the lifestyle nutrition drinks out, we are actually close to double digits.

So we're very excited about the future of this business. And our brands are very strong, and we expect good work in this space to essentially create that momentum that will help us basically drive the entire business forward. So on the whole, a good quarter for foods, but only beginning of our change agenda.

[Arnab Mitra, analyst]

Got it. My second question was on the overall growth outlook. So I think that the catalysts are all there, but your own data on the Nielsen data doesn't show a significant growth acceleration in the industry.

But you, of course, have access to other sources of data, household panel and those kind of things. So are you getting a sense that there is actually some pickup starting to happen on the ground? Or is it still that catalysts are there and we hope that a pickup would happen at a macro level?

And also in that slide, I just wanted to understand in the outlook slide, last time you had the comment saying a gradual improvement as the year goes ahead. This time, you don't have that comment. Anything to read into that in terms of your confidence on how this growth could shape up from this decently good 4% number that you had this quarter?

[Rohit Jawa, executive]

Let me paint the picture of the market and request Ritesh to talk through the future. Basically, what we see is sustained -- a gradual recovery led by rural that is sustaining. We see urban growth coming back in the market.

More recently, it's still -- it's below rural, which is indeed how it was before we went through those few years of demand compression. So that's quite expected. The growth uptick is coming from small cities and e-commerce, especially quick commerce. So on the whole, we see gradual recovery that is sustaining. It's volume-led in most categories, except food, where generally we see price being the driver.

Not in our categories, it's more generally in the food market. But by and large, it's a volume-led with low pricing. And that's basically what we see in the market. This, I think, reflects somewhat to the improvement in the economy when it comes to the informal urban and informal rural sectors of the economy, driven by, as you know, things like agri economy being stronger, monsoons, low food inflation and in the future, of course, also incentivized by the fact that we have fiscal and monetary impulses that are positive.

So given all of this, we expect this kind of growth to stick. It's not -- there's no magic shift that's likely to take place, but we do expect sustained and gradual recovery to remain in place. And for us, as a company, our job is to essentially keep moving our portfolio to the faster growth parts of that market, of which there are many.

And as naturally, our portfolio gets more and more indexed towards faster growth spaces, our growth will get easier and more organically in the larger turnover-weighted growth parts of the market. So that's basically our read of the market and what we're doing about that. And over to Ritesh on our guidance for the future.

[Ritesh Tiwari, executive]

Yes. So Adam, as Rohit mentioned that if I look at overall FMCG market, we have seen on a MAT level trends being stable, and we have seen gradual improvement in latest 3 months. Given all the context Rohit mentioned about the macro, we do expect this gradual recovery to sustain as far as FMCG consumption demand is concerned.

And hence, when it comes to Hindustan Unilever, both because of the work that we have done internally in the portfolio, and we called out as part of the prepared remarks, how we have now shifted more 500 bps of our portfolio towards FutureCore and market maker. And that's the area which is where the market is also growing. So we are getting more in the spaces where market is growing.

So because of the factors of portfolio transformation, supported by overall macro outlook of FMCG industry, we do expect that the recovery that we have spoke about that our own results in this quarter, June quarter have improved compared to what we had reported in March quarter.

We expect this improvement to be sustained. So that's the actual outlook. And in summary, we had spoken last quarter that first half of this fiscal year will be better than the second half of the previous fiscal year. It's the same basically commentary and outlook is what we maintained in our outlook for this quarter as well.

[Operator]

Next question is from the line of Ratika Chopra from JPMorgan.

[Unknown Analyst]

First of all, thank you, Rohit, for all the engagements and insights over the last 2 years. And Priya, welcome back to India and wish you the best in the new role. I have 2 questions. First one is on skin care. This quarter, we saw a positive low single-digit growth after 2 quarters of muted growth.

Clearly, your premium portfolios are doing better, but I wanted to get some flavor on how the mass portfolio is doing? Is it still a negative -- is it still in the negative territory? Or has it started to turn flattish? And with multiple interventions that you're in, what is the confidence in driving growth for skin care to more towards the high single-digit range?

The second piece within this segment of Beauty & Wellbeing is on margins. The segment has seen margin decline. Just wanted to understand, is it just higher A&P spend? Or is there a channel mix impact as well as you've gained market shares on quick commerce and e-commerce?

[Rohit Jawa, executive]

Let me just address the first question on our confidence Skin growth part of the story and then margin. I hand over to Ritesh and anything else you want to complement on that. Firstly, this quarter, we're beginning to see the benefit of shifting our portfolio to faster growth spaces in modern e-commerce channels in more premium areas.

Our Masstige portfolio, repent brands like Love Beauty Simple, Parts of Llackmame, even Ponds [indiscernible] more future Core type portfolios have done well. Ponds has done very well. It's been -- it's a double-digit quarter for Ponds again. It's a really big brand, as you know, for us.

