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MACRO ENVIRONMENT ANALYSIS:

After having done wonders in the world FMCG market Unilever set up its first Indian subsidiary
Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933)
and United Traders Limited (1935). Hindustan Unilever Limited, the current spearhead of the
FMCG industry was formed in 1956 after merging the above three subsidiaries. Since then it has
carved out a commendable position for itself in the FMCG market with over 37% share in the
Indian detergent market. HUL is a premier player in the Indian Detergents Market with Surf
Excel being one of the biggest shareholders in this segment.

POLITICAL ENVIRONMENT:
HUL was the first player to enter the Indian detergent market by launching ‘Surf’ in 1959. It
largely dominated the Indian market till 1969 when Nirma was launched at nearly one-third the
price of Surf. Since then HUL has been regularly facing stiff competition from other market
players especially the other global FMCG leader P&G. HUL has been really creative and smart in
launching numerous variants of the product in competition to products launched by other
players in the market.
● Tax regulation: The detergent industry has constantly been having faceoffs with the
government regarding the taxes imposed on them. There was a lot of hue and cry from
the soap making industry in 2011 when the value added tax and central excise duty was
imposed (Soap industries want tax reduced, Mar 7, 2011). Despite the constant rifts Surf
has been able to maintain a 13.4% share in the market. With the roll-out of Goods and
Services Tax the tax burden on Surf has increased substantially from 22% to 28% and
the effects of this are yet to be seen. The prices of washing machines is also set to go up
by 4% (Mitra, May 19,2017) which may affect Surf adversely as Surf has many washing
machine specific products.
● Health & Safety: HUL has a vision of an injury free organization and this is clearly
reflected in the continually reducing injury rates, which came down by over 20% in
2016 as compared to 2015. The absolute injury rate in 2016 was less than 0.4 injuries
per million man-hours worked.

ECONOMIC ENVIRONMENT:
The detergent market had a growth rate of 9% in 2016 and is expected to reach ₹205 billion by
the end of 2016. (Laundry Care in India, 2016). Given the great price wars in the detergent
industry and profits being really minimal the huge market basically comes from the large Indian
population and the nature of the product. Surf excel has been able to capitalise on this huge
customer base in India to a really great extent owning the 3​rd place in the detergent market in
India despite being in the slightly premium sector of the detergent industry and focusing on
customers with washing machines. Surf excel has continued to be the most contributing product
for HUL in the last two financial years generating over ₹3,000 Crore and ₹2,000 Crore in 2015 &
2016 respectively. (Annual Report, 2016-2017)

Even in 2009 when there was an economic crisis all over the globe and HUL’s parent company
Unilever was making losses in most of the countries, HUL continued to earn profits in India
(though the rate of profits reduced) which goes on to show the value their products have
created in the hearts of the Indian population. In the more recent past, there has been an
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increase in the purchasing power of the people because of the rapid growth and urbanisation
happening. With more money in the consumers pocket to spend, the company has to make sure
its innovates a lot so as to retain its customers. HUL has been able to do that by introducing
different variants of Surf in the market with higher stress on machine wash and even liquid
detergents as these are the areas where the Indian middle class is entering. This has helped Surf
to be the top performing product for them and constantly give a boost to their economic
scenario.

