Hindustan Lever, the fast moving consumer good giant is reducing promotional offers as it focuses on profitability at a time when volume growth has come back.
This company which has launched a slew of offers last year, like the ‘buy three, get one free’ offer on the Rs 75 multipack of Lux, which is its second largest selling soap brand has withdrawn the offer. Lux has a market share of 15.5 per cent in the Rs 7,500 crore soap markets.
HUL has also raised the price of the 400 milligram Clinic Plus shampoo Rs.139 to Rs.154. Clinic Plus has a market share of over 25 per cent in the Rs.2,500 crore shampoo market.
HUL has been affected by the volatility in 2008 the most, with the company losing market share across all its key soap, detergent and oral care categories. So in a bid to get the volumes back, HUL went in for consumer offers and aggressive advertising. This move worked, as the company saw a 2 per cent volume growth in the June quarter of this financial year compared to a 4 per cent decline in the previous quarter.
Wipro Consumer Care has also revised its consumer offer on Santoor soaps are ‘Buy 2 and get a Reynolds pen free’ to Rs.1 discount on a soap bar of Rs.18. Anil Chugh, VP at Wipro Consumer Care said, “The consumer offers that we saw in February and March are now experiencing moderation”.
Not all market players are toeing the same line, though. For instance, ITC recently launched promotional offers for its soap brands in select markets. ITC is offering a 2 +1 scheme on the Superia and Vivel Di Wills soap. It also has a ‘buy four and get one free’ offer on its Vivel soap.
70 per cent of the category sales in case of shampoos sachets and players like ITC and CavinKare are running ’25 per cent extra’ schemes.
So are more HUL-type price increases in the offing? On this Dalip Sehgal, MD of Godrej Consumer Products said “Not immediately. We will take a call next month depending on the palm oil prices.
Dabur’s CEO Sunil Duggal, however, said, “We have no plans to increase prices as we don’t feel any margin pressure.”