We have gained market share in e-commerce and in modern trade in the toughest of competitive hotspots. And that part is going well. And we -- of course, as we spoke, wellbeing part of the portfolio, Ziva, Minimis is also doing quite well. Where we do have more work to do, which is a multi-quarter work is Glow & Lovely. So relaunch in Glow & Lovely is also a significant part of our portfolio. Glow & Lovely was relaunched, as you know, early this year. We also had a new variants in place, Glass bright.

We see a clear sequential improvement. We can see that, in fact, we are near flat this quarter with all considered. There's more work to be done, and we expect this to continue improving. Excluding Glow & Lovely, in fact, have a near double-digit quarter for Beauty & Wellbeing.

So as Glow & Lovely starts to get normalized and we start to increase more scale the variant that's doing quite well. and the core brand renewal lands in the market, we should expect to see Glow & Lovely becoming less of a drag and also, in fact, if at all add to the growth. So yes, that's on the growth equation. And I'll move to the -- the second question you had was on the margins.

[Ritesh Tiwari, executive]

So let me pick that up. So overall, at the margin that we made in this quarter for Beauty Wellbeing is 28 percentage. It's a pretty healthy margin when you compare to the overall EBITDA margin or EBIT margin for HUL. So it's a business which is accretive to overall margin for the company. And we had maintained this.

In fact, we spoke about it in the Capital Markets Day as well that the role of B&W is to be growth accretive to Hindustan Unilever. So this quarter, when you see B&W 7% growth, HUL 5% growth, that's the exact equation that we want to do. And which means if at all we have to invest more in BMW, we will invest more.

And when we had called out that we will end up making investments in the business, we had alluded that Beauty wellbeing is one important space, we will end up dialing up more investments. And the investments across multiple lines of the P&L. It's on e-commerce, it's on modern trade in terms of platform channel investments and investment by working with the customer. We have increased the amount of innovation intensity in the business.

So that also leads to more amount of investment in product, in market research, in capabilities and working through different lines of the P&L, including A&P. We spoke about in our presentation, prepared remarks, how we're dialing up more in terms of digital media. In fact, digital media this year, last 12 months now is more than 50 percentage.

And this quarter, in fact, it is more than 60 percent -- so there's disproportionate investment that's going behind B&W. And you will see hence over, let me say, medium to long term, some amount of dilution in Beauty LB margin, but we're completely okay with it because it will always be accretive to HUL.

And if we continue to get growth ahead of average HUL, it will be overall mix accretive to us. This quarter, we spoke about our A&P investments, which went up by 40 bps and INR 150 crore plus. And B&W, of course, gets a lion's share of that increase that happens. So all in all, it's an investment -- winning investment case for us.

[Unknown Analyst]

Understood. The second question that I had was on skin cleansing. There was a revenue growth improvement to mid-single digit. I think it could possibly be because of pricing. But I wanted to understand better on the volume growth trends here.

Do you conquer that in the coming quarters, the base actually eases out, maybe the price value creation is looking better? If you can comment on that? And also, any comments on the market share trends in this category for you? That was the last question.

[Rohit Jawa, executive]

So we're very happy with our skin cleansing performance. We've had an all-round strong quarter. It's, of course, driven by price because the cost -- input costs have been quite high as with any other competitors in the market. We've -- but what we are happy about is the fact that we've seen a very good robust growth on the premium part of the portfolio.

Dove and Pears and on the liquids, where we continue to sort of grow very handsomely. Our Luxe brand, that's part of our business is quite strong and robust and gaining market shares. We do have work to do on Lifebuoy. Excluding Lifebuoy skin cleansing business would have been close to double digits.

Lifebuoy agreed, and we have done changes on the core, relaunched it with new formulation with a new packaging, refreshed core proposition. Early this year, we've had a successful entry with our freshest variant or reentry that's doing well. But admittedly, there's a lot of work to be done in Lifebuoy.

It's not an easy fix, but we are quite clear, and we have very exciting plans in modernizing the brand, expanding its range, getting into other formats, too. So we are quite certain that Lifebuoy will see an improvement, but it's going to take a few more quarters.

So on the whole, I would say on skin cleansing, good top line growth, good margins, competitive and in the right shape, meaning premium and premium formats growing faster than the rest. So we want to remain consistent. This is a very important category for price quality sweet spot.

So we must keep it right as we've done with tea and laundry. We are quite -- we will not let that go. As long as that stays on the core, we know that the premium will grow with better marketing, which is indeed the case as we have done with relaunches on Dove and action on peers to name a couple. So that's pretty much the story in skin cleansing.

[Operator]

Next question is from the line of Manoj Menon from ICICI Securities.

[Manoj Menon, analyst]

Just continuing with the question or clarification which Arnab had on the macros. Now looking at your data, if you could just help us understand, let's say, texture color in whichever form of, let's say, the volume part and the mix part of TVG.

So that might, let's say, give us some clues or clues about what's already happening, which may or may not be forecastable.

[Ritesh Tiwari, executive]

Yes. So when you ask, Manoj, volume and mix part, are you talking HUL, -- are you talking industry macro?

[Manoj Menon, analyst]

HUL. Let's say, what your portfolio is selling because you are a large player. So some way we can -- at least in some categories, we can actually use it for yes, for a larger picture.

