Presentation Team Member 36 – Nishit Saraya

37- Chetan Sawant

38- Sagar Sawant

39- Vijay Sawant

40 – Vikarant Sawant

Overview of Industry

Size of the Industry

The Indian Soap Industry includes about 700 companies with combined annual revenue of about $17 billion.

Geographical distribution

All the major metropolitan cities

Output per annumIndian per capita consumption of soap is at 460 gms per annum

Market capitalization70% of India's population resides in the rural areas and around 50% of the soaps are sold in the rural markets.

During the British rule the Lever Brothers, England introduced modern soaps by importing and marketing them in the country. The first company created was North West Soap Company, the soap manufacturing plant in India situated in the city of Meerut, in the state of Uttar Pradesh. In 1897, they started marketing cold process

History

soaps. In 1918, Mr. Jamshedji Tata set up India's first indigenous soap manufacturing unit when he purchased the Coconut Oil Mills at Cochin Kerala.

OK Mills crushed and marketed coconut oil for cooking and manufactured crude cold process laundry soaps that were sold locally and It was renamed The Tata Oil Mills Company and its first branded soaps appeared on the market in the early 1930's.

Soap became a necessity for the moneyed class by around 1937. Today with increase in disposable incomes all around the world along with India,

History

growth in rural demand is expected to increase because consumers are moving up towards premium products. However, in the recent past there has not been much change in the volume of premium soaps in proportion to economy soaps, this was due to the increase in prices which has led some consumers to look for cheaper substitutes. The major players in the market for the personal wash (Soap) market are HLL, Norma and P&G.

The toilet soaps market is estimated at 530,000 TPA including small imports where the Hindustan Lever is the market leader. The market has several, leading national and global brands and a large number of small brands. The popular brands include Lifebuoy, Lux, Cinthol, Liril, Rexona, and Nirma. Premium soaps are estimated to have a market volume of about 80,000 tonnes. This translates into a share of about 14 to 15%. However, by value it is as much as 30%.

Soaps are categorized into men's soaps, ladies' soaps and common soaps. There are few specialty soaps like the Glycerine soaps, sandal soaps, specially flavored soaps, medicated soaps and baby soaps. Specialty soaps are high valued which enjoy only a small share of the market in value terms. The market is growing at 7% a year.

Brief Introduction

This means that the incremental demand generation is 5% over and above the population growth. With increasing awareness of hygienic standards, the market for the Soaps could grow at a rate higher than 8% annually. Interestingly, 60% of the market is now sourced from the rural sector. This means that the variance between the two segments is not very large. Since upper-end market focus is the urban areas, margins come from the urban sector.

Soap is a product for many people and the lathering up can be a treasured part of a morning or nightly routine. Whether it might be scented or unscented, in bars, gels, and liquids, soap is a part of our daily lives. In the United States, soap is a $1.390 million (US$) industry with over 50 mass market brands. But in Indian markets the sales potential for soap is only beginning to be realized. At the end of the year 2000, soap was a $1.032 million (US$) business in India.

India is a country with a population of 1,030 million people. With the household penetration of soaps is 98%. People belonging to different income levels use different brands, which fall under different segments, but all income levels use soaps, making it the second largest category in India. Rural consumers in India constitute 70% of the population. Rural demand is growing, with more and more soap brands being launched in the discount segment targeting the lower socio-economic strata of consumers. Soap manufacturers originally targeted their products to the lowest income strata in urban as well as rural areas, positioning their brands as a way to remove dirt and clean the body. For some brands, that positioning persists even today with a focus on removal of body odor and keeping the user healthy. However, soap positionings are moving towards skin care as a value-added benefit.

Soap is primarily targeted towards women, as they are the chief decision-makers in terms of soap purchase and for Medicated positionings like germ killing and anti-bacterial are marketed to families. About 75% of soap can be bought through the different types of outlets.This is the most common source for buying soap, which usually forms a part of the month’s grocery list. Pan-Beedi Shops: These are really small shops, almost like handcarts, and they are primarily set up to dispense cigarettes and chewing tobacco.

Total annual soap sales by companies marketing their brands at national or state levels is estimated at 14,000 tonnes of a total soap market considered to be about 126,000 tonnes.

