All that bloodletting later, it’s time for a concerted play, to assuage the hurt if not undo the damage altogether.
Fast moving consumer goods (FMCG) biggies, which were locked in an intense price war over the past months, have started hiking product prices. Biscuits, toilet soaps and hair care products have already seen prices go up. And now, it’s the turn of detergents to catch the wave.
Both Hindustan Unilever Ltd (HUL) and Procter & Gamble (P&G) India have hiked detergent prices.
HUL has hiked Rin prices by 8%. The new stocks are, however, yet to reach dealers across the country. Going by industry sources, the new Rin stock with increased price has only been rolled out in markets of Gujarat and Uttar Pradesh.
P&G, which was giving 250 grams extra on 1 kg packs of its Tide detergent, has indirectly hiked prices by reducing the grammage. The hike on Tide has been to the extent of 12%.
Analysts are citing high input costs as a reason for detergent makers such as HUL and P&G hiking prices. High prices of linear alkyl benzene, a key raw material used in detergents, are hurting the margins of these companies, which they have now decided to pass on to the consumer.
Analysts believe the price hikes will extend to mass-end detergents of these companies (Wheel of HUL and Tide Naturals of P&G) and detergent bars in the weeks to come.
The price war between HUL and P&G had begun after when P&G entered the mass-market detergents segment with Tide Naturals in December 2009. Within a month, HUL had cut prices across its Rin and Surf Excel brands by 15-30%. P&G responded with a price cut of 12-20% across Tide, Tide Naturals and Ariel.
The battle for market share had also seen the brand-building expenditure of the two players shoot up dramatically.
“The price cuts helped both HUL and P&G gain market share from the unorganised sector. In the current scenario, both HUL and P&G are comfortable taking price increases,” said an analyst with a leading brokerage firm, requesting anonymity.
The intensity of competition in the laundry segment is, however, seen heating up with players like Jyothy Laboratories and Ghari Industries becoming aggressive on the national platform.
Jyothy Laboratories, the maker of Ujala fabric whitener, recently rolled out its washing powder Techno Bright nationally.
The brand, which was earlier restricted to southern India, can now compete with mid-premium brands like Surf Excel. The company now plans to introduce a slew of fabric care products under Ujala. It is also on the verge of acquiring two regional fabric care companies, forcing HUL to look at emerging categories such as fabric conditioners.
On its part, mass-market detergent Ghari is looking at increasing distribution. The company is strong in Uttar Pradesh and is looking to boost presence in other states, especially down south.
HUL’s market share in the Rs13,000 crore detergents market, which includes detergent powder and bars, is around 37%. Ghari has an 18% market share while P&G has around 16%. Among other players in the space are Henkel India, Nirma and Fena.
Considering half of HUL’s topline comes from soaps and detergents, and both national and multinational players are eyeing the same consumer base, detergents is expected to be a tough play going forward.
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