In 2016, listed laundry behemoths Hindustan Unilever and Procter & Gamble either lost market share to regional and local brands or showed signs of fatigue: From the standpoint of market-share gains, the year wasn’t the very best either for Nirma — the original local challenger to the transnational detergents brands.
Data from market researcher Euromonitor show that homegrown brands such as Ghari, smaller private labels, and other regional players together gained about 100 basis points (bps) in the Rs 20,000-crore laundry market that is still dominated by the Big Three above.
While they still have a 60% share of the market, their dominance is slipping — by about 90 bps since 2014 and 40 bps in 2016. The report reveals, "Last year, economy brands continued to dominate sales. Price is an extremely important factor for consumers in rural India."
Laundry care expanded by 9% in value terms in 2016, which was marginally slower than in 2015, with raw material prices such as crude oil dipping.
In the laundry segment, several local players entered and many slashed prices to widen the price gap with national brands as crude oil, the key ingredient for making detergents, fell sharply to $30 per barrel in January 2016.
Hindustan Unilever, which sells the Surf Excel, Rin, and Wheel brands, is by far the market leader, with nearly 39.6% in the laundry detergent segment, and the Mumbai-based giant has retained its share.
RSPL, which owns the Ghari brand, has increased its share by 100 bps over the past five years. With increasing penetration of washing machines and lower prices, laundry care consumers are shifting from bar detergents to powder detergents, a factor triggering growth for this category.
Hand-washing remains the most prevalent mode of linen-wash in India, particularly in rural parts of the country, with these products accounting for a 74% share of laundry-care sales.
Euromonitor also said most Indian consumers are unaware of the difference between standard powder detergents and the concentrated format and, therefore, tend to opt for lower priced products.
Still, national players in the mass-priced segment, which includes brands such as Wheel, Nirma and Procter & gamble’s Tide, lost market-share.
For instance, HUL’s Wheel has seen share erosion of about 60 basis points, while Nirma and P&G's Tide lost 30 bps and 50 bps, respectively.
Sushil Kumar Bajpai, President, RSPL, said, "While our brand is positioned at the mass-premium level, it has better quality compared with some of the pricier rivals."
Compared with other categories within home care, laundry care has the highest penetration rate, and due to the increasing maturity of the segment, the projected growth for the forecast period is expected to remain lower at around 2% for the next five years.
However, with increasing penetration of washing machines and rising number of women in the workforce, consumers are looking for faster methods of washing clothes. Hence, the market for powder detergents will expand at 4% a year to Rs 4,500 crore by 2021.