INTRODUCTION

COMPANY PROFILE

Hindustan Unilever Limited (HUL) is India’s largest Fast moving Consumer Goods

Company with a heritage of over 75 years in India and touches the lives of two out of three

Indians.

Hindustan Unilever Limited is an India-based fast moving consumer goods company. The

Company operates in seven business segments. Soaps and detergents include soaps, detergent

bars, detergent powders and scourers. Personal products include product in the catagories of

oral care, skin care (excluding soaps), hair care, talcum powder and color cosmetics.

Beverages include Tea and coffee. Foods include staples (Atta, salt and bread) and culinary

products (tomato based products, Fruit based products and soups, Ice creams include Ice

creams and frozen desserts. Others include chemicals and water business.

As of March 31, 2012 the company had over 35 brands spanning 20 distinct categories. Its

portfolio includes household brands, such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Fair &

Lovely, Pond’s, Vaseline, Lakme, Dove, Clinic Plus, Sun silk, pepsodent, Closeup, Exe,

Brook Bond, Bru, Knorr, Kissan, Kwality wall’s and Pureit.

In December 2012, the company demerged the FMCG exports business including specific

exports related manufacturing units of the company into its wholly owned subsidiary

Unilever India Exports Ltd (UIRL). The scheme became effective from January 1, 2013

The Company has over 16,000 employees and has an annual turnover of around Rs. 21,736

crores (financial year 2011 - 2012). HUL is a subsidiary of Unilever, one of the world’s

leading suppliers of fast moving consumer goods with strong local roots in more than 100

countries across the globe with annual sales of about €46.5 billion in 2011. Unilever has

about 52% shareholding in HUL.

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COMPANY HISTORY

In the summer of 1888, visitors to the Kolkata harbour noticed crates full of Sunlight

soap bars, embossed with the words "Made in England by Lever Brothers". with it, began an

era of marketing branded Fast Moving Consumer Goods (FMCG).

  Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and

Vim. Vanaspati was launched in 1918 and the famous ‘Dalda’ brand came to the market in

1937.

In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati

Manufacturing Company, followed by Lever Brothers India Limited (1933) and United

Traders Limited (1935). These three companies merged to form HUL in November 1956;

HUL offered 10% of its equity to the Indian public, being the first among the foreign

subsidiaries to do so. Unilever now holds 52.10% equity in the company. The rest of the

shareholding is distributed among about 360,675 individual shareholders and financial

institutions.

The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the

company had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India

Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an international

acquisition. The erstwhile Lipton's links with India were forged in 1898. Unilever acquired

Lipton in 1972 and in 1977 Lipton Tea (India) Limited was incorporated.

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Pond's (India) Limited had been present in India since 1947. It joined the Unilever

fold through an international acquisition of Chase brought Pond's USA in 1986.

Since the very early years, HUL has vigorously responded to the stimulus of

economic growth. The growth process has been accompanied by judicious diversification,

always in line with Indian opinions and aspirations.

The liberalization of the Indian economy, started in 1991, clearly marked an inflexion

in HUL's and the Group's growth curve. Removal of the regulatory framework allowed the

company to explore every single product and opportunity segment, without any constraints

on production capacity.

Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of

the most visible and talked about events of India's corporate history, the erstwhile Tata Oil

Mills Company (TOMCO) merged with HUL, effective from April 1, 1993. In 1996, HUL

and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme

Unilever Limited, to market Lakme's market-leading cosmetics and other appropriate

products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to

HUL and divested its 50% stake in the joint venture to the company.

HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in

1994, Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads.

HUL has also set up a subsidiary in Nepal, Unilever Nepal

Limited (UNL), and its factory represents the largest manufacturing investment in the

Himalayan kingdom. The UNL factory manufactures HUL's products like Soaps, Detergents

and Personal Products both for the domestic market and exports to India.

The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the

Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General

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Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan business

from the UB Group and the Dollops Ice-cream business from Cadbury India.

