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Hindustan Lever Reels Under P&G Onslaught, Cuts Surf Excel Price

04-March-2004
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Hindustan Lever Reels Under P&G Onslaught, Cuts Surf Excel Price

Call it aggression in reaction. Never before has consumer products giant Hindustan Lever Ltd (HLL) shown such swift retaliation to an unnerving move by a traditional rival. Procter & Gamble’s (P&G) move to slash detergent prices by half has not only sent shockwaves across HLL’s senior management, the tremors have also been felt by its dealer fraternity, who have been directed to burn the midnight oil so as to make sure that the reduced price-tagged Surf Excel is available on the retail shelves by 9 on Thursday morning.

P&G’s move has forced HLL to slash the prices of Surf Excel by a similar margin.

“We will be awake in our offices till very late in the night, putting the new price tags on Surf Excel, and hiring more tempos to push products to the retail shelves before consumers walk into the stores to make purchases on Thursday morning. We are all quite charged up, and have never ever seen such aggression in the company,” said an enthused HLL dealer in Mumbai.

HLL convened a hurriedly called meeting of dealers on Wednesday evening to pull the trigger on the new onslaught so as to not lose out on the volumes and market share to P&G, which has gained the first-mover advantage.

While P&G is said to be rolling out the detergents with reduced prices in a phased manner, HLL is understood to be working on beating the competitor at reaching the bulk of its reduced price detergent to the consumer at an earliest possible deadline. About 30 per cent of P&G’s reduced price Tide and Ariel are already available in the market, and the company hopes to cover the entire retail network by the end of this week.

Even as HLL is in the thick of a price war, financial analysts covering the fast-moving consumer goods (FMCG) sector have gone into number crunching on a serious note to ascertain the bottomline impact on the company, whose share price dwindled 5.3 per cent on Wednesday, a day after the price cuts were announced by P&G. An analyst estimated that the financial implications on HLL’s bottomline, in the event that the price of Surf Excel is reduced by half, could be of the order of Rs 120-150 crore on profits.

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