According to reports, Hindustan Unilever (HUL) has cut prices of its key soaps and detergents by 4-20%. The price cuts have been undertaken through a combination of increase in weight of some packs and a reduction in maximum retail price.
To cite an instance, the company has increased the weight of its Lifebuoy toilet soap from 115gm to 120gm, but kept the price unchanged at Rs15. This translates into an effective price cut of 4.2%.
HUL has also undertaken price reduction in the Wheel detergent portfolio by up to 20%. It reduced the maximum retail price of 200gm Wheel Active Blue detergent cake to Rs8 from Rs10 earlier, translating into a 20% reduction.
Wheel Green detergent prices were reduced indirectly through an increase in weight of the pack. For instance, the 275gm pack’s weight was increased to 300gm and its price was kept at Rs10, while the weight of the 560gm pack priced at Rs20 was increased to 600gm. There was no change in the price.
In addition, the company has also introduced a new 750gm pack of Rin Advanced detergent to counter the price cut action taken by rival Procter & Gamble. Procter & Gamble has cut price of its 750 gm pack of Tide detergent by 19.5% to Rs50.
The company earlier had only 1kg SKU of Rin Advanced portfolio, priced at Rs70, and also had a promotional offer of 100gm Rin Matic free with the pack. The new 750gm pack at the lower price translates into effective price cut of 4.8%.
We remain NEUTRAL on the stock.