As a measure of backward integration, Tea Estates and Doom Doom, two plantation

companies of Unilever, were merged with Brooke Bond. Then in 1994, Brook Bond India

and Lipton India merged to from Brook Bond Lipton India (BBLIL), enabling greater focus

and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching

the Wall’s range of Frozen Desserts. By the end of the Year, the company entered into a

strategic alliance with the kwality Ice-cream Group families and in 1995 the Milk food 100%

Ice-cream marketing and distribution rights too were acquired.

Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal

restructuring culminated in the merger of Pond’s (India) Limited (PIL) with HUL in 1998.

The two companies had significant overlaps in Personal Products,

Specialty Chemicals and Exports Businesses, besides a common Distribution system

since 1993 for personal Products. The two also had a common management pool and a

technology base. The amalgamation was done to ensure for the group , benefits from scale

economies both in domestic and export markets and enable it to fund investments required for

aggressively building new categories.

In January 2000, in a historic step, the Government decided to award 74 percent

equity in modern Foods to HUL, thereby beginning the divestment of government equity in

public sector undertakings (PSU) to private sector partners, HUL’s entry into Bread in a

strategic extension of the company’s wheat business. In 2002, HUL acquired the

governments remaining stake in Modern Foods.

In January 2003, HUL acquired the Cooke Shrimp and Pasteurized Crabmeat business

of the Amalgam Group of Companies, a leader in value added marine Product exports.

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HUL launched a slew of new business initiatives in the early part of 2000’s. Project

Shakti was started in 2001. It is a rural initiative that targets small villages populated by less

than 5000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it

benefits business. Currently, there are over 45,000 Shakti entrepreneurs covering over

100,000 villages across 15 states and reaching to over 3 million homes.

In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the

Ayush product range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to

home business was launched in 2003 and this was followed by the launch of ‘Pure-it’ water

purifier in 2004.

In 2007, the Company name was formally changed to Hindustan Unilever Limited

after receiving the approval of share holders during the 74th AGM on 18 May 2007. Brooke

Bond and Surf Excel breached the Rs. 1,000 crore sales mark the same year followed by

Wheel which crossed the Rs. 2,000 crore sales milestones in 2008.

On 17th October 2008, HUL completed 75 years of corporate existence in India.

In January 2010, the HUL head office shifted from the landmark Lever House, at

Back bay Reclamation, Mumbai to the new campus in Andheri (E), Mumbai.

On 15th Novenber, 2010, The Unilever Sustainable Living Plan was officially

launched in India at New Delhi.

In March, 2012 HUL’s state of the art Learning Centre was inaugurated at the

Hindustan Unilever Campus at Andheri, Mumbai.

In April, 2012, the Customer Insight & Innovation Centre (CIIC) was inaugurated at

the Hindustan Unilever Campus at Andheri, Mumbai.

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Company structure

Hindustan Unilever Limited is India's largest Fast Moving Consumer Goods (FMCG)

company. It is present in Home & Personal Care and Foods & Beverages categories.

HUL has over 16,500 employees, including over 1500 managers

The fundamental principle determining the organisation structure is to infuse speed and

flexibility in decision-making and implementation, with empowered managers across the

company’s nationwide operations.

Board of Directors

The Board of Directors of the Company represents an optimum mix of professionalism,

knowledge and experience. The total strength of the Board of Directors of the Company is

eight Directors, comprising Non-Executive Chairman, three Executive Directors and four

Non-Executive Independent Directors.

Management Committee

The day-to-day management of affairs of the Company is vested with the Management

Committee which is subjected to the overall superintendence and control of the Board.

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BRANDS

HUL is the market leader in Indian consumer products with presence in over 20

consumer categories such as soaps, tea, detergents and shampoos amongst others with over

700 million Indian consumers using its products. Sixteen of HUL’s brands featured in

the CANielsen Brand Equity list of 100 Most Trusted Brands Annual Survey (2008).

