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

10 Jan,2012

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

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