Hindustan Unilever Ltd (HUL) had to go through two consecutive embarrassments last month in a showdown with the Tata Group involving their respective water purifier brands — HUL’s Pureit and Tata’s Swach.
On July 11, Advertising Standard Council of India (ASCI), the self-regulatory voluntary organisation of the advertising industry, refused to uphold HUL’s complaint against Tata Swach accusing the latter of not meeting safety standards as claimed in its advertisement. Then, on July 25, ASCI upheld a complaint filed by Tata Chemicals, the group company that owns the Swach brand, accusing HUL of misleading consumers through persistent smear campaigns against Swach.
Over the past couple of months, HUL has circulated leaflets, denigrating Swach by way of comparison with Puret, across its sales network and distribution channel.
In a press release on Friday, Tata Chemicals said, “Violating the professional code of business, Pureit, the water purifier brand from the Hindustan Unilever had been misleading consumers through persistent smear campaigns against competition, Tata Swach, the water purifier from the house of Tata’s.”
The leaflet circulated in the market suggested a ‘safety challenge’ and claimed Tata Swach does not protect against viruses and bacteria, doesn’t have auto shut-off, has higher per-litre running cost than PureIt and does not have sales and service network.
The Tata press release further said that the leaflet violated Chapter IV (e) of the ASCI Code, which entails observing fairness in competition such that the consumers’ need to be informed on choice in the market place.
ASCI, through Consumer Complaints Council, directed PureIt to withdraw the leaflet from the market.
An HUL spokesperson said in an email response, “Pureit meets the stringent US EPA standards for germ kill and we have made the various laboratory test results available for consumers to access easily and at all times on the Pureit website. We wish to also clarify that the promotional leaflets of Pureit against which the complaint has been made are not in use since July 2010.”
However, a Mumbai-based retailer of water purifiers said he received the leaflet from his network two months back. “Yes, we received a leaflet from HUL that mentions that Swach is not a competent purifier, whereas Pureit is the best product in the market. But we have not recommended this to our consumers. We sell all the leading brands of water purifier and will let the consumers make the choice,” he said, adding, sales of both Pureit and Swach, along with other purifier brands, were surging.
Ever since the launch, HUL has been throwing open challenge in trade and to consumers that Pureit is the only purifier in the market to offer unmatched germkill water safety. It also challenges to offer `1 crore to consumers if they found any other in-home water purifier that meets all these safety criteria as Pureit.
This is the second time HUL has started a war against a competitor with a campaign. In March 2010, the company ran a Rin detergent television commercial openly bullying rival rival Procter & Gamble’s Tide.
In its annual report 2010-11, Tata Chemicals said, “The sale of the product (Swach) as well as those of replacement bulbs (used in the purifier) have been in line with expectations. In view of the increasing demand of bulbs, a second plant is being commissioned in Nanded, Maharashtra.” Water purifier is an under penetrated category in India with approximately 2% of rural and approximately 10% of urban households as users. This points to a huge untapped market potential and would ensure high growth rates can be sustained over a long period of time, the report noted.
The water purifier industry is estimated to be worth Rs1, 800-2,000 crore and expected to grow at 20-25% CAGR and touch Rs5,100 crore by 2013, as per industry estimates. Ion Exchange, Eureka Forbes and Kent RO are the leading companies in the organised water purifier industry, while Philips, Whirlpool and LG Electronics have recently made an entry.
Tata launched Swach in December 2009 at price points of Rs799 and Rs999 and also announced a target to sell 3 million units in five years.
The company had sold 5 lakh units of Tata Swach as of June 30 and hopes to clock 1 million units by the end of the year. Today, Swach is sold at price points of Rs899 and Rs1,199 under the brands Tata Swach, Tata Swach Smart and Tata Swach Smart Magic, and does not have a presence in the premium segment so far. It is currently sold in 12 states and manufactured at Tata Chemicals’ plant at Haldia with a manufacturing capacity of 1.8 million units per annum.
On the other hand, PureIt, launched in 2008, claims to have reached 4.5 million homes already. PureIt is sold under the brands Compact, Classic, Autofill and Marvella at price points of Rs1,000, Rs2,000, Rs3,200 and Rs6,900, respectively.
HUL is also exporting the brand to markets like Indonesia, Mexico, Brazil and Bangladesh.