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ShareMumbai: Hindustan Unilever Ltd continued to post volume decline in key categories such as toilet soaps, packaged tea and detergent cakes in July-August, while the industry posted growth in these categories, ICICI Securities on Tuesday said in a report, citing data obtained from market research firm ACNielsen.
The report analysed domestic sales trends of 10 fast moving consumer goods companies across 10 product categories.
The country's largest FMCG company also suffered market share erosion in these key categories.
For instance, volumes of its toilet soaps declined 2.9 per cent year on year during the period as against the industry growth of 8.8 per cent. This despite the fact that its toilet soap sales increased 1.3 per cent year on year during the period. ICICI Securities said the rise in toilet soap sales was on account of higher prices when compared year-on-year.
In the same period, value market share in toilet soaps fell 547 basis points to 44.6 per cent, led by a fall in market share of key brands Lux and Lifebuoy.
Hindustan Unilever's troubles with volume and market share decline in key categories began in October last year when the company increased product prices to pass on a rise in raw material costs, while its rivals refrained from doing so.
In comparison, Godrej Consumer's market share in toilet soaps during the same period increased by 110 bps year on year to 10.5 per cent, led mainly by growth in share of its brand Godrej No 1.
The company reported a robust 23.3 per cent sales growth aided by the strong performance in toilet soaps, though it lost market share in hair dyes.
In the washing segment too, HUL gave up volumes and market share, despite an increase in sales. It posted 11.8 per cent year on year increase in sales of washing powder, but volumes declined 2.1 per cent. More importantly, the company lost market share in this category too--by 328 bps to 36.7 per cent--indicating that the price increases took a toll.
Its detergent cake sales increased 6.1 per cent year on year, but volumes fell 11.2 per cent, causing market share to erode 360 bps to 37.2 per cent.
Soaps and detergents account for nearly half of HUL's revenue and a little more than half of its profit before tax.
Competitor Procter & Gamble too suffered 8.5 per cent decline in washing powder volumes, with market share falling 83 bps to 14.6 per cent. However, sales increased 15.3 per cent on the back of previous price increases, the brokerage house said in its report.
Overall, FMCG companies' sales grew 14.2 per cent in July-August. In April-June, the growth was 16.3 per cent, the I-Sec report said.
Of the 10 companies audited, six reported more than 10 per cent growth. However, HUL was the sector laggard due to its volume and market share decline in nearly all the 10 key categories.
Another category that witnessed intense competition was toothpastes, the key players being HUL, Colgate-Palmolive and Dabur. Here too, HUL suffered a fall in market share by 203 bps to 27.3 per cent on the back of Pepsodent, which lost 232 bps. Close-up, on the other hand, gained 29 bps in share. The company clocked sales increase of 2.3 per cent in the category overall. Colgate improved its category market share by 200 bps to 50.2 per cent, retaining its leadership position.
