FMCG cos to introduce price cuts, offers

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Mumbai: Quite a few FMCG companies are planning to or mulling over implementing price cuts for some of their brands, in a bid to woo customers. FMCG major Hindustan Unilever Ltd (HUL), among others, is planning to cut prices of select brands in the next few days.

Following a drop in input costs, HUL will reduce prices of its flagship brands, Vim Bar and Surf Excel, soon, according to key industry sources. HUL recently reduced prices of its soap brand Lifebuoy by 7-8%, to pass on the benefits of the recent excise duty reduction.

Meanwhile, another FMCG major, CavinKare Private Ltd, is also planning to slash prices of select brands from April this year. Also, Marico Ltd and ITC Foods are evaluating the option of reducing prices in the next few months. Industry analysts now expect more companies to cut prices, especially in categories where raw material prices have softened considerably.

According to a leading retailer in Mumbai, HUL is planning to reduce the price of Vim Bar (400gm) by Re 1. The company is also planning to implement price cuts for its detergent brand Surf Excel very soon. "HUL's proposed move will trigger a price war in the branded detergents sector. HUL's arch rival, Procter & Gamble, will soon follow suit. As the inflationary pressure is coming down, FMCG companies are revising their prices to lure consumers," said an industry analyst based in Mumbai.

On CavinKare's pricing strategy, CK Ranganathan, chairman and managing director of CavinKare Private Ltd, said, "We are looking at price cuts April onwards."

According to Chaitanya Deshmukh, head of M&A, Marico Ltd, said that the company will not effect any price cuts in the immediate future. "However, we will need to keep evaluating this on an ongoing basis," he said.

Even as leading FMCG majors are opting for price cuts to woo consumers, there are others who are looking at different strategic plans to pump up volumes.

For instance, HK Press, executive director of Godrej Consumer Products Ltd, said, "Instead of reducing prices, we plan to improve inputs and increase consumer offers."

Sangeeta Talwar, executive director (marketing), Tata Tea Ltd, said, "There are no price reduction plans under consideration on account of very firm raw tea prices."

Amit Buram, vice chairman of Dabur India Ltd, said that the company did not hike prices when input costs were rising. "Hence, there's no question of reducing prices now," he said.

In the final analysis, industry analysts with Sharekhan Securities said, "We expect FMCG companies to introduce measured price cuts/discounts to push volume growth going ahead by passing a portion of reduction in raw material costs to consumers."

Wooing consumers

• HUL to reduce prices Vim Bar and Surf Excel in a few days

• CavinKare is also planning to slash prices from April