The 5 Reasons for HUL’s Decline in Profit in the Year 2009.

Year 2009 has passed with many ups and downs for FMCG industry. Many products introduced and many re launched by different major companies of India. As the result, there was a mixed reaction of profit and loss of many major companies. HUL, the biggest FMCG company of India has doe good job in the last year but in spite of all of it’s activities, It was unable to prevent the decline in the net profit. It faces a decline of 2.7% in the net profit as compare to the earlier year. HUL’s business grows up in the personal care segment but soaps and detergents registers only a growth level of 1% this a negative side for the company. The food and beverages department able to register a profit level of 13% which is a steady growth for the company.

The main question arise that what is the basic reason for the decline of the profit of the company? Now for that, there are several reasons which can be describe in the following points :-


1. EXTRA EXPENSES ON ADVERTISEMENT :- Advertisement is a major part of the marketing promotion. Every company uses it as a major tool for the success of the product. But there is some limitations and principles of advertisement, which says that the cost of advertisement must e affordable and not higher than normal profit limit. Secondly, it is also said that advertisement should be long time effectible. As compare to the case of HUL, it is lacking in the both the major basic principles of the advertisements. It’s expenses on the adds of some soap , oral care brands like Lifeboy, close up was too much and it adds for the same products more times in a months. Ex. For lifeboy, there are more than five or six different kinds of adds of different models has been introduced. As the result, the present time demand for the product has been little bit increased but it caused the long term loss for the product and company.

2. COUNTER FIGHT BETWEEN OWN PRODUCTS ;- HUL’s Lux brand of soap was earlier known as the luxury and fairness soap and lifeboy was known as the economical soap. But the company promote Lifeboy soap as a luxury soap and makes more expenses on it’s attractive packaging and promotion. This was not happens only with soaps but also it was same story with shampoos and tea. These all caused for poor opportunity cost and less profit of the company in the long time.

3. PERSONAL ETHICS :- Personal ethics is a core for the long term profit of a company. Personal ethics stands for speaking truth, keeping the promise, fulfilling the commitments etc. HUL founds breaching the personal ethics many points in the last year. The major story is related with a promotion champagne of Lifeboy soap. Where the company promotes the brand as a best soap to take protection from swine flue. But in the reality, there was no any major contents include I the Lifeboy soap whch can save a person from Swine Flue. So, such kind of promotion effects the brand image of the company.

4. EXPANSION – Expansion is a need to grow, but at the position where the company is doing as good as captureing the total market of 50% or more, then there is no any need for expansion. The company has adopts a policy of expansion from last number of years. As the result it entered into many new business. Among them, many were loss making, e.g- entering in the coffee business by introducing Bru. Which caused some initial profit , but now, It is effecting the profit of the company.


5.COMPETITION ;- Competition increased in Indian FMCG sector from the last decade. Many MNCs has been already entered in the Indian market and many are waiting for make an entry. These effects the business and going to end the monopoly of only one company in the market. Colgate –Palmolive was the one of the major rival of HUL I the oral care segment . HUL never touches their position from last 20 years. Now other competitors in many different segments like Tata tops in the tea, P&G is giving a great competition in Shampoos and detergents, GCPL in soaps, Emami in fairness cream etc are giving a tough competition to HUL . Also some other FMCG major giants like ITC, Dabur are giving good competition and force it to expand more on promotional activities.

THE TOP 5 SHAMPOOS OF INDIA IN THE YEAR 2009

The shampoo industry with a market size of Rs. 4000 cr has shows a increasing growth in the year ending 2009. Major FMCG companies has done a good business in the shampoos segment. Where Dabur earns 31% growth in the shampoos at the same time P&G shows a growth of 35% in the shampoos. FMCG head HUL shows a good turnover in the shampoos segment but at the same time faces a declining profit as compare to the last year due to the heavy advertising expenses. The brief report of the performance of the shampoos can be given as follows:-

1. Heads & Shoulders :- Heads & Shoulders has done a good business in the year 2009 in both bottle and sachet segments. It is more preferred due to it’s new anti dandruff formula and hair falling control. Presently it has a market share of 38% of all Indian market.


