HUL, P&G slug it out over detergents

The price war between detergent giants Hindustan Unilever (HUL) and Procter & Gamble (P&G) continues, as they battle for mindshare in the domestic market.

Last week, HUL had brought down the price of a 1-kg pack of Rin detergent powder by Rs 20 (to Rs 50 from Rs 70), a cut of almost 29 per cent. The price of a 500g pack of Rin was also slashed to Rs 25 from Rs 35. And, it has now cut the price of certain stock keeping units (SKUs) of Surf Excel Blue, one of the variants under the Surf Excel umbrella. The price of a 200g pack of Surf Excel Blue has been reduced to Rs 23 from Rs 25, while a 500g pack of the same brand is available at Rs 55, down by Rs 7, according to a company spokesperson.

The move follows intense competition, as well as downtrading (opting for cheaper products) by consumers in the soaps and detergents category. Falling market share had compelled HUL to relaunch its soaps portfolio in the second half of the last calendar year. Company officials say the response to the relaunch had been favourable over the recent months.

Now, detergents seems to be on its radar, with the company resorting to straight price cuts, as well as increase in grammage, to deal with competition from national and regional companies. For instance, a 150g pack of Rin detergent powder has an additional 50g going with it — all of which is available at Rs 10. Then, there is a 600g pack of Wheel which has an additional 50g attached, that costs Rs 20 only. A 325g pack of Wheel costs only Rs 10.

The heightened activity to reduce price and increase grammage by HUL, say analysts, was after P&G’s launch of a low-priced variant of Tide, called Tide Naturals, in December last year. A 200g pack of Tide Naturals costs Rs 10 and a 400g pack costs Rs 20, respectively. Tide itself has a 500g pack available at Rs 35 and a 1-kg pack costing Rs 70. Its Ariel brand, at the premium end, costs Rs 34 for a 200g pack, Rs 78 for a 500g pack and Rs 152 for a 1-kg pack.

“Hindustan Unilever would have to do this to fend off competition in the segment,” reasons Pritee Panchal, analyst at brokerage firm SBI Cap Securities. Particularly, competition from P&G: in the October-December ‘09 quarter, it had a market share 16.5 per cent, says Shirish Pardesi, senior analyst at brokerage Anand Rathi, up from 11.6 per cent in the April-June ‘09 period. HUL’s share was 37.5 per cent in the third quarter, up marginally from the June ending quarter, when it was 36.2 per cent.

Ariel’s price points, too, are almost in line with Surf Excel’s Quick Wash variant. The heat is clearly on in detergents.