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

19 Apr,2012

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

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