[Ritesh Tiwari, executive]

Yes. So if I look at -- if I talk about HUL numbers to start with. So this quarter, for example, we have spoken about 4% UVG growth and 5% total growth leading to, let me say, 1% pricing. In this 4% UVG growth, our volume growth, which is tonnage growth is ahead of the UVG growth we spoke about. We have spoken about the mix being negative.

And we also spoke a few quarters ago that the number was material, and we spoke that, that is transitory in nature. And over the next few quarters, that gap will reduce. That's exactly what has happened. So there's a convergence happening as we speak between UVG growth and tonnage growth in the business.

So overall, when we see from a macro perspective, then having a tell to HUL, the only thing which is different compared to what you see for the last 5 years, 10 years is the pricing growth component to the total growth of the business. growth continues to be volume-led and price remains a small component.

All of us know that over the last 10, 20 years, 4% to 5% is typically growth of FMCG industry comes from pricing, which, as you know, is more like 1% now. So that's one element which is different. Otherwise, the volume recovery, which we have seen has been pretty comfortable, and we expect that this gradual recovery should sustain, both for the macro industry and equally for HUL outlook, as I spoke earlier, the gradual recovery to be sustained.

[Manoj Menon, analyst]

Very clear. Ritesh, just a quick follow-up on this linked to the seam cleansing category. I understand that the reasons for the volume decline has been there for [indiscernible] explained earlier. But let's say, ex of the INR 10 price point where there is a grammage price interplay, would the volumes would have grown on the non-RPE 10 price point of...

[Ritesh Tiwari, executive]

Yes. Skin sinking, one remember I've spoken some time back as well. It is one of the category which is sensitive on price increases and is elastic. We have seen not now, I'm saying for multiple times in the past as well. When you have such material inflation overall for commodity, which leads to price increase, it always impacts overall volume.

And in different formats, volumes of single packs, multipacks and of course, the gram changes that we end up doing, it does impact. And consequently, whenever the deflation happens, you've seen tonnage to volume picks up. So that's the impact which you've seen in this quarter as well.

Now of course, as we keep lapping the price changes, the impact of volume decline for the category and hence for us as well keeps reducing. This quarter, it's a growth that we have overall a mid-single digit, which is price led and the overall, let me say, decline in volume is much smaller compared to what we saw at the peak of inflation for us or for that matter for the industry.

[Manoj Menon, analyst]

Understood. Just second and last question is you did speak a lot about the interventions which you are making in many of the core categories. One request would be, if you could talk a little more about, let's say, the actions which are already there in the market, obviously, is sensitive, let's say, for Horlicks and Glow & Lovely. Specifically on Glow & Lovely, what I'm trying to understand is, look, it's a product which we see as a product which doesn't really have a substitute.

Let's say, for some the same question I discussed with the company have got a hair oil portfolio because hair oil is meant for conditioning. So where is the consumer gone, right? I mean, is it just a case of titrating consumption which is linked to macros or anything else which we are unaware of. So some more color on, let's say, actions have gone into the market about Horlicks and Glow & Lovely.

[Rohit Jawa, executive]

On Glow & Lovely, which is an iconic brand used by more than half the consumers speaking that loosely, critical brand for us. has 2 parts, the core and now the Future Core. The Future Core launched with modern sensorials called Glass Bright, doing extremely well. In fact, we will be scaling it aggressively going forward.

That is helping us grow the brand, making it available for people looking at modern versions of it, modern benefits space and modern format and sensorials. The Glow & Lovely has been relaunched with a renovated promise of renewing sales with a communication that's more engaging and a new pack design and some product upgrade in parts of the country, which is appropriate to the new consumer preference for lighter sensorials than what traditionally Glow & Lovely has offered.

We have tested this exhaustively because it's a big brand, and we find that consumers like it. And we already start to see some trends towards an improving trend on brand and user ship penetration, particularly in more urban areas. But it will take time as the brand reaches more rural and consumers start to see the improvement. We expect to see the improvement also come through in the rural areas.

So we are at it. We are going to scale up the Future Core premium version that I believe is a slam dunk idea to grow the brand, and that's helping the brand reduce its decline and keep the core more contemporary. All of this will be sequentially is improving over the last few quarters, but it will take a few more quarters of hard work for the brand to basically get to an even keel, but we are on it. That's on Glow & Lovely, very important for us, as you mentioned.

When it comes to Horlicks, Horlicks, we are -- we have seen, again, in this case, basically, there are 2 core actions. One is to improve the relevance of the core product because consumers have more options as we've spoken about it before, for their children for that breakfast movement and the snacking movement in the day and also address the fact that people have been -- consumers were dropping consumption as discretionary consumption came under stress.

What we're now doing is working on a relaunch on Horlicks, which we can't, of course, give you more details on, but I tell you that we have for a brand that's very popular and use it quite deeply in South and East. It's very important that we don't alienate the consumer. So we again have been doubly sure. We have a product that will address -- will be better. We have a proposition.

