Fresh Foam: Dabur to join shampoo price war

Fresh Foam: Dabur to join shampoo price war

Author | exchange4media News Service | Tuesday, Aug 03,2004 7:59 AM

Fresh Foam: Dabur to join shampoo price war

Nearly four months after FMCG heavyweights Hindustan Lever Ltd (HLL) and Procter & Gamble (P&G) initiated a battle in the shampoo sector, home-grown Dabur India Ltd has finally decided to join the price war in the Rs 1,000- crore shampoo market. The company is all set to drop prices of its high-end shampoo brand Vatika by 20 per cent.

“From next month, we are seeking lower levels of pricing for our Vatika brand of shampoo,” Dabur India CEO Sunil Duggal told FE. The company, however, does not plan to alter the pricing of its economy brand Anmol. “Anmol will continue to be positioned as an economy offering,” he added.

Dabur believes that growth in shampoos will occur at the economy-end of the market and towards that the company hopes to cash in on its recent launch of Anmol natural shine shampoo, positioned as a value-for-money product.

Giving reasons for its late reaction to the price war, Mr Duggal maintained that Dabur was not succumbing to the price pressure from competing brands but was ensuring a faster growth path for its shampoo brand Vatika which had been impacted ‘marginally’. “The impact (of price war) has been marginal though the growth has slowed down,” Mr Duggal said.

Dabur had so far shielded itself from the price war by leveraging its herbal niche to build on the brand loyalty it enjoys in this segment. The strategy, the company says has worked to some extent. According to Mr Duggal, Dabur has managed an overall growth of 11 per cent in its shampoo category for the period ended June 30, 2004; while Vatika shampoo range grew by 2.9 per cent, the anti-dandruff variant grew by 6.3 per cent.

The company has decided to bring the price cut into effect from September 2004 since it wants to exhaust the current stocks in the market. The price cut will be effective across pack sizes of Vatika Henna Cream and Vatika anti-dandruff shampoos. The pricing of its 5-ml and 8-ml sachets priced at of Re 1 and Rs 2, respectively, will however, remain unchanged.

A 100-ml pack of Vatika Henna Cream and anti-dandruff shampoos is currently priced at Rs 47 and a 200-ml pack at Rs 87. After the proposed 20 per cent price cut, a Vatika 100-ml pack will compete closely with HLL’s Clinic Plus and Sunsilk, and P&G’s Rejoice.

The company claims to hold a 3.5 per cent market share in the overall shampoo market. It however, enjoys a dominant position in the estimated Rs 150-crore herbal shampoo market.

The price war in the shampoo segment was first launched by HLL: so much so that HLL has so far already cut prices of its shampoo brands twice in the last three months.

Starting with a 20 to 24 per cent price cut on its Clinic Plus brand which prompted P&G to announce a 16 per cent drop on its Pantene brand, HLL, once again, announced a one-on-one offer on Sunsilk. It, however, withdrew that and more recently dropped prices of Sunsilk by 7.5 per cent to 15 per cent across all packs. More recently, P&G announced a 23 per cent cut in its mid-tier brand Rejoice, pitching it directly against HLL’s Clinic Plus.

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