According to Brand Equity, HUL has the largest number of brands in the Most Trusted

Brands List. It has consistently had the largest number of brands in the Top 50, and in the

Top 10 (with 4 brands).

The company has a distribution channel of 6.3 million outlets and owns 35 major

Indian brands. Its brands include Kwality Wall's ice-cream, Knorr soups & meal

makers, Lifebuoy, Lux, Pears, Breeze, Liril, Rexona, Hamam and Moti soaps, Pure-it water

purifier, Lipton tea, Brooke Bond (Roses, Taj Mahal, Taaza, Red Label)

tea, Bru coffee, Pepsodent and Close Up toothpaste and brushes, and Surf, Rin and Wheel

laundry detergents, Kissan squashes and jams, Annapurna salt and atta, Pond's talcs and

creams, Vaseline lotions, Fair and Lovely creams, Lakme beauty products, Clear, Clinic Plus,

Clinic All Clear, Sunsilk and Dove shampoos, VIM dishwash, Ala bleach, Domex

disinfectant, Modern bread, Axe deo sprays and Comfort fabric softeners.

MILESTONE ACHEIVED

Five of HUL's leading brands – Lux, Dove, Pears, Clinic Plus and Sunsilk – won the

Reader's Digest Trusted Brand 2008 Awards.

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Four HUL brands featured in the top 10 list of the Economic Times Brand Equity's

Most Trusted Brands 2008 survey

HUL was awarded the Bombay Chamber Civic Award 2007 in the category of

Sustainable Environmental Initiatives.

HUL was selected as the top Indian company in the FMCG sector for the Dun &

Bradstreet - American Express Corporate Awards 2007.

PRODUCT PROFILE

ABOUT HUL-OUT OF HOME DIVISION

OVERVIEW OF TEA AND COFFEE MARKET IN INDIA

Tea and Coffee are among the most popular beverage, consumed both in India and around the

world.

The industry provides employment to several million workers worldwide, both in plantation

activities, as well as in indirect and ancillary activities.

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Despite tea being cultivated in over 35 countries, only a handful of nations namely, China,

India, Shri Lanka, and Kenya account for almost 75% of global production. The top two tea

producing nations China and India collectively produced 85% of total global tea output in

2010. India is the second largest tea producer and consumer after China and forth largest tea

exporter after Kenya, China and Shri Lanka.

The tea industry of India is around 176 years old. Total tea output in India in 2012 was

recorded at 988 million kilograms (mnkgs), posting a positive annual gwowth of 2.3% for the

first time after three consecutive years of decline. Despite tea production improving at a

Marginal pace in the past decade, domestic tea consumption has increased from 653 mnkgs

sin 2000 to 837 mnkgs in 2011.

The tea consumption in India is expected to grow at a moderate pace, as opposed to marginal

increase in production.

The frost damage in kenkya, a key exporting nation, which took place at the beginning of

2012, is likely to affect global price trends, which would also greatly impact domestic auction

prices.

Coffee is the second most traded commodity in the world after crude oil, and is cultivated

across 80 nations spanning Central and South America, Africa, and Asia. The key coffee

producing and exporting nations are Brazil, Vietnam, Columbia, Indonesia, Ethiopia, and

India, among others. Brazil is the world’s largest producer, exporter and consumer of coffee,

while USA and European nations constitute key importing markets for coffee.

On account of coffee being traded widely, any alteration in the demand-supply dynamics of

above mentioned producing and exporting nations lagely impacts International coffee prices

that have recorded continuous uptrend from 2006 to 2011. The trend in internation prices also

impacts domestic prices to a large extent as India exports more than two thirds of its coffee

output.

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In coffee season ( October to September) of 2011-2012, India produced 3.02 lakh tons of

coffee, most of which was grown in southern states of Karnataka (71%), Kerala (22%) and

Tamil Nadu (6%). Arabica procuction amounted to 31% of total output, the remaining 69%

being contributed by Robusta Production, Coffee is cultivated on nearly 4.05 lakh hectares in

India, and 70% of output is grown on small farms owning area of less than 10 hectares.