We will not be able to tell you more details on that, that is compelling and modern and improves relevance. And all of this will come together somewhere towards the end of the year. It's a long haul, and therefore, we're not in a hurry by month, but to make sure that we have the right mix in the market that improves the relevance of the core holidays for our consumers. In the meantime, tactically, we also wanted to make sure that we promote the large pack usage, particularly in the South, where the consumers were titrating to smaller packs.

That action is in play, and we start to see that already making a big difference, especially the Boost that has grown mid-single digits this quarter. And our price pack architecture is broadly stabilizing. And that should, over a period of time also settle down.

So I think that's really what we see sequentially to bring back the core Horlicks back to growth and a few more quarters of work left there. So in sum, sequential improvement in Glow & Lovely, led by its premium Future Core brand. But on the way in Horlicks, more work to be done, but both already showing signs of promise this quarter.

[Manoj Menon, analyst]

Good luck to Rohit and Priya for your future endeavor. And one observation, if I may, maybe bothering Priya. Is there a particular reason why Liril is up there in the first flight itself?

[Rohit Jawa, executive]

It's there because it's done very well in the summers, and it's really a summer focus. And since we're covering summer, we put it up there. Isn't it beautiful?

[Manoj Menon, analyst]

Sure. Absolutely. I can't agree more because not seen it in a long time.

[Rohit Jawa, executive]

We are focused on it, especially in the summer season, and that's why we did a whole summer focus this time with lineral and Life oil, both of them did very well, and we are going to continue doing that every summer.

[Operator]

Next question is from the line of Vivek from Jefferies India.

[Vivek Maheshwari, analyst]

So one more question on your Slide 4, which is the operating context. Ritesh, you have explained it a few times on this call. But when we look at rural numbers, actually, at least the industry trend seems to be going down in terms of at least the growth, whereas urban is picking up.

So what exactly is -- and I understand that you have -- may have gained market shares. But other than -- in your outlook, other than the low base, do you genuinely think things are picking up on the ground, at least the industry chart doesn't show that. And especially, I'm more worried about the rural bit over here.

[Ritesh Tiwari, executive]

Yes. So rural to start with, Vivek, first of all, as a context, it's 1/3 of the business that we have. So I know the 2/3 population lives in rural, but 1/3 FMCG consumption and also 1/3 of our business comes from rural. What we have seen basis Nielsen data and our own internal read, we have seen an uptick in rural. And even when I take urban data and I add e-commerce to it and then look at the number, rural is still ahead of urban. Rural, we know had got impacted.

And this overall macro rural should do better than urban is a secular trend that should happen in the country. But in fact, $25, $30 per capita consumption in rural vis-a-vis $80, $85 per capita consumption in urban. Now disposable income perch is what had really hurt the rural population, where cumulative inflation was not nowhere getting compensated by the income level increase, which we had seen. Now with substantial amount of easing on inflation, including food inflation, continued government support on schemes, Agriculture is good last year and a promising monsoon this year as well.

All put together, we have seen improvement in income levels in the rural areas, including the nonfarm income, which is typically one from the rural economy. So the signs that we are seeing, we are seeing that overall, there is recovery in the industry, and we see that coming from rural as well. So we're not picking up a concern for rural. I think given the improvement in disposable income, it only augurs well for rural area.

[Rohit Jawa, executive]

And the growth has improved and is not sustaining. It's not that we're suddenly seeing a massive change in trend, by the way. There was a COVID effect in the middle. But generally, the growth is sustaining at reasonably strong levels.

[Ritesh Tiwari, executive]

And hence to Rohit's point, the operating word, if you add to it will be gradual recovery to be sustained, if I have to give outlook as well on that.

[Vivek Maheshwari, analyst]

Got it. Got it. It's just that the chart shows the trend drifting down starting December last year. So that was the reason. But...

[Ritesh Tiwari, executive]

Vivek, just to clarify, it's an MAT trend as we called out. And if you see the subtext on the chart, it calls out that LTM improved gradually. So we are seeing last 3 months better than the MAT trends, which you see on the chart. We always put the charts on MAT trend because we can know a quarter can go up and down. But within that MAT trend, which is stable, we do see uptick in the latest quarter market numbers.

[Vivek Maheshwari, analyst]

Okay. Got it. So exit is better. Got it. The second thing, Ritesh, you mentioned about -- on the acquisition, a couple of things I wanted to ask. On the minimal, you have explained and articulated very well on how the portfolio will be run and how will it benefit from -- how do you think about how actual portfolio, the online one particularly can benefit from Minimalist? Or do you think that there is no much upside for your base portfolio by acquiring these digital-first or D2C brands?

[Ritesh Tiwari, executive]

Yes. So overall, if I look, Vivek, we have a INR 2,000 crore portfolio, I mentioned a little while ago on the 6 big bets within Beauty & Wellbeing. And this INR 2,000 crore portfolio is, by and large, organized trade heavy and more e-commerce and digital first.

That INR 2,000 crore business now becomes INR 3,000 crores with OZiva and Minimalist. Definitely, both OZiva and Minimalist is a fabulous addition to our business. Put together, this INR 3,000 crore portfolio like-for-like is today growing at more than 25 percentage.

