Fast moving consumer goods giant Hindustan Lever is reducing promotional offers as it focuses on profitability at a time when volume growth has come back.
HUL, which launched a slew of such offers last year, has withdrawn the ‘buy three, get one free’ offer on the Rs 75 multipack of Lux, which is its second largest selling soap brand. Lux has a market share of 15.5 per cent in the Rs 7,500 crore soap market.
HUL has also increased the price of the 400 milligram Clinic Plus shampoo from Rs 139 to Rs 154. Clinic Plus has a market share of over 25 per cent in the Rs 2,500 crore shampoo market.
The volatility in 2008 had affected HUL the most, with the company losing market share across all its key soap, detergent and oral care categories. In a bid to get the volumes back, HUL went in for consumer offers and aggressive advertising. The move worked, as the company saw a 2 per cent volume growth in the June quarter of this financial year compared to a 4 per cent decline in the previous quarter.
Wipro Consumer Care has also revised its consumer offer on Santoor soaps from ‘Buy 2 and get a Reynolds pen free’ to a Re 1 discount on a soap bar of Rs 18. “The consumer offers that we saw in February and March are now experiencing a moderation,” says Anil Chugh, vice president at Wipro Consumer Care.
Not all market players are toeing the same line, though. For instance, ITC recently launched promotional offers for its soap brands in select markets. ITC is offering a 2 +1 scheme on the Superia and Vivel Di Wills soap. It also has a ‘buy four and get one free’ offer on its Vivel soap.
In shampoos, 70 per cent of the category sales come from sachets and players like ITC and CavinKare are running ‘25 per cent extra’ schemes.
So, are more HUL-type price increases in the offing? “Not immediately. We will take a call next month depending on the palm oil prices,” says Dalip Sehgal, managing director of Godrej Consumer Products, which has soaps like Godrej No 1 and Cinthol in its portfolio.
Dabur’s CEO Sunil Duggal, however, says, “We have no plans to increase prices as we don’t feel any margin pressure.”