The domestic coffee consumption has been continuously growing at annual average rate of

6% and is lagely on account of mushrooming presence of coffee retail outlets. With the

domestic coffee outlet set to increase multi-fold by with next 3 year, in addition to foray of

global players such Stabucks and Dunkin’ Domuts in India, the coffee industry is likely to

continue witnessing similar growth trend in future.

HUL- Out Of Home DIVISION

OOH is an arm of HUL that caters to the on premise F&B requirements, using state of the art

vending machines, with branded product mixes enabling people to sip their favorite

beverages. So whether one is at work or at mall multiplex or in cafeteria they can enjoy their

favorite drink at the push of a button.

OOH Division also supplies products directly to the caterers, confectionary manufacturers,

and other to meet their bulk requirements.

OOH Food & Beverage services are again sub Divided as vending solutions and non-vending

solutions.

VENDING SOLUTIONS:

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Lipton Cardamom Tea: A Classic blend of Shri Lankan and Indian Teas with natural

Cardamom flavors. You’ll reward yourself with its delicious taste and Cardamom aroma.

Lipton Cardamom Tea: Delightfully refreshing lemon flavor. Delicious taste, non toxic.

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Taj Mahal Tea Bags: The selection of finest teas to create a robust, full-bodies brew with a

lingering aroma that makes you say……….. “Wah Taj”

BRU Hot Coffee: A complete cup of hot coffee with a rich feel to keep you refreshed and

energizes round the clock.

BRU Cappuccino: Creamy, frothy and irresistible cup of coffee.

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Lipton Ice Lemon Tea: Natural refreshing tea with a dash of delicious fruit flavor. A

natural source of anti-oxidants.

Knorr Tomato Soup:

NON VENDING SOLUTIONS:

OOH Division also deals with large customers for their non-vending requirements and helps

them choose from a wide basket of HUL products.

It also offeres bulk packs for the factories, caterers, etc. to provide greater value. OOH

division is currently supplying BRU instant coffee to almost all the leading confectionary

manufacturer in the country, besides this they also provide services to choose products from

their Food or Home & personal care basket gift to patron and customers.

VENDING SOLUTIONS MARKET:

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Vending machine dispenses a product or a service, and it is a fairly new concept in India.

Economic growth, development of cities, lifestyle and eating & drinking habits has opened a

huge market for these machines which can cater to consumers directly. There exists a high

potential for growth, both in sales of these machines and goods & services sold through these

machines.

Sales of goods and services through vending machines are pegged to be worth $ 1 billion by

2012. According to PulinDani of plus beverages, a vending machine manufacturer,

approximately 12-15% of the potential market for vending machines has been tapped in India

till now. So, a huge market is still untapped. Estimates suggest that globally, the industry mix

of products sold through vending is 40% for canned beverages, 19% for snacks, 8% for hot

beverages and 33% for other products. However, vending of services is a fairly new concept

and is expected that the share of services would increase considerably in the coming years.

As of now, hot beverages vending machines for tea and coffee have the substantial share in

sales of machines in India. These machines are mostly found in offices , shopping-malls and

restaurants. However, sales of snacks and beverages machine are picking up and have a huge

potential. Potential locations where there machines are installed are train-stations, airports,

universities, shopping-malls, offices, hospitals, hotels, fuel-pumps etc.

CHALLENGES

In India, conventional vending business models and machines have not done well. Major

reasons are consumer habits, Non-availability of machines suitable for Indian conditions and

the availability of cheap labor. People are not very comfortable using these machines

because of complications, Trust and other factors. Also, currency recognition and especially

of notes has been an issue as price of products is generally such that payments through coins

is not convenient. Instances of vandalism and rough use have also been an issue and have

deterred installers/operators form making investments in these machines. Machines often

break down because of dust, heat etc. Furthermore, availability of cheap labor has come in

the way of popularity of vending through machines. One of the major reasons for vending is

to bring down the labor cost and especially wen labor cost is the major chunk of cost. But in

India this advantage has not accued to vending businesses till date.

