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Price war brewing in ketchup segment

16-June-2004
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Price war brewing in ketchup segment

With the price wars likely to have ended in the detergent and shampoo segments after a lot of bloodbath in past few months, it seems that the battle may begin afresh, albeit on the ketchup turf.

According to distributors, either of the two big players, Hindustan Lever Ltd (HLL) or Nestle India, are likely to slash their ketchup prices by about 15 per cent in the next two months.

However, a redistribution stockist of HLL from eastern Mumbai has different views. He does not see a price war in the ketchup segment in near future.

According to him, Nestle has its own way of deciding prices. Other distributors have a mixed opinion about the possibility of a price cut in ketchups.

When contacted, both HLL and Nestle refused to comment on the possibility of such a development saying that they do not make futuristic statements.

HLL also expressed inability to tell about any possible plans of new variants in ketchup.

An analyst with a Mumbai-based brokerage firm holds similar views. It is likely that the upcoming Budget may levy an excise duty of eight per cent on processed foods, which currently enjoys zero duty. With this, the analyst feels that the companies may be forced to hike prices, rather than slashing them.

Contradicting this, a market observer said that excise duty is MRP-based. Thus, a lower MRP means lower outgo in terms of excise, with a given duty percentage. Getting more consumers could be an obvious reason to slash prices, but the excise aspect is being seen as the driving force behind such a move.

Samsika Marketing Consultants CMD Jagdeep Kapoor said that the ketchup market in India needs to be increased on three fronts. Price is just one factor to woo consumers. The other factors being new ways of consumption and new locations and occasions. Mr Kapoor added that the market needs to expand in terms of width (more consumers), depth (more consumption from same people) and frequency (consumption more often).

Distributors said that it is difficult to predict as to whether HLL would slash the prices of its Kissan brand of ketchup first or whether Nestle would do it first on its brand, Maggie.

HLL has over 30 per cent share of the organised ketchup market in India. Its Kissan Ketchup and Kissan Sauce (no onion no garlic) are priced at Rs 82 (1 kg bottle), Rs 49 (500 gm bottle) and Rs 60 (600 gm squeezy pack), while Kissan Tomchi is priced at Rs 53 (500 gm).

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