New Delhi: At a time when consumer goods makers such as Hindustan Unilever Ltd (HUL) and Procter and Gamble Ltd (P&G) are cutting prices of their products, Colgate Palmolive India Ltd, the leader in the tooth paste segment, has raised prices of some its brands.
“We have got new stock of the ‘Colgate Strong Teeth’ toothpaste priced at Rs56 per 200gm pack. Earlier, the same pack was selling at Rs54,” said a New Delhi-based distributor on condition of anonymity. Dealers said the company has increased prices of some brands by at least 4% and more such hikes are in the offing.
“By next week we are expecting prices of other variants also to go up,” said another Colgate Palmolive dealer. He did not want to be named.
Colgate Palmolive sells several variants of the Colgate brand. These include Max Fresh, Strong Teeth, Active Salt, Herbal and Total.
The 200gm pack is the largest selling stock keeping unit, or SKU, for the company, said the distributors. SKU is a computerized marking of every product so there are data records of each. According industry observers, the 200gm pack makes significant contribution to the company’s total revenue and increase in prices will help the company fetch better margins. “Of the total sales of Rs1,500 crore, 200gm packs make for Rs400 crore,” said an analyst with a Mumbai-based brokerage firm.
The company did not respond to an email on the issue.
The increase in prices by Colgate Palmolive follows price cuts of between 4% and 20% by rivals HUL and P&G on their soaps and detergents.
Analysts expressed surprise at the price hike. “There is no reason why the company should hike prices at this point when most of the raw material prices are stable. Also the excise duty cut announced by the government should help companies keep prices under control,” said Anand Shah, an analyst with Mumbai-based brokerage Angel Broking Ltd.
According to market research agency AC Nielsen, the total toothpaste market for the 11-month period ended February 2009 was worth Rs2,353 core.
Colgate Palmolive enjoys 47% market share in the toothpaste segment. Cibaca and Colgate are its leading brands.
HUL, the largest consumer products company in the country by sales, has 28% market share. Its brands include Pepsodent, and Close-up. Dabur India Ltd, another leading toothpaste maker, has around 10% market share with brands such as Meswak, Dabur Red and Babool.
For the nine months period ended 31 December, Colgate Palmolive’s net sales grew 15% to Rs1,239.4 crore over the same period in the previous year. Net profit for the period jumped 21% to Rs213.2 crore.