Mumbai: The country’s largest maker of home and consumer-care products, Hindustan Unilever Ltd, or HUL, has cut prices of key soaps and detergents by 4-20%, the company’s stockists and distributors said.
The prices have been cut through a combination of an increase in the weight of some packs and a reduction in the maximum retail price.
For instance, the company has increased the weight of its Lifebuoy toilet soap from 115g to 120g, but kept the price unchanged at Rs15. This translates into an effective price cut of 4.2%.
Dual strategy: Various Hindustan Unilever products in a store. Prashanth Vishwanathan / Bloomberg
Lifebuoy accounts for around 30% of HUL’s annual revenue from soaps. According to market research firm AC Nielsen, Lifebuoy had a market share of 18% in 2008.
HUL has also reduced prices of its Wheel detergent portfolio by up to 20%.
It reduced the maximum retail price of 200g Wheel Active Blue detergent cake to Rs8 from Rs10, translating into a 20% reduction.
Wheel Green detergent prices were reduced indirectly through an increase in the weight of the pack—the weight of the 275g pack has been increased to 300g while its price remains unchanged at Rs10. The weight of the 560g pack priced at Rs20 was increased to 600g. There was no change in the price.
Wheel is an economy brand, contributing at least Rs2,000 crore to HUL’s revenue annually. It is the company’s biggest detergent brand by sales volume, accounting for nearly 40% of total detergent sales, and enjoys a market share of 17.5-18.0%.
HUL has also introduced a new 750g pack of Rin Advanced detergent to counter a price cut by rival Procter and Gamble Co. (P&G), distributors said.
P&G has cut the price of its 750g pack of Tide detergent by 19.5% to Rs50. In response, HUL launched the 750g Rin Advanced, priced competitively at Rs50.
The new 750g pack at the lower price translates into effective price cut of 4.8%.
“This action indicates that price wars in the FMCG (fast moving consumer goods) sector have begun. We expect some more price changes to be announced as it is the beginning of the peak quarter (April-June) for soap and detergent sales,” said an analyst with an institutional brokerage, who didn’t want to be named.
Shares of HUL lost 0.59% on Wednesday to close at Rs236.80 on the Bombay Stock Exchange, a day that the benchmark index, the Sensex, closed at 9,901.99 points, up 1.99%.