And I was speaking about it when we spoke in the Capital Markets Day that there are both things important out here. Growth portfolio is important, but equally business model is important. for it will remain sustainable. Now this INR 3,000 crore business that we have makes double-digit margins. And it has a sustainable business model because of all the work that we've done in supply chain on supply chain and singles, the entire nano-factory concept that we have spoken about. So there are many things that HUL adds in terms of scale, capability to these businesses.

Equally, there is reverse learning as well from both OZiva and Miniimalis and OZiva because we've been running that business for the last more than 2 years now, along with the founders and Minimalist has just got started. We do believe that the equal learnings of how these businesses are being run in a very agile and successful manner. So the team will co-create many of these learnings together and overall portfolio of Hindustan Unilever will benefit from this ecosystem.

[Rohit Jawa, executive]

But just to specifically talk about, say, OZiva, -- in fact, just a few weeks back, we had the OZiva team come and talk to our top 100 people. We spoke about how they build the brand, what they do in digital. the metrics they focus on, the importance of social, building credibility by being -- talking about the science behind products, the kind of metrics that really drive right return on advertising spend, et cetera.

So we are creating a very active way of osmosis of learnings from [ Unimlist ] and OZiva. They happen to be in the same business unit that also helps. So there is an active intentional cross transfer of learning both ways to absolutely reinforce the point that HUL Mainline can also learn a lot as can these companies or units by leveraging the scale synergies and supply chain media, et cetera, from insurer.

[Vivek Maheshwari, analyst]

.

Got it. And the last one on the same theme, with platforms becoming more and more demanding, do you think there is a case of going, let's say, aggressive and buy out some more D2Cs given such a good experience you have had with Oziva and Minimalist hopefully will also do well.

And that's just [indiscernible] because the smaller brands are complaining about higher take rates. So when you have such a large sizable portfolio, you can actually negotiate the terms far better versus the platform -- against the platforms versus smaller brands. What are your thoughts on that?

[Rohit Jawa, executive]

We don't look -- we look at it more as a portfolio play. So we have -- as we've said before, we have 4 levers of building a portfolio to cover the demand spaces, acquisitions, which Minimalist is one, build a new brand like Noavgy, which is our homegrown with Unilever Tech to actually launch a global brand like Simple or Love Beauty Planet in the market or to extend our core brand.

So we've done all of that, which is why Ritesh's INR 3,000 crore, let's call it, digital-first portfolio has been sourced from exactly these 4 levers, which is now growing at 25%, and I'm making up some rough numbers that this INR 3,000 crores, if this is a company, would probably have 40%, 50%, 60% of their throughput of sales through modern channels, including e-commerce.

So we don't always have to go ahead and buy a brand to create scale. We can always build or borrow from Unilever to create exactly that kind of coverage. We've also brought in Liquid IV as well from as Nexus. So what I'm saying is we have many more levers in acquisition to create that portfolio play in these markets for especially the higher income consumers where actually these brands have high relevance.

That doesn't take away from our openness to constantly scout the market as we do and to evaluate new brand for fit. This is how we found Minimalist as an exciting target, and it's now part of our family.

[Operator]

Next question is from the line of Amit from UBS Group.

[Amit Sachdeva, analyst]

Sir, my question is on Minim. And you clearly shared that the equity in skin that has been built very well. The brand has scaled up and is growing strong double digit. Now you plan to also take the skin equity to hair and body and which is a very interesting perhaps direction. In that sense, the brand is already growing in 25% of this portfolio.

What I want to ask is that is this a possibility? And is this the right direction to see that the brand could actually double by, say, FY '27, if not this year because it has not yet seen the might of the distribution or channel mix or it is has an online brand run differently.

But is there something that the ambition should be much larger than what it has and you clearly see that potential? How -- can we see that kind of largely within a year or 2 time? That's question number one. And I'll follow up with that.

[Ritesh Tiwari, executive]

Yes. So just to clarify, when we quoted a number of more than 25% growth, we spoke about the entire INR 3,000 crore portfolio put together. We did call out that Minimalist has grown strongly in double-digit growth without specific a number for Minimalis. That's one. And second, of course, Minimalist is a brand in beauty space and focused and anchored in skin, and we will do selective portfolio expansion of that as we speak, leveraging all the 4 synergies.

We have a very clear business case, which is what the Board approved as we acquired the business. And our job now will be as a team. Remember, we just acquired the business on 21st of April. So it's been like a quarter since we are now running the business with the founder. And all the 4 synergies that we spoke about, be it R&D innovation, be it off-line expansion selectively, be it leveraging the network of Unilever for international expansion or for that matter, the supply chain benefit that Millimilis should get. We are focused on realizing all these synergies to drive top line growth and profitability and invest back in the business.

So yes, we are committed to ensure that the business grows very well. And we had called out when we had acquired the business, it's a brand pretty well crafted and built up in 4 years' time with launch, it had scaled and reached a INR 500 crore ARR business. So that's the scale at which Minimalist has grown, and we would want to keep supporting and ensure that we're able to use the full opportunity that the brand presents itself with by leveraging scale and benefit of Hindustan Unilever...

