Unilever plans cut in soap and detergent prices to wash off local players' gains
Unilever said it will cut product prices in India in a few categories, such as soaps and laundry, to pass on the benefits of lower commodity prices, boost volumes and compete with local entrants.
The maker of Lux soap and Surf Excel detergent also said the Indian market is seeing a gradual recovery, led by urban areas, but the rural market has remained subdued.
«I don't expect that we will have deflation other than in a couple of areas,» Unilever CFO said.
«It (deflation) is possible in India because a couple of our categories — fabric cleaning and skin cleansing — are very heavily correlated to the underlying commodity prices and (have seen) local competition re-enter the market.
We have to simply adjust pricing there in order to maintain competitiveness and our volume position,» Chief financial officer Graeme Pitkethly told analysts during the third-quarter earnings call.
For years, homegrown brands have been nibbling away market shares from leading consumer product companies, especially in soaps, detergents, hair oil, tea and biscuits. However, pandemic-led disruptions and subsequent inflation in key raw materials forced many to either shut shop or prune operations.
But, in the past two quarters, companies have cut prices of soaps, detergents and tea amid falling commodity prices.
For instance, the price of crude oil, the key ingredient for making detergent, has dropped from its high of $112 per barrel last year to about $88 per barrel currently.
Similarly, palm oil, used for manufacturing soaps, has fallen by more than a third — from its high of 6,000 Malaysian ringgit a metric ton a year ago to 3,700 Malaysian ringgit this month.
Last week, Unilever's Indian subsidiary Hindustan Unilever said it is seeing the
