P&G steps up battle for Indian territory

25 June 2010

NEW DELHI: Procter & Gamble, the FMCG giant, is heightening its focus on cracking the $24bn (€19.5bn; £16bn) consumer packaged goods market in India.

The sector's 12% annual growth makes it an attractive target at a time when trading conditions in areas such as the US and Western Europe are proving challenging, but competition is also intense.

P&G officially set up in India around 20 years ago, although this made it a late entrant when compared with Hindustan Unilever, Unilever's domestic arm, which has been active in the country for decades.

"As P&G reaches its next billion consumers, a lot of them have to come from India," Sumeet Vohra, the firm's India marketing director, said.

The two rivals are now battling it out with slashed prices, aggressive promotions and, critically, a nationwide distribution push.

"We've been here 75 years, and we are not going away," said Gopal Vittal, executive director for home and personal care at Hindustan Unilever.

"This is a market that we own, and we are not going to cede anything. If it comes at the cost of short-term profitability, we will find ways of recouping that."

Despite starting off at a disadvantage, and what some grocery stores still see as very high prices, P&G is already making inroads with Gillette razors, Tide detergent and Pantene shampoo.

However, despite the fact it is successfully gaining share from smaller competitors, the company is lagging behind in certain key segments.

In shampoos, for instance, P&G has boosted its share from 15% to 25% in the past six years, but it remains behind Hindustan Unilever's 46%, Manoj Menon, an analyst at Kotak Institutional Equities, said.

In detergents, P&G has a share of between 8% and 9%, measured against Hindustan Unilever's 37%.

Low income levels among many consumers means marketing goods for daily use is a tough proposition for manufacturers in the FMCG industry.

Undeterred, P&G is now sending out thousands of door-to-door salesmen to convince families to buy more packs of Pampers for their babies and toddlers.

"Most mothers use [Pampers] when they go to a party, a temple. We are trying to convince them to use them overnight so a child can enjoy uninterrupted sleep," Vohra said.

Data sourced from Wall Street Journal; additional content by Warc staff