2. Clinic Plus :- After being the No.1 shampoo of India in a raw from last nine years, clinic plus’s monopoly comes to an end. This popular shampoo has looses it’s market position in the some states of India. Presently it having a market share of 29%.of all Indian shampoo market.


3. Pantene :- The world famous brand of P&G is doing it’s best business in India from many years. It is more preferable by both male and female customers. It’s scathe segement is also doing good business.


4. Dabur Vatika :- Vatika is the repudiated name of shampoo brand from the stable of Dabur. It is the major profitable segment of the company in last quarter ended July 2009. It is doing good business in rural and urban India.


5. Garnier :- The world famous brad of Lorel has been able to make an entry in the list of top 5 shampoo brands of India for the last year 2009. It is more preferable in upper middle class and top class peoples.


6. Others :- there are also some other brands like Clinic All Clear, Sehnaaz Hussain, Chick, etc are showing ups and downs in the year 2009.

THE TOP 5 BEAUTY CREAM OF THE YEAR 2009

Personal care segment which consists the 35% of all the FMCG sector of India. It has shown a good growth in the last year. Many of the new products introduced in the market and the existing one has also done a good market . The market leader HUL shows a decreasing growth with a market share of 44.5% which was 55% in the year 2008. A brief overview of all those products can be given as follows :-


1. Fair & Lovely :- Fair & Lovely leads the market with it’s five segments. More than the half of the market of fairness cream has been covered by Fair & Lovely. The Rs.5 sachet of Fair & Lovely has done a good job in the rural and semi urban markets. It’s multivitamin cream has remain No.1 in the third year in a raw.


2. Fairever: – Fairever fairness cream is one of the emerging fairness cream of the year 2009. It done a good business in South India as well as metros and the northern states(Lucknow, Allahabad, Ghaziabad, Varanasi etc,). The unique combination of saffron and milk has made it the beauty secret of millions of beautiful Indian women. Actress Asin has given a new and popular publicity to Fairever. She is the brand ambassador of the company.


3. Emami Malai Kesher Cream :- Emami malai kesher cream has slipped from number 2 to 3 in the year 2009. The company’s pioneer brand in the fairness cream segment ha shown a steady growth in the year 2009.


4. Fair & Handsome :- the No. 1 cream in for the men has done the good business un the year 2009. It is the biggest brand in the fairness cream for the men. The variation in the product line made it more popular. Rs. 5 and Rs. 10 creams are much popular in semi urban and rural markets.


5. Dabur Uveda :- Dabur Uveda has been introduced in the month of July and it has shown a green signal to the company . the brand ambassador Vidya Balan has givesn a good publicity to the brand. It occupies the 5th position in the fairness cream market of India.
COMPANY PRODUCT MARKET SHARE
HUL FAIR & LOVELY 45%
CAVIN CARE FAIREVER 18%
EMAMI MALAI KESHER CREAM 10%
EMAMI FAIR & HANDSOME 7%
DABUR UVEDA 4%
OTHERS 16%

Barista to bring wine to everyone

With Barista Lavazza's deal with Sula Vineyards, it seems plausible that they maybe the ones that will do the most to build interest around wine in India. As covered earlier in Sommelier India, Barista has sought state licenses sell liquor in its coffee shops. Certain outlets like the Defence Colony Barista in Delhi already serve wine. Shiv Singh comments on the Barista evolution.

It was only in September that Barista formalized a deal with Sula Vineyards to supply wine for its coffee shops. At the same time, it also struck a deal with Fosters to serve beer in them as well. It is also experimenting with liqueurs. The liqueur coffee has expresso as its base with a dash of liqueur ranging from Teacher's Scotch whisky, Irish whisky, Baileys Irish cream, rum or vodka and is priced between Rs. 199 to Rs. 299.

