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Tag: Ghari

  • The new brand, Uni Wash, will be launched in the next 2-3 months and be priced similar to Rin and Tide

    Rohit Surfactants to launch mid-premium laundry brand Uni Wash to challenge HUL & P&G brands

    By Sagar Malviya

     

    Maker of India’s largest-selling detergent brand Ghari, Kanpur-based Rohit Surfactants plans to launch a mid-premium laundry brand to take on Hindustan Unilever’s Rin and Procter & Gamble’s Tide.

     

    “We want to tap into mid-priced category which has good potential as well as offer higher margins,” Rahul Gyanchandani, director at Rohit Surfactants, said. Ghari competes in the highly competitive mass-priced segment, where companies are under margin pressure due to high raw material costs. “In addition, apart from brands such as Rin and Tide, there is a vacuum in the segment which we want to fill,” said Gyanchandani.

     

    The new brand, Uni Wash, will be launched in the next 2-3 months and be priced similar to Rin and Tide, the company said. Rin’s 1-kg pack costs Rs50, while Tide Naturals’ 870-gram pack is sold at 30. Spokesperson of HUL and P&G said as a company policy they do not comment on competitors.

     

    Rohit Surfactants’ Ghari beat HUL’s Wheel late last year to become the top brand in the 13,000-crore laundry industry. The firm’s entry into the mid-premium segment is expected to make the infamous Rin-Tide fight even murkier. HUL, early this year, priced Rin lower than P&G’s Tide and released an advertisement asking consumers to choose the better brand-the latest in a series of aggressive commercials from either brand targeting the other. Some blatant ads even attracted legal recourse from the other side.

     

    According to an industry insider, Tide’s share has doubled in the last two years to over 13.7 per cent in 2011 while Rin’s share has grown from 4 per cent in 2009 to around 6 per cent.

     

    TOUGH MARKET

    Analysts feel that Rohit Surfactants’ entry could further dent margins in laundry, one of the largest segments that contribute to more than a quarter of the revenues for both HUL and P&G.

     

    “The category has limited pricing power already and a new brand entering will surely affect the exiting brands in the long term,” Gautam Duggad, an analyst at brokerage Prabhudas Lilladhar, said. Mr Duggad, however, added that it would not be easy for Rohit Surfactants to build a brand from scratch.

     

    “Launching a completely new brand altogether would be a challenge in this cut-throat market as it will take a long time for a brand to start from scratch,” he said. Rohit Surfactants has been building its distribution network to reach most of the country and believes it now has the wherewithal to compete with established brands.

     

     

    “We already have a solid platform now, which we can leverage for the new brand to push it,” Mr Gyanchandani said.

     

    Rohit Surfactants entered 10 new states in the last three years to expand its reach to 19 states through more than 3,500 dealers. It has 21 manufacturing units, 15 of which were added since 2006. The company now plans to expand its distribution and build manufacturing plants in markets such as Bihar, Raipur and Karnataka.

     

    Launched in 1987 by brothers Muralidhar and Bimal Kumar Gyanchandani, Rohit Surfactants had sales of over Rs2,500 crore in the year ending March 2012.

     

    But there is increasing pressure on the margins of detergent makers due to increasing prices of key raw materials such as LAB, or linear alkyl benzene,  that has increased 19 per cent, and soda ash that climbed 4 per cent in the last three months.

     

    HUL, the Indian unit of Anglo-Dutch Unilever, has indicated that it is facing the heat of inflation in categories such as soaps and detergents, and has tried to moderate its advertising spends to protect margins.

     

    At the same time, P&G is looking to expand production capacity in India so that it can make products cheaper locally.

     

    Source: The Economic Times
    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Wheel comes a full circle as Ghari tops the laundry charts

    Ghari ousts Wheel to be Detergent No 1 (in Oct & Nov 2011)

    By Sagar Malviya

     

    Twenty-five years after launching a laundry brand inspired by Nirma, Ghari detergent appears to have edged out, at least temporarily, Hindustan Unilever’s Wheel from the number one slot in the Rs 13,000-crore laundry industry.

     

    Ghari, manufactured by Kanpur-based Rohit Surfactants Pvt Ltd (RSPL), had a higher share in October and November than Wheel, a brand that contributes over Rs 2,500 crore, or 12%, of the Rs 20,000-crore top line of Unilever Plc’s Indian unit.