SOCIAL ENVIRONMENT:
Hindustan Unilever has been one company that has been very active in Corporate Social
Responsibility and with Surf they launched a product where they capitalised on the emotional
connect of mothers with the brand. HUL has been a constant believer in the fact that an
organisation’s worth is also in the service it renders to the community. HUL focuses on hygiene,
nutrition, enhancement of livelihoods, reduction of greenhouse gases and water footprint. Its
work in the social sector has also involved taking care of the education and rehabilitation of
special or underprivileged children. Some of the special initiatives taken by HUL are:
● SHAKTI: Changing Lives in Rural India: Shakti is an initiative that has been taken by
HUL in the rural areas targeting small villages with population of 2000 or less. Women
in rural areas do not have a regular income and hence HUL started a campaign where a
woman from the rural area could buy products at a discount from company
representatives and then sell them at a profit in their villages. This not only gave them a
way to earn but also made them feel self-dependent and gave them a feeling of being
able to contribute to the family. (Annual Report, 2016-2017)
● Special Education and Rehab: HUL has undertaken various initiatives for special
education and rehabilitation of children with challenges. Initiatives like Asha Daan,
Ankur, Kappagam & Anbagam have been aimed at providing children aged between 5-15
years with vocational, educational and recreational activities. With such activities it has
been able to build a special social connect with the Indian masses thus helping brand
and the product to grow.
When HUL came out with Surf they went ahead with the concept of Bucket Wash which
focussed on making washing clothes an easier job for the mothers where they no longer had to
use the soap bar and put greater efforts into cleaning. Surf excel extended its ‘Dirt is Good’ or
‘Daag Acche Hain’ brand philosophy through an activation that helped mothers inculcate the
value of ‘sharing’ in their kids in order to get them ready for life. The brand partnered with
various foundations such as HelpAge India, Smile and others to facilitate the ‘sharing’ of clothes,
crafts, birthdays and a lot more with underprivileged children and elderly people.

TECHNOLOGICAL ENVIRONMENT:
It continuously imports technology from Unilever under the Technical Collaboration Agreement
and the same is fully absorbed. The R&D programmes are focussed on the development of
breakthrough and proprietary technologies with innovative consumer propositions like
Machine wash- top load and front load, Surf excel Matic liquid and Surf excel with increased
stain removal efficacy thereby driving better in-wash, tough and oily stain removal.

HUL continued to lead the digital transformation and leverage IT capabilities to improve their
reach and service to millions. Technology and mobile connectivity are rapidly changing
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consumer behaviour, business processes and demand fulfilment. The e-commerce space is
growing exponentially in India. It is expected that Rural FMCG market size is expected to touch
USD100 billion by 2025. (Annual Report, 2016-2017) HUL has made significant investment in
capability building and an integrated IT platform which will play a leading role in delivering
capabilities that fuel the growth of the e-commerce business.

Technology is also enabling them to better understand their consumers. HUL created a People
Data Centre that analyses trends from social media, consumer care-lines and digital marketing
to turn millions of ‘conversations’ into business decisions that optimise sales and revenue.
Solutions to manage digital content of their products and brands, and to seamlessly publish the
same to their partners have helped improve the quality of consumer engagement online.

Expertise centres with cutting-edge analytics and technology capabilities help them de-link
business growth from transactional volume growth to drive speed, expertise, standardisation
and scale in accounting processes to leverage technology for building business intelligence
thereby, enabling growth and reducing costs through project Livewire and Zero Based
Budgeting (ZBB).

ECOLOGICAL ENVIRONMENT:
The brand as a part of HUL targets to reduce the water, waste and greenhouse gas impact
associated by 50% and will source 100% of its agricultural raw materials for global operations
sustainably by 2020. (Annual Report, 2016-2017)

By leveraging technology to reduce paper consumption, the Company has adopted a web-based
application for transmitting Board / Committee Agenda and Pre-reads in electronic form
through this application, which can be accessed through Browsers or iPads.

The share of renewable energy used is increased through several innovative initiatives such as
converting our agricultural process waste like vegetable oil residue into consumable fuel-biofuel
and biogenic fuel and solar energy. This increase in use of renewable energy and reduction in
energy consumption has helped in reducing the carbon foot-print of our manufacturing
locations by 13% over the previous year. Equally, initiatives such as reuse of treated effluent
water and rain-water utilisation have helped in lowering water consumption across our
factories by 9% over the previous year.

Factories identified newer avenues for re-use and energy recovery from waste, in addition to
the current reduction and recycling streams, within the purview of statutory guidelines of waste
disposals. It maintained the status of ‘zero non-hazardous waste to landfill’ from all factories
and offices. In January 2017, HUL announced a commitment to ensure that all of our plastic
packaging will be fully re-usable, recyclable or compostable by 2025. (Annual Report,
2016-2017)

