Hindustan Unilever (HUL), the brainchild of toilet soap makers has expressed to cut down prices, as growth in this domain has manifested a slowdown. As a result of which manufacturers, in order to stimulate market demand, passed on cost benefits from reduced palm oil prices.
"HUL does selective and judicious price changes across its portfolio in the normal course of its business. Given that commodity prices are expected to remain benign for a certain time period, we have reduced prices by 4-6% in the Lux and Lifebuoy portfolio. It may be higher on certain packs, in order to pass on the benefits to consumers," was addressed by the HUL company spokesperson.
Wipro Customer Care, that manufactures Santoor soap, also lowered its prices to state itself competitive in the market. Anil Chugh, President of Wipro Customer Care (India consumer care business) mentioned "Yes, we have also cut prices in soaps, passing on the benefit of lower raw material prices to the consumer. We believe this will help increase consumption."
HUL has been facing a volume growth crisis, over the last few months and the management addressed it in its session on June quarter outcomes that it experienced dull performance in its skin cleaning division, largely owing to widespread brands like Lifebuoy and Lux. HUL CMD Sanjiv Mehta further added that the company was looking at price reduction in soaps.
Industry analysts said the initiative to reduce prices could prompt growth in toilet soaps, a highly penetrated category.
"This is the right strategy by HUL in our view, considering soaps volumes are soft and palm oil prices continue to remain lower on a year-on-year basis, although having picked up lately," stated Edelweiss Securities executive VP (institutional equities research) Abneesh Roy. He added that the move could not only help HUL gain market share from the disorganized market, but from the not-so-major players as well.