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Other areas that need to be taken care of is keeping machines well stocked, goods should be

quality products, Quick repairing in case of Breakdown, keeping machines clean etc.

WHY VENDING MACHINES?

In order to understand the vending solution option for hot beverages in corporate houses and

other institutions and organizations the following are some of the merits of vending machines

over the traditional ways :-

COST SAVINGS:

Each of the vended beverages contains exactly the same amount of ingredients. This reduces

the “heaped-teaspoon-effect” where the tin of ingredients disappears so quickly. It is found

that the biggest saving comes from the reduction in the need for milk as machine holds

powdered milk. The powdered mixes are great and add a good creamy forth for beverages.

TIME SAVING:

There is no waiting for the kettle to boil when you have a vending machine. It remains on and

ready for the moment the button is pressed. So be it late night or early in the morning, it can

vend the beverage anytime. This also adds value in the office environment where getting a

quick cup of tea/coffee, means exactly that.

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HYGIENE:

As the vending machine holds the ingredients inside the airtight canisters, there is no messy

container left out in the kitchen or area table to attract flies, ants etc. The machines have

automatic rinse cycle and hot water is flushed through the dispensing pipes and mixing bowls

to keep it clean. It has easy detachable machine parts to facilitate cleaning.

RELIABILITY:

Modern machines are robust and will vend cup after cup without interruption. Only thing

which is needed to be done is to keep the bubble top filled and empty the waste container

and replace a few rubber seals in sometime, after all they are exposed to heat and water.

VENDING MACHINES FORM HUL

Two lanes cuter model:

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17

S.

No.Specifications Lane 2 (Cute)

1Machine Dimension

(WDH)mm200 X 440 X 625

2 No. of Options 2

3Premix Capacity (each

lane)1.2 kg each

4 Water Tank Capacity20 Ltrs. (Bubble

Top)

5Dispensing Rate

(cups/min)03-05 Cups

6 Weight of Machine 15 kg

7 Max. Load 1.4 Kw.

8 Power Supply 230 AC, 15A

9 Auto Cleaning Yes

10 Water Filling Bubble Top

11 Machine Body GI Sheet

12 Top Cover GI Sheet

13 Tray Moulded

14 Boiler Capacity 2.0 Ltrs. (Insulated)

15 Mixing Unit 1

16 Temperature Interlocking No

17 Digital Counters Yes

18Separate Hot Water

OptionNo

19 Hi-speed Option No

20Password Locking in

PCBNo

21 21 Half Cup Facilit Yes

2 Lane (Robo) Vending Machine

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19

S.

No.Specifications Lane 2 (Robo)

1Machine Dimension

(WDH)mm330 X 430 X 620

2 No. of Options 2

3Premix Capacity (each

lane)1.2 kg each

4 Water Tank Capacity20 Ltrs. (Bubble

Top)

5Dispensing Rate

(cups/min)04-06 Cups

6 Weight of Machine 22 kg

7 Max. Load 2.2 Kw.

8 Power Supply 230 AC, 15A

9 Auto Cleaning Yes

10 Water Filling Bubble Top

11 Machine Body GI Sheet

12 Top Cover Stainless Steel

13 Tray Moulded

14 Boiler Capacity2.6 Ltrs.

(Insulated)

15 Mixing Unit 2

16Temperature

InterlockingYes

17 Digital Counters Yes

18Separate Hot Water

OptionNo

19 Hi-speed Option No

20Password Locking in

PCBYes

21 21 Half Cup Facilit Yes

3 Lane Machines

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Machine Dimension

(W*D*H)mm

330 X 430 X

620

No. of  options 3

Premix Capacity (each

lane)1.2 kg

Water Tank Capacity20 Ltrs. (bubble

top)

Dispensing Rate

(cups/min)4-6 Cups

Weight of Machine 28 kg

Max. Load 2.2 Kw

Power Supply 230V AC, 15A

Auto Cleaning Yes

Water Filling Bubble Top

Machine Body GI Sheet

Tray/Top Cover Stainless Steel

Boiler Capacity2.60 Ltrs.