[Amit Sachdeva, analyst]

Got it. That's very, very helpful. And let me just stretch it a little bit on -- because I think the skin is fragmenting because of the large benefit spaces are emerging. And so maybe the brand or new 2 brands, even the architecture needs maybe more plethora of brands to capture all the benefit spaces and one way to acquire, one way to build one way to borrow from Unilever, as you rightly say.

But do you see any Unilever brand, which you kind of think that could come to India? Or is it possible that you acquire a brand outside with an intention to bring to India specifically, all these options are possible for sitting India portfolio?

Because I believe that skin needs a lot more brand and given the fragmentation is on the rise to play rather than paying through 3 or 4 major brands. I mean I don't know I want to get your thoughts on how organically or inorganically this business could be beefed up from what it is today.

[Rohit Jawa, executive]

We acknowledge that you need more than just a few big core brands, which is why we have core FutureCore and market makers mindset, especially for BMW, which is why you've seen us doing exactly those things. We have built brands for the market, say, OZiva. We have brought brands like Simple from Global, Unilever into India, and it's expanding fast. It's more than INR 100 crore ARR and Love Beauty Planet also more than INR 100 crore ARR.

We have acquired -- we have brought in the global brand Liquid IV Nexus just this year. Both of these are serving very niche segments in well-being and the beauty market, respectively. We have full intentions of bringing the prestige brands from the global stable into India, and the work is well underway to do that. So there will be a few core big brand equities, let's call it, sort of the center of our plate like bonds, Lak, Glow & Lovely, Dove to name 4. And then there'll be satellites serving several small need spaces in this area, such as Minimalist on active science or Simple on Clean Beauty and so on and so forth. So there's basically every intention we have of us to serve all of these segments with this kind of a portfolio play.

[Amit Sachdeva, analyst]

That's very helpful. And can I ask just one small bit on Glow & Lovely. You said that Glow & Lovely sequentially has done better and is kind of largely flattish. But a lot of this portfolio action has happened in early part of the year. And do you see portfolio reshaping is complete and it's other actions on promotion and distribution and building reaching out to more consumer, that's the part pending for kind of turning it into growth?

Or how its second half this portfolio could jump to positive territory from where it is today? Is there -- what -- could you specify what would take it there?

[Rohit Jawa, executive]

So we are doing 3 main actions. First of all, we are not yet above water fully and there's work to be done, but it is sequentially improving from last year. That is definitely helping us. And like I said, if you just -- even that decreased decline, so to speak, we take it out, the rest of the business is growing near double digits. But we -- Glow & Lovely is an important part, profitable part of our business, and we will -- we are fully focused on making that grow. So 3 main actions. One is to renovate the core to make it contemporary, and we've done that early this year. So that started with new proposition of renewing cells, a new pack, which is more modern.

Even sensory is a very important change, by the way, because we're finding that as weather conditions have changed, as consumers' reference points of what is good, voisturization of brightening has changed or sensors have changed. We have also had to change the way the product feels on skin, less sticky, less heavy, et cetera.

But it's not a straightforward call. It's quite nuanced because our consumers for tubes and sates are different. The weather conditions in North, Central and South are different. So we have done a lot of work to optimize the product now, and that's also gone in the market. We have, of course, new advertising. So on the core, we are addressing all levers, all 6Ps to get that brand more [indiscernible] of the core to grow. What's already working for us is our extension to a lighter sensorial Glass bright product with a jar. That extension is doing quite well.

In fact, we were supply short. Now we are actually scaling it, and we expect to make it a significant part of the total brand, and that could also drive our growth on the total going forward. And that is basically a modernized Glow & Lovely for consumers who are looking at a modern premium type proposition, but not at a very high cost.

And I think only Glow & Lovely with its reach and brand name recall can offer that. We are also entering new formats like seeds and sunscreens. Those are relatively small at this point, but that basically makes sure that Glow & Lovely offers consumers, therefore, every type of benefit and format that they seek without shutting out huge amounts from their pocket.

And I think our distribution reach both media and availability are under our spotlight, and those are also being driven. So we are very focused on this core business and are making sequential progress.

[Operator]

Next question is from the line of Percy Panthaki from IIFL Securities.

[Percy Panthaki, analyst]

My first question is on the detergents portfolio. So you had mentioned this last quarter also, and it's going according to that only that there is sort of going to be further investments in detergents, and we've also seen average selling price kind of a decline there. Just wanted to understand how much of this decline in ASP is driven by the price competitiveness in the liquids portfolio?

I mean liquids is maybe, let's say, 10%, 15% or whatever of the business. So would you say that it has its fair share of the decline or it's lower than the fair share, higher than the fair share? That is one.

And secondly, you mentioned that this is also in response to higher competitive intensity in the overall detergent space. I'm assuming this is including powders, not just liquids. And if that is the case in powders, who is driving this competitive intensity? Is it the other large MNC or any other large sort of national player? Or is it some sort of small and regional players who are driving this? Yes. So this is my first question on Home Care, please.