Water was realized to be a major issue in the future. The key objective in Surf product
development has been to find new methods for helping consumers and customers to be more
environmentally friendly in the way they do their washing and cleaning. So it focused on new
product developments that meet the need for more efficient use of scarce water in the country.
In the dry southern states of Tamil Nadu and Andhra Pradesh, washing clothes accounted for
almost one-quarter of water consumption. People spend more on water for washing than on the
detergents themselves. A new formulation of Hindustan India's Surf Excel detergent for washing
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by hand, which was launched first in the two southern states, saves people two buckets of water
per day by doing fewer rinses, while obtaining the same level of stain removal. "Typically people
keep rinsing till all the lather has gone, which often takes four rinses or four buckets of water,"
said a Unilever official. "We knew we could cut the number of rinses by adding one of a number
of anti-foam ingredients commonly used in washing-machine detergents. This would make the
lather rinse more quickly."

LEGAL ENVIRONMENT:
One of the activities that the Legal function has engaged itself with across the country is in
propagating intellectual property awareness with a view that the menace of counterfeits can be
effectively addressed if enforcement actions are supplemented with building awareness
amongst the consumers of tomorrow.

HUL appointed four retired judges of different High Courts to act as Ombudsman to resolve
customer grievances and disputes. The Company has taken the view that the decisions arrived
at such dispute resolution meetings, while being fully binding on the Company, may not be
binding on its consumers and customers and if they choose to continue with litigation, they are
free to do so.

HUL is a signatory to the United Nations Global Compact Programme and its Environment
Sub-Committee engages periodically to review environmental performance and define the
implementation strategy. There were no non-compliances by the Company and no instances of
penalties and strictures imposed on the Company by the Stock Exchanges or SEBI or any other
statutory authority on any matter related to the capital market during the last three years. The
Company has been impleaded in certain legal cases related to disputes over title to shares
arising in the ordinary course of share transfer operations. However, none of these cases are
material in nature, which may lead to material loss or expenditure to the Company.

The Company had started this unique initiative of organising Alternative Dispute Redressal
meetings wherein aggrieved investors come face to face and get a chance to settle their disputes,
some of which were pending for years. A number of Shareholders have availed the benefit of
this process and the Company through its various initiatives keeps exploring the possibilities of
settling such issues. The process helps the investors in releasing the locked-up investment and
save their time consumed in contesting legal proceedings. The objective of this process is to
facilitate quick resolution of the dispute between the parties.
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MICRO ENVIRONMENT ANALYSIS

Customers​:
A study by Euromonitor (2017) has revealed several laundry habits of Indian consumers that
has predicted an increase in the awareness of powder detergents. With a market share of 37.4%
by value, HUL is the most disruptive player in the detergent segment for its three products –
Wheel, Rin and Surf Excel. With Wheel as the market leader, Surf enjoys the 3​rd highest market
share in terms of value in an extremely competitive environment. Interestingly, none of the
detergent products of HUL have cannibalised each other, thanks to the strategic market
segmentation that separates them. The report also states that price is an extremely important
factor for consumers in rural India.
Its products costing anywhere between Rs. 5 to Rs. 500, Surf Excel has attained a premium
status owing to its quantity-price ratio. This can be clearly inferred from the advertisements of
Surf Excel and its portfolio products that target customers owning washing machines – a niche
segment in the Indian market. Quoting the report, “​According to Euromonitor International’s
Economies and Consumers data, the possession of washing machines increased from 9% in
2015 to 10% in 2016, which has also increased the demand for automatic detergents, which
grew by 10% during the same year” (Euromonitor, 2017) and Surf Excel relies on this very
segment to improve its sales.

Additionally, the brand is positioned to target customers from the upward mobility group that
has higher disposal income in hand. Further, the “Daag ache hai” campaign of Surf Excel looks at
mothers as target customers, while relaying a social message of a child’s overall development
when Surf Excel can take care of the stains.

As Pinto, (2016) reports for the Business line, all this has allowed Surf to become a premium
brand of HUL with sales revenue in excess of Rs 3000 Crore.