     

    “As per value market share data, on a 12-month average share basis, the gap between Wheel and Ghari now stands at just 30 basis points; however, Ghari’s shares were higher than Wheel for the last two months,” said brokerage firm Prabhudas Lilladher in a report, dated January 2, quoting numbers from market research firm The Nielsen Company.

     

    In November, Ghari had a 17.4% share compared with Wheel’s 16.9%, according to people familiar with the numbers. The market researcher will generate data for December in the third week of January.

     

    Ghari’s achievement is reminiscent of the feats of Ahmedabad-based Nirma, whose eponymous washing power evicted HUL’s Surf from the top slot in 1985. Nirma achieved this by pricing its products considerably lower than Hindustan Lever (HLL), as the company was then known as.

     

    The resultant rumpus and the incumbent’s fierce response are part of Indian business folklore and have made it to management textbooks.

     

    HUL, which contributed 6% to Unilever’s top line in 2010, eventually prevailed as Nirma’s challenge faded in the early years of this century, with the global consumer giant stepping up marketing and advertising spend to levels its homegrown rival could not match. Wheel, the detergent whose market leadership is under threat, is very much a product of that period.

     

    HUL still dominates

     

    A powder variant of Wheel was introduced in 1988 to take on Nirma’s challenge. Despite the wobbles in October and November last year, HUL still dominates the detergent market with Wheel as the country’s largest brand on a yearly comparison, though the gap has been narrowing each quarter. The Hindustan Unilever spokesman declined comment on the data.

     

    “Our laundry category has grown significantly ahead of market in both volume and value in the period from January 2011 to September 2011. Wheel also contributed significantly to this with strong double-digit growth driven both by volume and price,” the spokesman added.

     

    The company said it could not validate the Nielsen data. “We cannot confirm the factual correctness of the market share data you have emailed as it is proprietary data of Nielsen. We request you to contact Nielsen to validate the data.” The Nielsen Company’s spokeswoman said: “As per company policy, I will not comment on brand specific data and will not be able to verify and validate the data.”

     

    Big hitters from Kanpur

     

    Both Wheel and Rin, another detergent from the HUL stable, have increased their market shares compared with the same year, but have been lapped by the faster growth achieved by Ghari, which was launched in 1987 by brothers Muralidhar and Bimal Kumar Gyanchandani.

     

    The Ghari phenomenon, emerging as it did from Kanpur, a business backwater, has been widely celebrated by many as an example of small town entrepreneurial chutzpah. “Losing share isn’t as big as losing leadership in its largest brand.

     

    In trying to maintain its margins, HUL didn’t adjust the pricing at the challenger’s level and that did the trick,” says a former HUL senior executive who was directly involved with HUL’s operation STING (Strategy To Inhibit Nirma’s Growth) in the late eighties.

     

    In 2011, Ghari gained not only by growing faster than Wheel but also yesteryear’s price warriors such as Nirma, which has less than 6% share now. “While Wheel may have maintained its market share, its other brand Rin has been consistently gaining share clearly reflecting the company’s premiumisation strategy,” said Anand Mour of Ambit Capital.

     

    “On the other hand, Ghari has taken share from smaller regional players, especially brands from the southern states, where it entered last year.”

     

    Ghari’s expansion

     

    RSPL attributes its growth to a variety of factors, including expansion to more states. The company has entered 10 more states in the last three years and now peddles its ware in 19 states, through more than 3,500 dealers. It has 21 manufacturing units, 15 of which were added since 2006.

     

    “We will be setting up plants in Bihar, Raipur and Karnataka soon to catch up with our sales growth of over 25% in the last nine months. Even in volume terms, we have been growing more than 10%,” said Mr Sushil Kumar Bajpai, president (corporate affairs) & company secretary, RSPL.

     

    Also, what’s helped Ghari is the sheer size of its home market Uttar Pradesh, which contributes 17% to total FMCG revenues, according to The Nielsen Company. Judging by its past, HUL is likely to respond fiercely.

     

    “Hindustan Unilever has a tremendous capability to fight back and they will do it soon,” says Mr Amin Babwani, an independent consultant who has spent three decades with HUL.

     

    It clearly has the marketing muscle to do so. The company’s existing distribution footprint in rural India, where a brand such as Wheel would sell, reaches nearly 200,000 villages, which is nearly double the industry average.

     

    “The growth in soaps and detergents segment will come from gradual upgradation of cheaper alternatives, ” said Mr Vijay Chugh of BNP Paribas Securities India in a recent report.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved