HLL gearing up to ward off competition

Pradeep Rane
28 September 2004

HLL has been losing market share ever since its rivals took on HLL through major price cuts. The company is now trying to regain ground by re-launching some of its products like Rin.

Rin Shakti is being launched as Rin Advanced with improved formulation, packaging and communication to effectively counter the growing threat of P&G''s Tide in the laundry segment. Rin is also likely to be launched in ''tub'' packaging to improve its brand image and quality perception significantly. Rin Shakti detergent bar will now be re-launched as Rin Advanced detergent bar.

HLL, which had cut prices for its detergent products after the price war began, now feels the strategy is unsustainable as this is depressing its margins. Also, the recent rises in input and packaging costs are putting further pressure on margins. The company will continue to make substantial investments in its brands and focus on expanding volumes.

HLL''s laundry business faces a major threat from Tide, P&G''s laundry brand which, increased its market share from 1.3 per cent in July 2003 to 2.3 per cent in July 2004. In contrast, Rin has been losing its market share continuously from around 14 per cent in July 2002 to 11 per cent in July 2004. Interestingly, Tide is perceived as a superior product at reasonable prices.

According to analysts with Morgan Stanley, "the re-launch is timely and is likely to help HLL restrict P&G''s progress with Tide." The company has increased the quality, packaging and positioning of the product, strengthened its distribution reach and will start its media campaign.

It has already hiked its advertising budget from 8.8 per cent to 9.6 per cent, which is likely to put pressure on HLL''s earnings in 2004. The company is likely to reap the benefits of its marketing efforts, price rationalisation and cost cutting efforts.