HIGH PRICES COAST DECLINE IN MARKET SHARE OF HUL

New Delhi: The country’s largest maker of home and personal care products, Hindustan Unilever Ltd (HUL), has lost market share by value over the five quarters ended 31 March, the erosion cutting across key categories such as soaps, shampoos, toothpastes and skin creams, even as the broader market expanded significantly.
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The decline, ranging from two to six percentage points, was at least partly the result of price-sensitive consumers switching to cheaper products made by rival manufacturers as HUL increased prices, analysts said.
Price increases have helped shore up HUL’s financials, but analysts say the decline in market share is a matter of concern at a time when the broader market is expanding. HUL has been gradually losing market share in soaps and skincare products “from the past seven-eight quarters, which is a major concern”, said Vanmala Nagwekar, a research analyst at Mumbai-based India Infoline Ltd.
HUL, a unit of Anglo-Dutch consumer products maker Unilever, declined to comment for this story. A spokesperson said HUL is observing the so-called silent period when it is required by stock market regulations not to comment publicly on business matters ahead of its latest earnings announcement.
In the past five quarters, HUL’s rivals increased their own share of a consumer goods market that defied a downturn in the larger economy, estimated to have grown at its slowest pace in six years during the 12 months ended March. Home and consumer care products are considered relatively immune to economic cycles.
HUL lost considerable market share in soaps, detergents and shampoos that contribute three-quarters of its sales, securities house DSP Merrill Lynch Ltd said in a recent report, citing data from market research firm ACNielsen.
“We understand from the management that share loss is of concern primarily in soaps and oral care...,” DSP Merrill Lynch said in the report.
Market share for soaps, detergents and shampoos declined to 47.5%, 36.8%, and 44.7% in the three months ended March, from 53.4%, 38.9% and 46.3%, respectively, in the January-March quarter of 2008. In some categories such as tea and coffee, HUL expanded its market share marginally. In tea, for instance, its share rose to 23%, from 22.6%.
In soaps, the company’s market share dropped in each of the five quarters even as the overall soap market, according to ACNielsen, grew 18% in the year to Rs7,967 crore. HUL’s soap portfolio includes popular brands such as Dove, Lux, Hamam and Breeze.
“Discount brands such as Godrej No.1 and Santoor have been gaining share from HUL’s Breeze and Lux,” said India Infoline’s Nagwekar.
Godrej No.1 is a product of Godrej Consumer Products Ltd (GCPL) and Santoor is made by Wipro Consumer Care and Lighting, a unit of Wipro Ltd.
Pays for price rises