Suppliers:
For Hindustan Unilever Ltd. (HUL), Sodium Tri Phosphate or STPP is the most important
ingredient in the making of any of its detergent products. This is no different for Surf Excel in
India, which utilises STPP as the primary ingredient in all its formulas of powder detergents
across the portfolio.
As Manwani (2008) mentions, this explains why HUL decided to produce STPP in an indigenous
plant in 1979. Surf Excel used to source its STPP from this plant, when in 2004 the plant was
sold to Tata Chemicals Limited.
While the details of suppliers aren’t directly available, some inferences can be made from the
annual reports and strategic mergers of Hindustan Unilever Ltd in the past few years.
A report by Pani (2013) mentions that HUL acquired Aquagel Chemicals Pvt Ltd. – a detergent
making company responsible to produce the detergent, Wheel. A spokesperson cites it as a
strategic investment for the organisation.
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Additionally, Vashisti detergents ltd. was acquired by HUL citing another example of the
company’s possible supply market. In fact, the Annual Report of HUL (2015) states that the
company had a stake in Tata Chemicals as recently as 31​st March 2014 which was relinquished,
possibly explaning a change in suppliers of STPP.
The same report also shows an investment made in Hi Tech Surfactants which is a leading
manufacturer and supplier of detergent powder based out of Bulandshahr, Uttar Pradesh.
Further, Unilever has a global program called “Partner to win” that encourages local
manufacturers to partner with them for better revenues and asks for a win-win strategy. All
these speaks about the supply chain model that Hindustan Unilever Ltd. follows to source its
raw materials with strategic investments being made in different companies while appealing to
other manufacturers to continue partnering with them.

Competitors:
If we look at the entire Laundry Care market as a whole, Surf Excel can be said to have multiple
competitors like:

Table 1: LBN Brand Shares of ​Laundry Care​: % Value 2013-2016

Brand Name Company 2013 2014 2015 2016

Ghari RSPL Ltd - 16.3 16.3 16.5

Surf Hindustan 13.3 13.5 13.4 13.4

Unilever Ltd

Tide Procter & 9.9 9.9 9.7 9.4

Gamble Home
Products Ltd

Ariel Procter & 1.5 1.5 1.6 1.6

Gamble Home
Products Ltd
Source: Euromonitor Reports
However, if we have a close look at the pricing and the target group of each of these top brands,
only Ariel comes out to be the relevant market competitor to Surf. Tide belongs to the mid-price
segment (and competes with Rin from HUL) whereas Ghari belongs to the economy and
low-price segment (which competes with Wheel from HUL). Ariel and Surf are the two major
players that compete in the premium Laundry Care category.

Looking at the portfolio of products both these brands offer, and their respective prices

Category N N
o Surf o Ariel
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Price Weight Price Weight

Product Range Range Product Range Range

Classic Surf Excel

Detergen Easy 200g - ₹110-₹5
t 1 Wash ₹25-₹479 4kg 1 Ariel 20 500g - 3kg

Surf Excel
Quick Ariel ₹110-₹3
2 Wash ₹10-₹395 60g - 2kg 2 Colour 80 500g - 2kg

Ariel 24
hours ₹210-₹4
3 Fresh 10 1kg - 2kg

Machine Surf Excel Ariel

Wash Matic Matic
(Top ₹110-₹43 500g - (Top ₹115-₹4
3 Load) 0 2kg 4 Load) 30 500g - 2kg

Surf Excel Ariel

Matic Matic
(Front ₹100-₹46 500g - (Front ₹122-₹4
4 Load) 5 2kg 5 Load) 80 500g - 2kg

Liquid Liquid
Detergen Detergent
t Matic
(Top ₹130-₹24 500ml -
5 Load) 5 1lr

Liquid
Detergent
Matic
(Front
6 Load) ₹140 500ml

Liquid
7 Detergent ₹62 200ml

Soap Surf Excel 100g -

Bars 8 Bar ₹10-₹48 400g
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From this table, we can clearly see that ___

Sources:
1. https://www.surfexcel.in/laundry/detergent.html
2. https://www.ariel.in/en-in/shop/by-needs
3. BigBasket
As an additional way of comparing brands, we can also look at their taglines:
Surf Excel: “Daag Acche Hai”
Ad Summary: A brother purposefully stans
Source: https://www.youtube.com/watch?v=mi4yKET-tBg
Ariel: #ShareTheLoad
Ad Summary
Source: https://www.youtube.com/watch?v=OD0tlRRzS9M
Thus, by using the ads and the product comparison table as reference, we can come up with a
STP framework for both Surf and Ariel, and use that as basis for comparing the competitors:

Market Intermediaries (Retailers):

Since it is not possible to get Surf-specific supply-chain reports, we will make the assumption
that Surf, as a brand, leverages HUL’s extensive distribution network in India. Hence, for the
purpose of this analysis, we would equate HUL’s distribution network to that of Surf, and talk
about how HUL is taking steps to grow its massive channel, especially in the rural areas.
Despite the team’s best efforts, we were not able to procure data related to the distribution of
Surf revenues among small and large retailers in the market. A data of this nature would have
added a lot of context to our analysis. We then would have been able to differentiate what
portion of Surf’s revenues are coming from urban/rural areas and chain-retailers v/s ​kirana
general stores.

Source:​ ​https://www.slideshare.net/9981123735/sales-and-distribution-channel-of-hul

Agarwal (2014) writes that India has 7-8 million small stores selling their products across
600,000 villages and 5,500 towns, out of which HUL had reached 2 million stores across urban
and rural India in 2012. As per company reports, they also increased the number of perfect
stores from 80,000 in 2010 to one million in 2013.

Srivastava (2010) mentions in an article that HUL is taking proactive steps to enhance the rural
distribution market. ​With its Shakti initiative, they equipped local women in very small
villages to act as rural sales executives for its products. HUL empowered underprivileged
women with the term “Shakti Amma” and equipped them with smartphone apps to earn extra
income by contributing to HUL sales.
Here is what a Harvard Business Review article has to say regarding HUL’s rural initiatives:

“Underlying HUL’s success in rural India is a program that requires managers

to spend a month during their first year living in a village. They see how rural
consumers live, and get a first-hand perspective on their needs and
aspirations. That personal experience gives them insights that they could
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never gain from reading reports or conventional market visits. Several HUL
executives told credited their success in part to that program.” (Mahajan,
2016)

Market
Hand washing remained as the most prevalent mode of washing in India, particularly in rural
parts of the country. Hand wash detergents and bar detergents accounted for a combined 74%
value share of laundry care sales in 2016.

According to Euromonitor International’s Economies and Consumers data, the possession of

washing machines increased from 9% in 2015 to 10% in 2016, which has also increased the
demand for automatic detergents, which grew by 10% during the same year.

Hindustan Unilever Ltd led laundry care with a 37% value share in 2016, followed by RSPL Ltd
with a 17% value share. Both companies have strong rural distribution, which helps them to
gain share and maintain their leadership.
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SWOT ANALYSIS:

STRENGTHS
● Market Leader in the premium detergent segment with 37% share by value
As of 2016, the parent company of the surf excel brand, the Unilever group enjoys about 37%
market share by value in laundry care industry comprising of detergent powders, liquids and
bars. The distant second in the list is Rohit Surfactants Pvt Ltd with a market share of 16.5%.
The larger market share in this industry helps Unilever group in having more control over
industry variables. Surf Excel has a market share of 13.4% in the premium detergent segment
which is more than 10 times higher than Ariel (1.6%) which is its direct competitor in this
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segment. This gives Surf Excel a position of advantage over others. ​(Euromonitor report :
http://www.portal.euromonitor.com/portal/analysis/tab)​

● Strong distribution network in rural areas

The HUL group has a vast network of distributors reaching even the nooks and corners of rural
India. As of 2013, HUL had a reach of 1 million perfect stores spread across India. The perfect
stores are the stores where HUL can ensure that right product are available on the shelves and
are properly marketed by retailers. In addition to this HUL has about 65,000 Shakti
entrepreneurs which is a network of rural women who reach out and sell HUL products in
villages with limited reach. Pilot studies conducted in India also show that the perfect stores
grow on average 4% more than other retail outlets. This will in turn fuel the rise in perfect
stores in coming years and giving HUL much of monopoly in deciding shelf preferences when it
comes to retails distribution. ​(Mint Article :
http://www.livemint.com/Companies/ZzGVBz0dRGg83OazY7rYDN/HUL-expands-distribution-network-by-50-in-two-years.html ​)

● Wider portfolio than competitors with complementary product

Surf Excel currently has 11 variants in its portfolio apart from the fabric softener variant. It has
been successful in launching commercially viable products ahead of its main competitors as the
industry landscape kept on changing. It started with Surf bar in 1959 which eventually evolved
into Surf Ultra in 1990, rebranded it as Surf Excel in 1996, as the competition with Ariel gets
serious, after implementing technological breakthroughs in the detergent industry. Surf Excel
Matic was launched in 2002 and the Quickwash was launched soon after in 2004. The most
popular SKUs among the powder variants are half and one kg packets which cater to upper and
upper-middle class section of society. There are 25gm, 50gm and 115 gms sachets as well which
focus on middle and lower-middle class of the society. It also has 200gm and 2kg packet
variants.
(​https://www.hul.co.in/brands/our-brands/surf-excel.html)​

Image source: https://www.hul.co.in/brands/our-brands/surf-excel.html

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● Pricing with respect to competitors

Surf Excel has positioned itself in a slightly lower price bracket than its one of the only main
competitors in premium detergents segment, Ariel. Below image shows comparative price
difference between Surf and Ariel. Such pricing coupled with strong brand positioning has
helped Surf to maintain its position as a market leader.

Image source:
https://image.slidesharecdn.com/detergentwars-150907170144-lva1-app6892/95/detergent-wars-in-india-surf-excel-ariel-nirma-whe
el-tide-ghari-24-638.jpg?cb=1441684597

● Strong brand positioning

The brand positioning and communication is one of the most critical factors for the success of
Surf over the years. The product differentiation compared to other players in the market is not
prominent enough to explain the wide gap in the market share, it is mostly attributed to the
marketing strategies employed by the HUL which has hit a chord with a large population of
India. Their flagship campaign of “Daag Achche Hain” (Stains are good) has been communicating
the same message in different forms over the years. The scale at which it reached the consumers
and earned their loyalty has made it one of the most iconic marketing strategies in the world.

● Entry barriers for new competitors are very high

The entry for any new competitor in premium segment of detergents is fairly challenging as the
brands like Surf and Ariel have already earned customer loyalty to some extent. The barriers are
not as high in mid and lower segments of this industry. Surf having majority of the market share
has the power to prevent any such entries by means of predatory pricing, exclusivity with
retailers, better value propositions etc.

WEAKNESSES:
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● Strong Competitors
Surf Excel has been facing stiff competition mainly from Ariel which is gaining the market
slowly. Ariel has been trying to gain the upper and upper-middle class market by positioning
itself as a more premium brand that surf Excel by charging a small premium compared to Surf
Excel price for similar quantities. HUL faces stiff competition from other brands like Nirma and
RSPL in rural areas which is making it difficult for HUL to acquire customers from rural areas.

● R&D and Innovation

The Surf Excel product has not seen any major technological shifts in improvement in recent
years. A competitor coming up with an innovation in the product offering could seriously
challenge the market leader position of Surf Excel.

● Incomplete control over distribution network

Working with such a vast distribution has its own concerns. A slight disruption in any part of the
supply chain can cause major shifts in the revenue generated in a particular area. That is why it
is necessary to control the supply chain and distribution variables to the greatest extent
possible.

OPPORTUNITIES:

● Tie up with leading washing machine brands to promote Surf Excel

Surf Excel’s only competitor in premium detergent market, Ariel, has a tie up with LG washing
machines. LG recommends Ariel detergent for its washing machines. Surf Excel could explore
the possibility of having similar tie-ups with other leading washing machine manufactures to
boost sales in the premium detergent market.