Can you imagine a future in which your day time coffee shop turns into a bar in the evening? Or you step into your coffee shop and find people at the next table sniffing wine instead of sipping cappuccinos? Visit the Defence Colony Barista to get a glimpse into this future.

They have had to make changes to the Barista to allow for the serving of alcohol. For starters you cannot see inside the Barista anymore. The glass panes have been glazed. The menu has of course changed and it is interesting to note that with only one wine brand being served the choices are limited. This is a smart, economic move on Barista's part - to only serve one brand and have fewer issues with inventory. And needless to say, Sula Vineyards is not a weak brand by any means - it took home several medals at the recently held Sommelier India Wine Competition.

All in all, the strategy makes sense for Barista - test it out in select outlets to see whether it drives more customers in, keeps them long and especially later into the evenings. On the part of Sula, it gives them a potentially huge distribution outlet in the form of the Barista's across the country and a means to popularize both wine as well as their own brand. I wouldn't be surprised if Grover Vineyards is in discussions with Cafe Coffee Day.

Barista's 2008 revenues were Rs. 150 crore and it is expecting to finish 2009 with Rs 225 crore in revenue. For the next year, the company has a target of Rs 300 crore. It currently enjoys 25 per cent of the coffee chain retail market in India though outlets that serve alcohol will only be a small fraction of those in the short term.

CADBURY DAIRY MILK IN A NEW INTERNATIONAL PACK

Cadbury’s much loved flag-ship brand Cadbury Dairy Milk now comes to its loyal consumers’ in a brand new, premium packaging. The change into a premium, international packaging is the first in 7 years for the biggest chocolate brand in India!

The fine purple and gold packaging portrays the rich and creamy taste of Cadbury chocolate. The smooth and sophisticated eating experience of India’s most loved chocolate brand is creatively conveyed in the new international pack with the gold Cadbury logo.



“The new international packaging while retaining the color purple, a color that has become synonymous with Cadbury, creatively works the other graphic elements. The gold Cadbury Logo embodies the premium and sophisticated eating experience of Dairy Milk , while the real chocolate chunk on the pack enhances its chocolate appeal. The new Dairy Milk logo against the all purple backdrop helps reinstates the goodness of milk in CDM”, said Sanjay Purohit, Executive Director- Marketing , Cadbury India .

The chocolate that has a huge fan base across many countries will now also have a more integrated look and feel. The new design is the international pack sold across the world.

Cadbury rejects Kraft takeover bid

British confectionery group Cadbury today rejected a takeover bid from US giant Kraft Foods, describing the offer as insufficient.

Cadbury management said it was offering shareholders maximum value by keeping the company independent, notably as it was raising its long-term financial targets.
"Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model," said Cadbury chairman Roger Carr in a circular to shareholders.

"Don't let Kraft steal your company with its derisory offer."





Cadbury said it now foresaw organic growth of 5.0 to 7.0 per cent a year, a profit margin of 16-18 per cent by 2013 and double-digit growth in dividends per share starting next year.

Kraft, which has been repeatedly snubbed by Cadbury management, had appealed directly to Cadbury shareholders with details of its offer, now worth about 9.9 billion pounds (11 billion euros, $16.1 billion) in cash and shares, down from an initial 10.2 billion pounds.

Kraft is the world's second biggest snacks group after Nestle. Cadbury is meanwhile the second largest confectionery company behind Mars.

A tie-up between Kraft and Cadbury would merge leading Kraft brands Oreo biscuits and Maxwell House coffee with Cadbury's Dairy Milk chocolate and Trident chewing gum.

