Unilever CEO Bets Big on India, Eyes Stronger Growth in H2 2025
Unilever Eyes India as a Key Growth Market
Unilever CEO Bets :Unilever CEO, Fernando Fernandez, has placed a strong bet on India as a crucial market for the FMCG giant’s future growth. Despite recent sluggish demand, mainly due to food inflation, Fernandez remains optimistic about a recovery in the latter half of 2025.
Speaking at a fireside chat with Barclays, Fernandez highlighted the challenges Unilever has faced in India, with food inflation impacting nearly 80% of households. However, he expressed confidence that the economic landscape will improve in the coming months, making India a key driver alongside the company’s established markets in America and Europe.
India’s FMCG Market: A Bumpy Ride in Early 2025
The first half of 2025 has been challenging for India’s FMCG sector. Unilever’s Indian subsidiary, Hindustan Unilever Limited (HUL), reported an 18.9% rise in net profit for Q3 FY25, largely driven by price hikes rather than volume growth.
Fernandez pointed out that high food inflation has weighed heavily on consumer spending, leading to a slowdown in demand across the FMCG sector. Other major players, including Dabur and Nestlé, have also faced similar challenges in India during Q2 FY25.
“The market has been softer, and food inflation was very significant in India,” Fernandez noted. “The economic environment in India will get better in the second half of the year.”
Factors That Could Drive Growth in H2 2025
Several factors are expected to fuel India’s economic recovery and boost FMCG demand:
1. Interest Rate Cuts by RBI
The Reserve Bank of India (RBI) recently cut interest rates by 25 basis points, bringing the repo rate down from 6.50% to 6.25%. This move is expected to improve liquidity, encourage borrowing, and stimulate consumer spending.
2. Tax Relief for the Middle Class
The Indian government has introduced fiscal measures, including tax relief for the middle class, which could lead to increased disposable income. This, in turn, is expected to drive higher consumption across FMCG categories.
3. Easing Inflationary Pressures
With food inflation gradually stabilizing, consumer sentiment is likely to improve, leading to stronger demand in key FMCG categories such as personal care, home care, and packaged foods.
Unilever’s Long-Term Bet on India
Despite the current challenges, Unilever remains committed to the Indian market, viewing it as a long-term growth opportunity. CEO Fernandez emphasized that India’s vast consumer base, rising urbanization, and increasing disposable incomes make it a strategic market for Unilever’s future expansion.
Rohit Jawa, CEO and MD of HUL, echoed this sentiment, stating, “While we keep a close watch on the pace of recovery and the broader economic outlook in the short term, we remain confident of the medium to long-term opportunity in the Indian FMCG sector and HUL’s ability to grow competitively.”
Financial Performance Overview
| Financial Metric | Q3 FY25 | YoY Change |
|---|---|---|
| Consolidated Net Profit | ₹2,984 Cr | +18.9% |
| Revenue Growth | Moderate | Slower due to muted demand |
| Inflation Impact | High | Affected 80% of households |
| FMCG Sector Demand | Weak in H1 | Expected recovery in H2 |
FMCG Industry Outlook: What Lies Ahead?
The FMCG sector in India is poised for a turnaround in the second half of 2025, driven by:
- Increased consumer confidence as inflation cools down.
- Stronger rural demand with better monsoons and government support.
- Product innovations and expansion into digital and e-commerce channels.
Despite the short-term headwinds, Unilever’s strategic focus on India indicates confidence in the country’s long-term growth potential. The next few quarters will be crucial in determining how well these expectations align with reality.
Q&A: Key Takeaways from the Article
Q1: Why is Unilever focusing on India for growth?
A: Unilever sees India as a key market alongside the U.S. due to its vast consumer base and long-term economic growth potential.
Q2: What challenges has Unilever faced in India?
A: The FMCG sector has struggled with high food inflation, which has impacted nearly 80% of households, leading to sluggish demand.
Q3: What measures could help boost demand in H2 2025?
A: Interest rate cuts by RBI, government tax relief for the middle class, and easing inflationary pressures are expected to improve consumption.
Q4: How did HUL perform financially in Q3 FY25?
A: HUL reported an 18.9% increase in net profit, mainly driven by price hikes rather than volume growth.
Q5: Will the FMCG sector recover in the second half of 2025?
A: Yes, experts anticipate stronger demand in H2 2025 due to improving economic conditions and increased consumer spending.
By keeping a close eye on these developments, Unilever is positioning itself to capitalize on India’s recovery, making it a crucial pillar of its global growth strategy.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.