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Rediff.com  » Business » Amid slump, FMCG companies pamper the price-conscious

Amid slump, FMCG companies pamper the price-conscious

May 04, 2014 11:13 IST

Improve speed of delivery, introduce smaller packs, create greater value


The weak quarterly performance of multinational consumer goods makers is pushing these to redraw strategies. The country’s largest consumer goods maker, Hindustan Unilever, is likely to take value packs to categories beyond soaps, shampoos and detergents, to catch price-conscious consumers.

“Packs with prices of Rs 5 and Rs 10 have grown faster than the category average in certain segments. This is certainly something we will focus our attention on to accelerate growth in these challenging times,” Harish Manwani, chairman, Hindustan Unilever (HUL), said while announcing fourth-quarter results on Monday.

HUL is also expected to improve speed of delivery as the persistent slowdown forces quicker response from the Rs 27,408-crore (Rs 274.08 billion) company. For the three months ended March, HUL reported its lowest sales volume growth in five quarters at three per cent. A year-ago, HUL’s sales volume grew six per cent.

Besides focusing on value packs, HUL will also pare unproductive processes and stock-keeping units to shore up numbers. The change in strategy, say analysts, is critical as challenges mount with a possible weak monsoon this year. A disruption in rains will mean lower farm output and demand in the countryside. It also pushes up commodity prices.

Procter & Gamble (P&G) is also hunkering down for tough times. The Indian region has been merged with West Asia and Africa to help the world’s largest consumer goods maker focus on emerging markets, where sales underperformed in the March quarter. P&G has been fighting rivals such as Unilever and Colgate for greater share in detergents, personal care and oral care in India but has remained at number two in these segments.

With pressure from investors mounting, P&G is likely to continue pruning costs as it looks to restructure its business. In India, for instance, the company has avoided getting into price wars with HUL. In oral care, P&G has been focusing on a gradual build-up rather than flooding the market with inventory. It launched Oral-B in tier-I cities last year, before taking it to tier-II ones.

Nestle, the world’s largest food company, will rationalise its chocolate and beverage portfolios in India, trimming low-margin products and focusing on health and wellness, managing director Etienne Benet said recently. Entry into new categories such as water and pet food is not expected to happen soon as the company looks to stabilise operations.

The company is also expected to increase focus on noodles with new launches this year.

Hunkering down

  • Packs with prices of Rs 5 and Rs 10 have grown faster than category average in certain segments, says HUL
  • P&G has merged the Indian region with West Asia and Africa to help it focus on emerging markets, where sales underperformed in the March quarter
Viveat Susan Pinto in Mumbai
Source: