Price cuts notwithstanding, discount brands in the Rs 5,000-crore Indian detergents market continue to give market biggies a drubbing in the low end of the market. Industry sources say discount brands have also innovated, re-positioned and are aggressively marketing their brands on a strong value platform. Most of the volume gains recorded by HLL and Tide post price cuts last year have been primarily from the urban markets, analysts say.
Industry players say regional brands like Ghadi continue to do well in the northern markets. Most of the upgrades to HLL and P&G's brands have taken place in the urban markets, it is felt. Currently, unlike HLL, which has a Rin and Wheel to address consumers in the lower end of the market, P&G may not be willing to make Tide more affordable than it is. Analysts say P&G may look at launching new brands in the low end of the market.
Shantanu Khosla, managing director of P&G said the company would look at ways of making its brands affordable to smaller markets. “Affordability can be through various means, not necessarily cutting prices. We have raised our distribution in the smaller markets and are confident of getting the big numbers eventually,” he said.
The major discount players include Nirma, Wheel (HLL), Fena, Ghadi and many other small brands.
While HLL is aggressively taking on P&G by repositioning its brands and improving brand image and product value, P&G may have to look at other ways to push Tide's growth, which analysts say shows signs of plateauing in market share gains. Leading brands in the Rs 2,300-crore detergent bar market include Rin, Wheel, Nirma and Ghadi. HLL's Rin Shakti and Rin Supreme, hold a commanding market share with a 38% value share.
HLL has a market share of around 38.5% in detergents, while P&G is placed at around 11.5%. P&G is clearly not growing at HLL's expense. The detergents market is growing at a healthy 7.1% for July '05, as per AC Nielsen estimates. Rin is one of HLL's mega brands, with sales of over $100m or Rs 450 crore, but this includes powder sales as well. Unlike the detergent powder segment, which is growing at around 8%, the bar segment has been registering a flat growth rate, sources said.
Sachets currently constitute 15-20% of the total detergents market. The urban market has slowly been shifting towards compact detergents (detergents with dirt-removing intensive enzymes), in which HLL and P&G are fighting to prove their dominance. Surf Excel, Ariel, Tide and Henko are fighting each other in this segment.
The discount brand Wheel, with its two variants, Regular and Active, has also been getting a new lease of life. Wheel Regular was recently re-launched to provide enhanced sensorial effect. A new campaign is soon to be launched. However, '05 is going to be a difficult year for detergent makers in profit terms, with input costs rising. “Most of the detergents are linked to crude oil which is its active ingredient,” industry officials said.