(Insulated)

Temperature

InterlockingYes

Digital Counters (for

Each Lane)Yes

Separate Hot Water

OptionYes

Hi-Speed Opt. (8-10

cups/min.)Yes

Password Locking Yes

Half Cup Facility Yes

4 Lane Machines

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6 Lane Machines

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Machine Dimension

(W*D*H)mm

330 X 520 X

660

No. of  Options 4

Premix Capacity (each

lane)1.2 kg each

Water Tank Capacity20 Ltrs.

(bubble top)

Dispensing Rate

(cups/min)4 to 6 Cups

Weight of Machine 28 kg

Max. Load 2.2 Kw.

Power Supply230V AC,

15A

Auto Cleaning Yes

Water Filling Bubble Top

Machine Body GI Sheet

Tray/Top Cover Stainless Steel

Boiler Capacity3 Ltrs.

(Insulated)

Temperature Interlocking Yes

Digital Counters (for

Each Lane)Yes

Separate Hot Water

OptionYes

Hi-speed Opt. (8-10

cups/min.)Yes

Password Locking in

PCBYes

Half Cup Facility Yes

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Machine Dimension

(W*D*H)mm470 X 430 X 620

No. of  Options 6

Premix Capacity (each

lane)1.2 kg

Water Tank Capacity20 Ltrs. (bubble

top)

Dispensing Rate

(cups/min)04/06/11

Weight of Machine 35 kg

Max. Load 2.4 Kw

Power Supply 230V AC, 15A

Auto Cleaning Yes

Water Filling Bubble Top

Machine Body GI Sheet

Tray/Top Cover Stainless Steel

Boiler Capacity3.0 Ltrs.

(Insulated)

Temperature

InterlockingYes

Digital Counters (for

Each Lane)Yes

Separate Hot Water

OptionYes

Password Locking Yes

Half Cup Facility Yes

PREMXES FOR MACHINE FORM HUL

Tea variants

Lipton cardamom Tea

Lipton Masala Tea

Lipton Lemon Tea

Lipton Ginger Tea

Coffee Variants

Bru Coffee

Bru cappuccino

Bru chco Almond

Soup

Knorr Tomato soup

Tea Bags

Taj Mahal Tea Bag

Brooke Bond Tea Bag

Milk Powder

Badam Milk Shake

Dairy Whitener

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DISTRIBUTION NETWORK FOR VENDING MACHINE:

OOH Division has a very basic distribution network where the premixes come directly from

factory to depot and from there to the distributor.

Indore city has 3 distributors with services part taken care by the distributors only.

As far as sales lead generation and acquisition of account is concerned, that is done by both

the HUL , OOH division’s personnel and the distributor. The HUL personnel depending upon

the account size allot it to the distributor depending on their capability to handle the account.

Distributors also generate leads and acquire accounts of their specific region. At last the

distributor’s technician team would install the machine.

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FACTORY

DEPOT

DISTRIBUTORS

CUSTOMER DEALER

On an average the consumption of MP region for premixes is around 20 tons. Indore and

Jabalpur are the two depot for M.P region. Indore’s consumption of premixes is around 8

tons. On an average a distributors has 8% to 12% margin in products given by the company.

COMPETITORS

Nestle being the first one in this market certainly holds a strong position, with HUL being

second in the market of vending machine solutions.

Nestle is the market leader in beverage vending machine solutions market with 45% market

share. It has the following product portfolio in the market:

TEA

Nestea tea bags, Everyday instant tea premixes( cardamom flavor), Everyday instant tea

premixes (plain Tea), Nestea lemon tea, Everyday dairy whitener, everyday sugar free dairy

whitener.

COFFEE

Nestle coffee premixes, Nescafe low sugar, and Cappuccino & Mocchacino premixes.

SOUP

Maggi Tomato soup

The Major players in the vending solution IN market.

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45%

40%

10%

3% 2%

MAJOR PLAYERS IN MARKET

NESTLE HUL GOREJ TATA LOCAL

COMPARISION OF HUL AND OTHER PRODUCTS

PREMIXES HUL NESTLE LOCAL

CARDAMOM TEA 280.00/Kg 265.00/Kg 230.00/Kg

LIMON TEA 220.00/Kg 200.00/Kg 180.00/Kg

COFFEE 250.00/Kg 250.00/Kg 210.00/Kg

DAIRY WHITENER 200.00/Kg 200.00/Kg 160.00/Kg

TOMOTO SOUP 550.00/Kg 560.00/Kg 540.00/Kg

Local vendors sell premixes at comparatively low price still they have low market share, the

reason being the gram set for their premixes is around 24% which is almost souble to the

standard grams of HUL. Because of high grams, the number of cups delivered is less which

in turn increase the cost of organization.

OBJECTIVES

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PROJECT OBJECTIVE

The main objective of this project lies in studying and understanding the market for beverage

vending machine and to increase the sales volume of machines also analyzing the latest and

emerging trends.

This is relatively a new emerging market with lot of growth opportunities for food and

beverage companies which and why all major FMCG players in food and beverages business

are Nestle, HUL, Georgia, CCD, Godrej etc.

The project probes the purchase decision behavior of customers. This analysis will provide

valuable insight to the company for deciding its sales and promotional strategies and hence

will give a competitive edge.

The project objectives were to generate sales lead. and to increase the key accounts of Lipton

vending machine by either selling machine or by providing machine on rent or a FOC (free of

cost) depending on the account size.

This project also deals in creation of database of potential customers for the company and in

process generate sales lead and closure of deals.

FINACIAL ASPECTS-

BENEFITS NEEDED TO BE EXPLAINED TO CUSTOMERS.

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In order to make a valid point in favor of vending machine for customers, a cost-benefit

analysis has to be done for them. Which would actually show them that how this offer is

more economical for their organization.

Cost benefit analysis is quantified in terms of the no. of employees in the organization.

Which gives us approximate daily consumption of the beverages in the company.

As most of the companies outsource pantry to a third party, I have taken in the price of per

cup following are the examples of the calculation:

Cost per cup of tea charges by a canteen/pantry for 60 ml serving = Rs. 5

Cost per cup of coffee charges by a canteen/pantry for 60 ml serving = Rs. 7

Total working days for any organization are taken on an average as 25 days.

In India, tea consumption is higher than coffee and that too especially in northern part,

so the divide between tea and coffee is around 60:40.

Now for any Lipton vending machine, maximum power adsorption is 2500 watts,

assuming than an office usually opens for 9 hours a day. Power cost of a vending

machine can be calculated as follow;

Commercial rate for 1 unit of electricity = 9/kwh.

Power consumption by Lipton vending machine = 25000 watts* 9 hrs/day=Rs.

22.5/day

On an average 1 kg of Lipton cardamom tea and BRU coffee gives 120 cups

fir a serving if 60ml for which per cup cost is around 2.10 and 1.90

respectively

Case 1:

No. of employees = 20-30

Overall daily consumption = 60 cups

Cost calculation for pantry:-

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Total monthly cost for tea = 36 cups*Rs5/cup*25days=Rs4500

Total monthly cost for coffee =24cups*Rs.7/cups*25day= Rs.4200

Overall monthly cost = Rs. 8700

Cost calculation for Lipton vending machine:-

Since the account size is around 12kg suitable option is to sell the vending machine.

