Consumer products major Procter & Gamble's recent move to slash prices of its hygiene products, Whisper and Pampers, is likely to push its rivals to take price cuts soon.
P&G announced on Wednesday that it was reducing the prices of select stock keeping units of Whisper and Pampers by three and 15 per cent, respectively.
This was effective March 16, and new stocks would arrive in the next few weeks, the company said.
The move followed the slash in excise duty on sanitary napkins and diapers by nine per cent in the 2011-12 Union Budget.
Despite being welcomed by the industry, most appeared to have shied away from making the first move to bring down prices.
Vineet Agrawal, president, Wipro Consumer Care & Lighting, said a price cut on its Wipro Baby Soft diapers was in the offing. The reduction, according to company sources, is likely to be in the region of 4-5 per cent.
"It won't be a 100 per cent pass-on owing to input cost pressures," says an executive from WCCL.
Prices of paper pulp, used to make both sanitary napkins and diapers, have increased by 25 per cent in the last five years, touching over $1,000 per air-dried metric tonne from under $800 per ADMT in 2006.
The input cost pressure coupled with rising prices of crude, which impacts packaging, has prompted Johnson & Johnson, manufacturer of the Stayfree brand of sanitary napkins, to withhold any price reduction for now.
"There has been a very clear inflationary trend in paper pulp. We will not take a price cut in any of our SKUs," says a J&J spokesperson.
A Mahendran, managing director, Godrej Consumer Products Ltd, says the company has not taken any decision yet on price cuts. But market sources say GCPL may look to pass on the excise duty benefit to consumers in the near future.
The Rs 500-crore (Rs 5-billion) baby diaper market is led by Pampers, with a share of 56 per cent, followed by Huggies, manufactured by GCPL, at 32 per cent.
Mamy Poko pants, which entered the market a few years ago, is third with a share of five per cent, while Wipro is at fourth.
The size of the market is growing at 28 per cent per annum.
The women's hygiene market, in contrast, is a Rs 1,200-crore (Rs 12-billion) category, growing at 14 per cent per annum. The key players include Whisper, Stayfree and Kimberly Clarke's Kotex.