HUL to cut prices of soaps, detergents to keep local competition in check

FMCG giant Unilever has announced that it will slash prices of a few product categories in the Indian market, The Economic Times (ET) has reported. The products will include soaps and laundry products. The company has taken this call to pass on the benefits of lower commodity prices to the consumers. The move also aims to keep the competition from local players in check.

The company said that the Indian market is witnessing a recovery in demand in the urban markets. However, the demand in the rural market has remained muted, the newspaper reported. CFO of Unilever, Graeme Pitkethly was quoted by The Economic Times report as saying, "I don't expect that we will have deflation other than in a couple of areas." 

 

Competition from local players and falling commodity prices

Large FMCG companies have seen their sales cut by homegrown brands in India. This is especially true for soaps, detergents, hair oil, tea, and biscuits. However, the disruption and price volatility induced by the pandemic resulted in several small players shutting their shops or limiting their operations. However, as the prices of commodities have fallen in the last two quarters, companies have cut prices of soaps, detergents, and tea.

Crude oil prices, for instance, dropped from a high of $112 per barrel last year to about $88 per barrel. Crude oil is a key ingredient for making detergents. In the case of palm oil, which is widely used in making soaps, the prices have dwindled by more than one-third.

Hindustan Unilever's outlook

Unilever's Indian subsidiary, Hindustan Unilever (HUL), has said that small and regional brands are again trying to regain the lost market. Many of these players had left the market as inflation peaked. Tea companies, for example, have expanded their business 25 per cent faster than their larger rivals. On the other hand, local detergent bar makers have also registered fast-paced growth, the ET report said.