Total monthly cost for tea = 36cups*Rs.2.10/cups*25days= Rs1890

Total monthly cost for coffee= 24 cups*Rs.1.90/25days= Rs.1140

Monthly electricity bill for vending machine = Rs. 202.50

Overall monthly cost = Rs. 3232.50

CASE 2;

No. of employees = 80-100

Overall daily consumption=200 cups

COST CALCULTAION FOR PANTRY:-

Total monthly cost for tea = 120cups*Rs.5/cup*25days= Rs. 15000

Total monthly cost for coffee = 80 cups*Rs.7/cup*25days = Rs. 14000

Overall monthly cost = Rs. 29000

cost calculation for Lipton vending machine:- since the account size is of around 42 kg’s as

per company policy machine can be provide on rent on following rates;

2 lane vending machine = Rs 600

3 lane vending machine = Rs. 800

4 lane vending machine = Rs. 1100

Total monthly cost for tea= 120cups*Rs.2.10/cups*25days= Rs. 6300

Total monthly cost for coffee = 80 cups* Rs. 1.90/cup*25days = Rs. 3800

Monthly electricity bill for vending machine = Rs. 202.50

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Rent for monthly = Rs. 800

Overall monthly cost = Rs. 11102.50

CASE 3:-

No. of employees = 200-400

Overall daily consumption = 600 cups

Cost calculation for pantry:-

Total monthly cost for tea = 360 cups*Rs. 3/cups*25days = Rs. 27000

Total monthly cost for Cups*Rs. 5/cups* 25 days = 30000

Overall monthly cost = Rs. 57000

Cost calculation for Lipton vending machine:- since the account size is of around 125 kgs.

Way above 60 kg, therefore as per company policy machine can be provided on FOC( free of

cost) i.e. the organization will not charges any rent:

Total monthly cost for tea = 360 cups*Rs. 2.10/cups*25days= 18900

Total monthly cost for coffee = 240 cups* Rs.1.90/ cups*25day = 11400

Monthly electricity bill for vending machine = 202.50

Overall monthly cost = Rs. 30502.50

Thus from the above illustration of detailed cost comparison of pantry V/s vending machine,

customer can be shown the economic benefits of vending machine.

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ANALYSIS

S.W.O.T. ANALYSIS

STRENGHS:

Strong brands like Lipton and BRU under HUL.

Customized beverage solution.

Convenient to use

Machine with auto flush technology

Better in services as compared to competitors.

Better marketing policies

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Digital display board with distinct features.

WEAKNESS:

Higher price as compared to competitors.

Limited success in changing the consumption habit of people.

Tea and Coffee cools down quickly

Basic model is larger as compared to Nescafe’s machine

OPPORTUNITIES:

Penetrating locations where per unit consumption is very high like airport, Electronic

complex, Pithampur, Polo ground and woods mandi.

Lowering the price marginally in order to sustain and capture market in long run.

Bringing premixes in smaller packets also or to provide it to prospective customer to

taste.

Launch cold beverage solution also

It can increase th internal capacity of water so that the length of the machine can be

reduce

Company can bring the option of payment on installments.

THREATS:

“Nano” machine introduced by Nescafe in low range.

Nescafe has strong brand Image on customers mind.

Lowest rate provided by other local competitors

Variation in flavors introduce by competitors to grab the market

Nescafe is older in market.

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RECOMMENDATIONS:

Based on the work done during the project, following are some recommendations which if

planted will benefit OOH division.

Differentiating service agency & Distributor:

Differentiation the servicing part from the distributor will help in two ways. Firstly it will

help distributor on reducing manpower in terms of technician and in place recruiting more

sales persons to focus on generating sales lead. Secondly, a dedicated service agency will

focus more in solving customer problems.

Opening up café and kiosk:

As done by other competitors HUL should also open cafes and kiosk around the city

to grab the attention of customers,

To improve the efficiency of after sales services:

HUL has very good after sales services but it can be improved if some people of the

company are developed to monitor redistribution stockiest and their activities. It can

also place a shop of premixes in the market where the number of customers is very

high. It can facilitate the customers

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