Hindustan Unilever cuts prices

03 April 2009

MUMBAI: Hindustan Unilever, India's biggest consumer goods company, has cut the prices of some of its brands and increased the pack sizes of others, as competition intensifies and own-label brands gain share in the country's FMCG market.

India's FMCG sector is comprised of a broad range of national and regional brands, meaning that Hindustan Unilever is faced with a wide range of competitors in its key areas of operation.

The company has now reduced the price of its Wheel Active Blue detergent by 20%, and increased the weight of packs of its Wheel Green brand from 275g to 300g, and from 560g to 600g, while keeping the cost to the consumer at the same level.

Its Wheel economy range accounts for almost 40% of total detergent sales in India, and is thus one of Hindustan Unilever's biggest brands.

Other products that have seen the launch of a bigger pack size include its Lifebuoy soap, with the increase in volume amounting to a price cut of 4%.

Procter & Gamble has also reduced the cost of the 750g pack of its detergent Tide by 19.5%, prompting Hindustan Unilever to launch a larger variant of its Rin Advanced offering in the same category.

A study from KPMG has also reported that own-label brands increased their share in the organised retail market to between 10% and 12% last year, a proportion that is expected to grow further in 2009.

The company says there is an "increasing trend towards acceptance of private label brands and thus their penetration is on the rise," particularly in the FMCG, consumer, homecare and apparel sectors.

It further suggests that private label will benefit as "cash-strapped consumers' perception of the products as a 'cheaper option' changes."

Data sourced from Livemint/Economic Times; additional content by WARC staff