UNFRIED CHIPS BY MONACO

Monaco's healthy but tasty route



Parle eyes 25% share in the Rs 6,500 crore branded snacks market, from 7% now

After the price war, snacks makers have made the ‘health’ platform their new battleground. While PepsiCo recently positioned cracker brand Aliva as a health food, Parle Products has gone a step ahead with Monaco Smart Chips, which the company claims, is not fried – a first in the chips segment.
“The idea was to give today’s health-conscious consumers a smart choice – healthy, but tasty,” says Shalin Desai, Senior Brand Manager, Parle Products. “Since no other chips are available in the health segment, Monaco Smart Chip’s brand equity is its differentiation”, Desai adds.
Brand experts are impressed. Harish Bijoor, brand-strategy specialist and CEO, Harish Bijoor Consults Inc, says it’s a clever positioning. While every chips manufacturer is occupying the fun and taste range (Aliva isn’t a chips brand), Monaco is trying to occupy the high-ground of smart-eating.
With the extension of Monaco, one of its strongest and fastest-growing brands in biscuits, to chips, Parle is eyeing a 25 per cent market share (from around 7 per cent now) in the Rs 6,500 crore branded snacks market, which has been growing at 15-20 per cent annually.
Smart Chips is available in four flavours: tangy tomato, crazy chaat, simply salted, and macho masala in Rs 5 and Rs 10 price points.
The company forayed into the non-biscuit snacks with Musst Chips and Musst Stix one and a half years back and competes with market leader Frito-Lay’s (Pepsico subsidiary) Lay’s and ITC’s Bingo. Lay’s leads the pack with 48 per cent market share followed by ITC Bingo’ 13 per cent.
Bijoor says the smart positioning has been reinforced by an equally smart TV commercial showing its brand ambassador Aamir Khan, distributing XXL size T-shirts to people having chips. The underlying message is you become obese if you have unhealthy chips. The ad ends with Khan approaching a smart-looking teenager with the T-shirt, only to find that he is already munching Monaco Smart Chips. The ad ends with a punch line – “Better switch to Smart Chips”.
As a positioning, health isn’t anything new for a foods brand. Even confectionery makers such as Cadbury and Nestle have added chocolates to the growing list of food products promising nutrition that includes biscuits, energy drinks and fast food. Examples: Cadbury’s glucose Perk and Nestle’s Milky bar Choo.
Where Monaco has scored is the first mover advantage in the chips segment. But competitors like Frito-Lay’s are unperturbed. The company says that it has already taken the health route by ensuring that the chips are made from the best quality potatoes which contain zero MSG, are cooked in rice bran oil (40 per cent less saturated fat) and contain zero trans fats.
With ITC’s Bingo also expected to join in soon, the battle for the ‘health’ crown in the chips segment has just begun.
Watch this space

GLOW WITH ASIN CONTEST

HUL LOOSING IT'S SHARES IN LAUNDRY SEGMENT

A recent research note from broking firm Sharekhan Ltd quotes AC Nielsen retail data that shows HUL’s volumes in key categories such as soaps, laundry bars and shampoos have declined in October, by 9.5%, 5.5% and 5.5%, respectively, over the same period last year. Washing powder volumes grew by 7%, however, which is a key positive. Market shares in some categories are improving too. The December quarter’s results will provide some clue of which way its performance is headed, and how much time HUL has before it recovers.
It will be under pressure to deliver—usually it is an outperformer in the Unilever Plc stable. Its parent Unilever went through the same volume decline that it did, but has pulled back, with volumes growing by 3.6% in the September quarter. If the trend in volume declines continues, then HUL’s results in the December quarter may not be all that great. But occasionally, retail sales trend data and company sales data diverge, especially during volatile periods such as the one we are seeing. Investors will hope that the company has better sales growth numbers to report.

Meanwhile, P&G has launched Tide Naturals, which will compete with Rin in the detergent powder segment. As of now, there are no signs that P&G is going to start a bruising price war again. A longer-term competitor is a worry but will not immediately hurt HUL’s growth or margins. A key positive trigger will be improved volume growth, achieved without affecting its operating profit margins.

Emami gets court approval for merging Zandu operations

New Delhi: FMCG major Emami on Friday said that it has got the Kolkata High Court’s approval for merging the operations of Mumbai-based Zandu Pharmaceuticals with it.

