New Delhi: Hindustan Unilever Ltd (HUL) has cut prices of its Lux, Lifebuoy and Dove soaps in the past month, passing on the benefit of cheaper inputs, as India’s largest consumer goods company aims to win customers amid stiff competition and weak demand.

“HUL does selective and judicious price changes across its portfolio in the normal course of its business. Given that the commodity prices are expected to remain benign for a certain time period, we have taken price reductions in the range of 4% to 6% in Lux and Lifebuoy portfolio, while it may be higher on certain packs in order to pass on the benefits to the consumers," a company spokesperson said on Tuesday.

For some packs, the price cuts are as steep as 20-30%.

Lifebuoy and Lux are among the highest selling soap brands in India’s ₹20,960 crore toilet soap market, according to research firm Euromonitor, and contribute significantly to HUL’s beauty and personal care segments. Lifebuoy is India’s biggest selling soap brand in terms of household penetration, according to researcher Kantar.

Within personal care, soaps are the biggest category, which means the bulk of Indian households buy them. However, despite its market leadership, the maker of Dove, Pears, Ayush and Lux soaps faces stiff competition from rivals including Godrej Consumer Products Ltd, Wipro Consumer Care and ITC Ltd.

In a conference call with investors after its quarterly earnings announcement last month, the company’s top management indicated that price reductions were underway in its soaps portfolio, as it sought to pass on the right value equation to shoppers, expecting commodity prices to remain weak.

“I talked about looking at the future outlook of commodities and, given the budget changes, we have taken certain decisive actions from a pricing point of view. You will see that in July, both in Lux and Lifebuoy," Srinivas Phatak, chief financial officer and executive director (finance and information technology) at HUL said in an earnings call in July. “We have taken price reductions across the board in the range of about 4% to 6%, whereas in the case of certain packs, you will also see a steep reduction in price."

Beauty and personal care segment that comprises personal wash, skin care, hair care, oral care, colour cosmetics and deodorants contributed 46% to overall revenue, according to HUL’s 2018-19 annual report.

Intensifying competition, the current demand environment and low costs have prompted these changes, an analyst at a brokerage firm said. “Lifebouy and Lux are witnessing stiff competitive intensity in terms of market share loss in a benign commodity environment," HDFC Securities analyst Naveen Trivedi wrote in a note last month.

Trivedi added that this has prompted the company to slash prices and rework strategy for the two brands that could launch new products in the near term.

During the quarter ended 30 June , the company rolled out Lux Botanicals and Pears Naturale nationwide, in line with the popularity of the naturals category among shoppers.

HUL’s soap price cut comes at a time when demand for packaged consumer goods remains subdued.

In its April-June update, research firm Nielsen noted that non-food categories such as salty snacks, biscuits, spices, toilet soaps and packaged tea led the slowdown during the quarter.

HUL has been witnessing modest demand in its beauty and personal care segment too.

The company said that in the June quarter, sales in its beauty and personal care portfolio grew at a modest 4%, trailing growth in other segments such as foods and refreshments, and home care. “Within beauty and personal care, personal products’ performance was steady, while personal wash witnessed a muted delivery, particularly in the popular segment," said the company.

In personal wash, the demand for the popular segment was soft, while that for premium brands remained steady, HUL said in its investor presentation for the quarter.

Edelweiss analyst Abneesh Roy noted that HUL’s move is “the right strategy in our view, considering soaps volumes are soft and palm oil prices continues to remain lower on year-on-year basis, although have picked up lately".

The move will help HUL gain market share from unorganized and some of the smaller players, Roy said on Tuesday.

Interestingly, even as the company cut prices of soaps, it increased prices of face washes by 4-14% across Pears, Dove, Ponds and Fair & Lovely brands in July, according to a 27 August report by Kotak Institutional Equities.

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