[Ritesh Tiwari, executive]

Yes. So overall on Home Care, as you rightly alluded, Percy, that we have grown high single digit in terms of volume. And you saw that our reported growth, our underlying sales growth was 4 percentage, which means we had negative pricing.

Now all the pricing actions that we had to do for 2 reasons: a, because of deflation in commodity, the entire crude basket and many of the commodities like soda ash had seen deflation, those we had already passed on to consumers. The second area and reason why we had done a price decrease was competitive reason, and I'll kick down since your question is more focused on that.

So both put together, the pricing actions have got deployed in the previous quarters. In this quarter, no further new action happened. It is basically the payout of decisions that we've done previous to this. So year-on-year, hence, you see a decline in terms of pricing in the business.

Now when it comes to what part of the portfolio to your question, has been commodity linked and what part of the portfolio has been competition linked, of course, very difficult to, let me say, give a number to each of them, but let me still help you with some color on it. The area which has seen more commodity decline is crude oil and crude basket. That impacts more on laundry powders and detergent bars.

When it comes to liquids, remember, liquids are obviously, by and large, there are many materials in it. But again, that's palm oil and palm oil derivative linked active detergent in it. So it's -- and there, we have seen inflation. So for competitive reasons, when we have reacted to price, we reacted to price in liquids and in laundry bars. By and large, powders have been more commodity linked. So I hope that gives you our understanding which portion has been driven with what.

[Percy Panthaki, analyst]

Right. And the competitive action more by MNC or national players or more by regional players?

[Ritesh Tiwari, executive]

Yes. What happens for liquids, you see it's still a concentrated market with few players. When it comes to detergent bar, it's pretty well spread out with multiple players, global players, local players, regional players. So it's a pretty spread out competition. On detergent bar, liquids is more concentrated to a few players.

[Percy Panthaki, analyst]

Right. So on powders, whatever price cuts have happened have happened mainly on account of commodity only and not any competitive action?

[Ritesh Tiwari, executive]

We can never say it's only on account of A or only on account of B.

[Percy Panthaki, analyst]

But very largely, it's not...

[Ritesh Tiwari, executive]

As I mentioned earlier, largely is on account of reasons of commodity reason for powders.

[Percy Panthaki, analyst]

Sure, sure. My second question is on Glow & Lovely again. Of course, a lot of it has already been discussed. But see, right now, the brand is in decline. And of course, it's improving, but it's still in decline.

So this is my thought process and let me know whether it's a fair way to look at it, that a combination of whatever little bit of demand revival on a macro basis plus the actions you are putting in place will bring the brand back to sort of an even keel. It will not decline. But we should not have too much of a growth expectation from this brand.

Even if it remains sort of flat, it should be okay. The reason is that we should probably be looking at whether we are serving the customer in some way or the other. Now if the customer is upgrading and we catch that upgrading in some other brand, that should also be okay. So would this be a fair thing to say that over the next, let's say, 3 to 5 years, if Glow & Lovely sort of remains flat, that's a more realistic expectation, and we will catch those customers in some of the other brands?

[Rohit Jawa, executive]

Firstly, for each of the brands. So we play a portfolio. High level for skin care, as you well, we just said, we have to go where the growth is. Growth is more premium, more new formats and spaces going to more modern channels. So clearly, we're going to go where the growth is. And clearly, consumers are upgrading and we want to be the one driving those upgradations.

So high level, what you suggested is the right allocation of resources. That's exactly what we are doing. We call it Aspire, but it's pretty much that. That said, each and every brand manager who's handle the A brand, their job is to grow the brand. And the Glow & Lovely brand manager has got that mission is to grow the brand as if it was a company. It's already close to INR 2,000 crores. So it could be a company.

And the vision to that particular brand manager is please grow this brand, get more users, more usage, more benefits. And that's what they're going to do. Obviously, given it's already at a big scale and many of the consumers are up trading, could be users of Glow & Lovely, there will be that pressure. But we have so many more brands like Ponds, Lakme and others that we just spoke about to really take those consumers to those new brands. That's what we have done in Home Care with Surf Excel and with Taj and Lipton in tea. So that's the story of the Indian market is upgradation.

[Percy Panthaki, analyst]

Sure. And with the actions we have taken, how long do you think it will be before this brand comes back to a Y-o-Y growth?

[Rohit Jawa, executive]

I think it would be difficult to put a specific precise number to that. We do see sequential improvement. So if that continues to be the case in the future, which is what our plans are, then it should be a few quarters at which time this should be in that position. That's, I think, as much of precision I can give at this point.

[Percy Panthaki, analyst]

And very quickly, last question would be that in skin cleansing for the last few quarters, we've seen Lux doing much better and sort of Life Boy lagging. There are certain issues with Life Boy. I think you did a relaunch as well. So can you give some idea as to whether now Life Boy is more or less growing in line with your category growth or not yet?