The Kolkata-based Emami, which had acquired Zandu Pharmaceuticals last year for around Rs700 crore, said that the high court has approved the company’s scheme of arrangement on 17 November, with effect from 2 December.

“The high court of Kolkata has approved the scheme of arrangement of de-merger / merger of businesses between Emami Ltd, Zandu Pharmaceutical Works Ltd and Emami Infrastructure Ltd,” the company said in a statement.

Under the arrangement, the FMCG business of Zandu comprising all brands and corresponding assets and liabilities would be demerged into Emami Ltd while the realty undertaking of Emami and Zandu’s non-core business, including realty, are demerged into Emami Infrastructure Ltd.

Emami had bought 68.9% stake in Zandu Pharmaceutical and took management control of the latter.

“The acquisition was aimed at achieving synergetic benefits and to leverage on mutual strengths,” it added.

Emami sells personal care brands like Fair and Handsome, Navratna Oil, Boroplus Antiseptic Cream while from the Zandu portfolio, it has Zandu Balm, Menthoplus Balm among others.

NEW CADBRY PERK WITH GLUCOSE

A first for India, Cadbury Perk with Glucose Energy is a new innovation that is aimed to appeal to consumers’ taste buds. Targeted at 14-18 year olds, it is a fun treat which combines energy giving glucose with great chocolate taste.

Since its launch in 1996, Cadbury Perk has been one of Cadbury’s leading brands and a preferred choice for casual snacking with its light chocolate and wafer construct. Over the years, Perk has successfully built a distinct and iconic status for the brand among the youth of India.

Commenting on the launch, Mr. Anand Kripalu, MD, Cadbury India said, “This is the first chocolate in India to contain Glucose. The recipe breakthrough has been made possible by the Cadbury India Science & Technology team.”

The announcer advertisements will be on air from mid-November. Created by Ogilvy & Mather Advertising, it will be centered around the theme of “Naya Perk with Glucose Energy.”

Mr. V. Chandramouli, Executive Director, Strategy, Cadbury India added, “One of the key objectives for the launch is to expand the chocolate category by providing superior value to consumers in the form of taste and price. The added benefit of Glucose, gives consumers more reasons to consume Cadbury Perk. We also want chocolate consumption occasions to be regular amongst non users and thus expand the category.”

With the launch of Perk, Cadbury aims to accelerate market growth by an additional 5% annually. An integrated marketing campaign will be launched in the second week of November to create awareness around the product. The 360-degree marketing communication will encompass TV, Outdoor, tie-ups and sampling activities.

Perk with Glucose Energy consists of crispy wafer enrobed with Cadbury with two pieces in each pack affordably priced at Rs. 2/- for 7.5 gms & Rs.5/- for 21 gms. It will be available at all retail outlets across cities in the country.

NOW BURN WILL BURN INDIA

The good response of Red Bulls and it'e co products in India, now the world's top soft drink company, Coca Cola decides to launch it's premium energy drink, "BURN" in the Indian market."With the launch of Burn, the company is set to further extend its portfolio in the energy drink segment," Coca-Cola said in a statement. Priced at Rs 75 for a 250ml can, Burn is one of the most successful energy drink from the company's global portfolio.

The launch of Burn, it said, would be followed by a large scale below the line marketing activity. As part of the phased roll-out, Burn will be initially available in select premium outlets in three major cities Mumbai, Delhi and Bangalore, the company said.

"Burn is targeted at the trendsetting, socially active and adventurous young adults who require energy to experience life to the fullest," it added. This energy drink has a strong presence in Russia, Ukraine, France, Italy, Great Britain, Austria, Poland, US, Australia and South Africa.

Coca-Cola India, which mostly sells carbonated drinks in the country has various brands like Thumbs up, Sprite, Limca, Fanta, Coca-Cola, Kinley, Georgia Tea & Coffee, Maaza and Minute Maid in its portfolio.