Govt lists essential hygiene products, gives industry price control scare

There is a social case for price control on hygiene products, but it leaves economic questions for manufacturers working on thin margins

The government's move to draw up a list of essential hygiene products, on the lines of an existing national list for drugs, could put it at loggerheads with industry. For one, say sources in the know, it signals the Centre’s intent to widen its control beyond pharmaceuticals into over-the-counter (OTC) products.

OTC products in India are typically sold like fast moving consumer goods (FMCG), backed by huge marketing budgets and an aggressive distribution push. It is not heavily regulated, say industry experts, the way the pharmaceutical industry is in the country.

While some experts say it is precisely this lack of regulation that has pushed the government to consider putting a price cap on hygiene products, industry players say it can hardly work for categories such as theirs. “Segments such as sanitary napkins and diapers are fairly young, having evolved in recent years as disposable incomes and awareness about hygiene products improved. Their adoption also grew after branded players began advertising about their convenience and ease of use,” says Kamal Johari, managing director, Nobel Hygiene, which makes adult and baby diapers.

“Over the years, product prices have fallen sharply to improve penetration. Organised players today operate on thin margins. A price cap will not help. Branded players could get squeezed, pushing them to scale down their market activities and initiatives,” he says.

Most big brands today manufacture and market sanitary napkins and baby diapers for under Rs 50 a pack, though activists such as the Centre for Science and Environment (CSE) argue that accessibility remains poor in rural areas, since people can neither afford branded products nor do these companies reach them through conventional trade channels.

According to the National Family and Health Survey 4, around 48 per cent of the women in rural areas have access to clean sanitary napkins versus 78 per cent in urban areas. Overall, 58 per cent of the Indian women between 15 and 24 years use a hygienic method for protection, which is mostly sanitary napkins. In other words, there are still gaps to be filled when it comes to access to clean and affordable hygiene products. This, says CSE, builds a case for price control, though companies are not in agreement at all.

Procter & Gamble and Johnson & Johnson, two of the country's top hygiene product makers, manufacturing brands such as Whisper and Pampers (both by P&G) and Stayfree (J&J) declined comment for the story.

Unicharm and Kimberly-Clark, also key market players with brands such as MamyPoko Pants and Huggies respectively, were not immediately available for comment. Kimberly-Clark, which until 2017 had a joint venture with Hindustan Unilever, also makes Kotex sanitary napkins.

But a delegation from the Feminine and Infant Hygiene Association (FIHA), a body of the country's top manufacturers, which includes the above companies, had an urgent meeting with the government last week, said sources, to understand the proposed move to draw up a hygiene list.

At the meeting, the government, said persons in the know, assured the delegation that it was only studying the health and hygiene market right now and that a list would come up later. But companies remain wary of price control.

The proposed list could also look at a broader spectrum of hygiene products including soaps, handwash, disinfectants, toothpastes and mouthwash apart from sanitary napkins and diapers, implying that the larger personal and health care market could be regulated in the future.

“In the last few years, hygiene and health care products have been driven aggressively by FMCG companies and price control could slow down initiatives in this market,” says Kaustubh Pawaskar, associate vice-president, research, at brokerage Sharekhan.

The branded feminine hygiene market in India is pegged at Rs 4,873 crore, while the infant hygiene market stands at Rs 6,006 crore, according to market research agency Euromonitor International. 

Aggressive launches in the last few years across the price pyramid and awareness campaigns have increased the penetration of both these categories of products, especially, feminine hygiene, Euromonitor says. The compounded annual growth rate of feminine hygiene market in India is pegged at 20.5 per cent over the next five years, while that of infant hygiene is pegged at 15 per cent, the research agency says.  

“Significant opportunity for category penetration and growth exists for both segments and affordability remains a key factor for companies when looking to capture demand from low-income groups,” Euromonitor says.

The government itself is working keenly in the area of feminine hygiene, market experts said. Last week, the Centre reduced the price of biodegradable sanitary napkins to Rs 1 per piece from Rs 2.50 a pad. The move was aimed at making the product even more accessible to girls, the government said, who were dropping out of school because of the lack of good quality sanitary napkins at an affordable price.