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Soap Market signals new life in FMCG industry

02-December-2002
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Soap Market signals new life in FMCG industry

There could be a ray of hope in sight for the fast-moving consumer goods (FMCG) industry, if the October 2002 ORG-MARG retail audit figures are anything to go by.

Toilet soaps, the largest contributor to FMCG, which faced a slowdown by registering negative growth in the last 1-2 years, has finally turned the corner in October. While the overall Rs 3,500 crore (in October 2002) FMCG industry grew by 3.2 per cent, toilet soaps registered a 0.7 per cent value growth — which the industry feels is a healthy sign.

According to industry analysts, this is due to the general feel-good factor, slightly better economic indices and innovative new products.

Hindustan Lever Ltd (HLL), the market leader in toilet soaps, say analysts, would benefit if the revival continues in the months ahead. HLL’s market share in toilet soaps stood at 60 per cent in value in the month of October. Nirma’s share was 11.5 per cent, while Godrej’s share was 5.9 per cent.

According to industry sources new launches and innovations could have led to the turnaround in the toilet soap category.

Analysts feel that HLL, which has been impacted by a slowdown in its topline growth, would register better sales in October. However, a decline in the tea industry sales, and slowdown in food products like vanaspati/edible oils could come as a dampener. HLL draws almost 40 per cent of its turnover from soaps and detergents (Rs 4,284.76 crore in 2001), while tea contributes 10 per cent. HLL, which registered a 3.53 per cent in net profit at Rs 413.29 crore for the second quarter ended September 30, 2002, posted a net sales decline of 7.20 per cent to Rs 2,367.46 crore during the quarter. However, the company’s soaps and detergents business grew by 2.8 per cent led by a strong personal wash growth of 11.1 per cent. Another category in FMCG, which has come back on the growth path is household insecticides. This category had suffered a growth slowdown of about 6-7 per cent last year. It is now growing at 20 per cent.

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