According to Euromonitor International’s Economies and Consumers data, the possession of

washing machines increased from 9% in 2015 to 10% in 2016, which has also increased the
demand for automatic detergents, which grew by 10% during the same year. In addition, the
number of women in the workforce in India is increasing and consumers are looking for faster
methods of washing clothes with washing machines offering the solution.
Table: Household Possession of Washing Machines 2011-2016

% possession of washing 2011 2012 2013 2014 2015 2016

machine

Washing Machine 7.8 8.2 8.6 8.9 9.3 9.6

Source: Euromonitor International from official statistics, trade associations, trade interviews

There is an opportunity for Surf Excel promote its range of detergents, especially it Surf Excel
Matic Front load variant, which is especially designed to remove stains without generating
excess foam, which is harmful for washing machines.
(Source - https://www.surfexcel.in/laundry/detergent/products/surf-excel-matic-front-load.html)

● Promote Surf Excel Liquid Top and Front Load variants

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The liquid variants of detergent is a small but growing market. The liquid detergent category
grew with a CAGR of 11.3% from 2011-2016 and had a total sale of INR 90.2 crores while the
total sales of powder detergent stood at INR 3596.9 crores.
ref : ​Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews,
trade sources

HUL has an opportunity to promote its liquid variants of detergents. The liquid variant of
detergent has the potential to find flavor in the urban market, given its higher efficacy of stain
removal and reduction in scaling, as the liquid detergent leave no residue ​and thus extends the
life of washing machines.

THREATS:

● Changing lifestyles
With increase in floating population and time constraints in their lives, there is a paradigm shift
from traditional washing machines towards laundry outsourcing. This can lead to decrease in
sales as most of these outsources have their own local products. This gets coupled with the fact
of lower wages in India as compared to many of the developing countries to further aggravate
the loss.

● Threat from organic products/potential price wars

Increasing acceptance of organic competitors like Patanjali have posed a serious threat to
detergents like surf excel. Patanjali products are produced at a much lower per unit cost as
compared to brands like Surf Excel. Being a premium product, surf excel can’t afford a price war
with Patanjali. Also, the Patanjali products are in line with the growing trend of ecological
products in the country. “After the success of the company in beauty and pers​onal care, and
packaged food, Patanjali Ayurved Ltd has entered home ​care by launching detergents. The
company launched its product in HDPE bottles, which is a new and unfamiliar packaging type in
laundry care in India”
(​Source- Euromonitor Analysis Report on - ‘Laundry Care in India’)

● Vulnerable to political & economic environment

Profit margins are less in detergent industry. Economic/political fluctuations in terms of
changing policies, government, taxes etc. can make or mar product’s net profits. Say, as it is
already premium,any price increase strategy to incorporate economic shocks can lead to
decrease in market share. “With the passage of GST on July 1, 2017, putting 28% tax slab on
detergents, HUL has slashed the price of its detergent soap Rin bar of 250 gm to Rs 15 from Rs
18 and increased weight (grammage) of its Surf Excel bar costing Rs 10 to 105 gm from 95 gm at
the same price”
(​Source-:http://www.business-standard.com/article/economy-policy/gst-impact-hul-slashes-prices-of-detergents-soaps-extends-tax-be
nefits-117070200372_1.html)​
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● Dependence on global economic factors

The pricing of the product category is directly linked to input production cost. This in turn gets
affected by economic factors such as crude oil prices. Crude oil and its derived products being an
indispensable part of the production can affect the input cost in terms of increasing/decreasing
cost of raw materials. This change in production cost will get transferred to customers at the
end. ”​Laundry care grew by 9% in current value terms in 2016, which was marginally slower
than 2015’s value growth, due to a decrease in raw material prices of ​laundry care ​such as crude
oil”.
(Source-Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade
interviews, trade sources)

(Laundry Care in India, Euromonitor , March, 2017)

http://www.portal.euromonitor.com/portal/analysis/tab
Automatic detergents grew by 10% in current value terms in 2016 to reach INR36.9 billion.
With an increasing number of washing machines in the country, the demand for automatic
detergents is also increasing.
According to Euromonitor International’s Economies and Consumers data, the possession of
washing machines increased from 9% in 2015 to 10% in 2016, which has also increased the
demand for automatic detergents, which grew by 10% during the same year.
 16

The demand for automatic detergents is expected to grow during the forecast period with
increasing penetration of washing machines in India. Automatic detergents is predicted to grow
by a value CAGR of 4% at constant 2016 prices to reach INR45 billion by 2021.

BIBLIOGRAPHY

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2. Laundry Care in India.​ (2016). Euromonitor Report.
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