[Rohit Jawa, executive]

Life Boy is clearly not yet growing in line with the total business. But our intention there is for it to gain share of the hygiene segment because what we can't do is go, yes, the consumer shifts are going more and more towards upgrading to new formats, more beauty, more skin care, et cetera, where we have absolutely the right brands to cat those consumers through Dave pairs and the whole equals agenda.

Hygiene segment is clearly after COVID under more pressure. And within that, we want Lancore to gain market share. It is doing better than its peers in that segment, but there's more work to be done, and we are on the journey.

[Operator]

0

Next question is from the line of Mihir Shah from Nomura.

[Mihir Shah, analyst]

Firstly, on gross margins. Ritesh, the gap between NMI and UPG has widened this quarter. Also, if I see the palm oil prices recently, they've started to become inflationary again. How should one triangulate your comment on sequential improvement in gross margin with low pricing-led growth going forward? And this GPM improvement that you're expecting, will it largely be driven by cost efficiencies and better mix? So that's my first question.

[Ritesh Tiwari, executive]

Yes. So overall, as you saw that there's a price versus cost gap that we have at this point in time. And we label that, that gap is more transited in nature. And as we progress forward with this disturbance in line, I hope you can hear me. Okay. So the price versus cost gap, Mihir, that we have, that's more transitory in nature.

And I called out that 3 different reasons for that we had called out as part of the prepared remarks. Tea, we are pricing to replacement, not to consumption. So there is a price versus cost gap. It sort itself out as we move forward, number one. Number two, for Home Care, all that we had to do, we have done in terms of passing on the benefit of commodity and also competitive reason for taking price decrease.

And that's the second reason why we've seen the price versus cost hurt. And third is in the space of overall Horlicks, where the pack price architecture correction that we did to drive consumption. Now good news is all 3 actions are yielding results in terms of growth. And we had anticipated this, which is why in our prepared remarks in the previous quarter, we had called out that you will see gross margin moderation in quarter to come. That's exactly what the quarter has played out.

Now going forward, we believe that from next quarter onwards, we should start seeing improvement in gross margin levels compared to where we are now. And this improvement will come from a better, let me say, a smaller price versus cost gap, number one. Number two, improved mix as we're driving more sales of Beauty Wellbeing ahead and other parts of the premium portfolio.

We spoke about 500 bps is the amount of change which is happening towards future Core and market maker portfolio. And third, by driving net productivity across all lines of the P&L. And so all those 3 actions put together, we'll be able to improve gross margin compared to where it is today. But as I mentioned earlier that we will invest back this improvement of gross margin into other lines of the P&L to drive growth.

And hence, our EBITDA margin, our outlook doesn't change. It remains what we gave in the previous quarter, which is a range of 22% to 23% is what we want to operate for next few quarters.

[Percy Panthaki, analyst]

Understood. Secondly, on your comment on your ad spend again. So basically, if you see your lower raw material prices usually also lead to higher competitive intensity. Are you sensing any competitive intensity to go up and hence, the higher ad spend budgeting apart from the investment that you want to do in the brands?

And also with the economy opening up or getting better, how should one think about the new digital brands again to mushroom and start growing faster and probably some way hurt the growth of other legacy brands? So your comments on competitive intensity on this?

[Ritesh Tiwari, executive]

Yes. So coming to A&P and the intensity there, a year back in the period of deflation, we have seen heightened intensity of -- and which is why our A&P levels are different. Regardless in a time where there's a higher heat or lower heat, our principle is very clear, share of voice ahead of share of market. And that's how we operate. That's principle #1.

And of course, then you always do A&P for the objective of reach and frequency, depending upon the activity that we have of innovation in the quarter. That is what determines the absolute amount of A&P that you want to spend in the business. This quarter, as we spoke, we spent sequentially 40 bps more, INR 150 crores more because this is exactly what we had to do to deliver on our objectives of the way we allocate media.

Second big thing which is changing there is, of course, the composition of how much is traditional media and how much is digital media. If I look at last 12 months' time now, we have crossed more than 50 percentage now of media investment goes into digital compared to traditional. In fact, in the latest quarter, the number is even higher.

So as intensity happens, we are very clear that for us, driving competitive volume-led growth is first priority, and we will do investments in the business as required. And that's also the reason I called out earlier that the improvement of gross margin, we will invest in the business.

We have a large agenda of portfolio transformation and dialing up more growth in the demand spaces, which is the consumers are going and spending money in the market maker portfolio in Future Core, and we will continue to dial up and reallocate our resources to that space. So you will see this happening going forward as well.

[Operator]

Thank you very much. Ladies and gentlemen, I'll now hand the conference over to Mr. Yogesh Mishra for closing comments.

[Yogesh Kumar Mishra, executive]

With that, we now come to the end of the Q&A session. Before we end, let me remind you that the playback of this event will be available on the Investor Relations website in a short while. Thank you, everyone, for your participation, and have a great evening.

[Priya Nair, executive]

Thank you very much.

[Ritesh Tiwari, executive]

Thank you all.

[Operator]

Thank you very much. On behalf of Hindustan Unilever Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.