With significant distribution scale, a portfolio of iconic brands and leading market share in many categories, we give India's largest consumer products firm a narrow economic moat rating. Hindustan Unilever's products reach about 6.5 million outlets across India, the largest distribution network among peers. Sixteen of its brands generate annual turnover of more than INR 5 billion, or USD 80 million, each; while a good 95% of products hold the two leading spots in their respective categories in terms of market share. To ensure that its dominance remains intact, the company is constantly investing behind product innovation and supporting brands via media spends. As the company innovates to bring new-to-India products to market and gains further scale benefits we anticipate operating margins will expand over the coming decade, keeping returns elevated above its cost of capital.
HUL's ability to innovate ahead of competition is truly remarkable. We've been particularly impressed by the company's ability to expand margins despite mounting competition in soap and detergents, which contributes 47% to sales. This has been possible by launching new products such as fabric softeners ahead of competitors. At the same time, its rural strategy of converting local villagers to salesmen has allowed them to access the interiors of India and sell them 1-rupee sachets of its products, keeping volumes buoyant.
In our view, personal products, contributing 28% to sales is a big opportunity for HUL to drastically improve its margins. The underpenetration characteristics of this category will allow HUL to leverage the breadth of its brands across price points, to lead adoption across affluent as well as poor households in India. Its recent launches of TRESemme and Toni & Guy brands, is a step in that direction to explore how far up the price band can be expanded in this pseudo-luxury category.
Overall, we see tremendous opportunity in the Indian market, with per capita consumption that pales in comparison with other emerging South East Asian markets; and believe HUL is in a sweet spot to benefit from the inevitable explosion in consumption that is about to happen.