The size of the Indian detergent market is roughly estimated to be ` 12,000 Cr. Characterized by immense competition and high penetration levels the Indian detergent segment is ruled by players like Hindustan Unilever Limited, Henkel and Proctor & Gamble. As a result of rapid urbanization the demand for better quality household products is constantly on a rise. To cater to this increasing demand of quality washing powders most of the top detergentbrands in India are continually introducing better packaged

detergents that are offering a host of benefits in a single wash. In India HUL holds a 38 per cent market share in the washing powder segment clearly standing as the winner. The other important players in the detergent industry include Surf Excel, Nirma and Sunlight. Top Detergent Brands in India

WheelSurf ExcelSunlightRinWheel

Product and GrowthSoaps

The product categories can be classified into three segments; premium (Lux, Dove), popular (Nirma, Cinthol), and economy (Nirma Bath, Lifebuoy). The price differential between the premium and economy segments is about 2X. The popular and economy segments account for about 4/5ths of the entire market for soaps.

Penetration of toilet soaps is high at 88.6%. However per capita consumption levels remain low India's per capita consumption of soap at 460 gms per annum is lower than that of Brazil at 1,100 gms per annum.

GrowthRural demand growth is expected to occur mainly with consumers moving up towards premium products. But in the past, the proportion of premium soaps to economy soaps has not changed much, in volume terms. This is because as some consumers move up the value chain with increase in disposable incomes, some consumers move down looking for cheaper substitutes as prices move up. This has been the case especially, as growth in soap prices has generally outpaced overall consumer inflation.

Production and Supply ChainRaw Materials80% of the raw materials used in soap are oils. Since animal fats (which are used worldwide and are far superior to vegetable oils and also cost effective) are banned in India, Indian soap manufacturers are forced to use vegetable fats and hence settle for a poorer quality of soap. Various kinds of oils such as rice bran, palm, soyabean, neem, karanji, olive, kopra etc. are used for manufacturing of soap, depending upon its

positioning. The most commonly used oil is rice bran, followed by palm. Other oils are also added but in a small quantity to get different variants of soaps. Rice bran and palm oil are the most common base oil used in nearly all soaps, Apart from the base other additives used are perfumes, colour and other more expensive oils in small quantities. Since these additives are added in small quantities they do not make much difference to the cost structure. Therefore the contribution (excluding packaging cost) on premium soaps vis-à-vis the popular soaps is substantially higher. Distribution network Soaps are available in 5 m retail outlets in India, 3.75 m of which are in the rural areas. Therefore availability of these products is not a problem. 75% of India's population is in the rural areas; hence about 50% of the soaps are sold in the rural markets.

Today in the Indian economy the popular segments are 4/5ths of the entire soaps market. The penetration level of toilet soaps is 88.6%. Indian per capita consumption of soap is at 460 Gms per annum, while in Brazil it is at 1,100 grams per annum. In India, available stores of soaps are five million retail stores, out of which, 3.75 million retail stores are in the rural areas. 70% of India's population resides in the rural areas and around 50% of the soaps are sold in the rural markets.

Market Capitalization

The Indian Soap Industry includes about 700 companies with combined annual revenue of about $17 billion. Major companies in this industry include divisions of P&G, Unilever, and Dial. The Indian Soap Industry is highly concentrated with the top 50 companies holding almost 90% of the market. The market size of global soap and detergent market size was estimated to be around 31M tonne in 2004, which is estimated to grow to 33M tonne in the coming years. Toilet soaps account for more than 10% of the total market of soap and detergents. InAsia, the countries like China and India are showing rapid growth in the toilet soap section. Market share of body wash was

estimated to be around 2% in 2004 and is showing signs of healthy growth in these markets. India’s soap market is Rs 41.75 billion. Indian Soap Industry volume is Rs 4,800-crore. For the purpose of gaining a competitive edge, Indian companies are now relaunching their brands with value-additions to woo consumers across India. For instance, Hindustan Lever Ltd (HLL) has recently launched a host of toilet soap brands which include Lifebuoy, Lux, Breeze and Liril—with value additions. Also is in the process of rolling out ‘Ayush’ ayurvedic soap. The aim is to meet the evolving needs of customers. One of the factors which affect the demand of soaps is the penetration, which the products have in market. In case of soaps this has not been a major issue as the penetration in the rural area is as high as 97% and that for urban area is around 99%. Thus approximately the penetration is around 99% for overall India.

Size of the Industry

In terms of market share for Indian Soap Industry the data indicates that HLL had a market share of 64 % in the soap market, followed by Nirma at 16.8 % and Godrej at 4.4%. Nirma’s market share was in the northern region was 21 %. The largest contributor to the toilet soaps market in Indian market is Hindustan Lever with the total contribution to the economy & enjoys almost a two-thirds share, with the second ranked Nirma Soaps placed at a distantly low share of 16.8%. Lux and Lifebuoy have held the sway of the market for almost fifty years.

Total Contribution to the economy / sales

Top Leading Companies

In the Rs 4,800-crore Indian toilet soaps market, the lead players include: HLL Godrej Consumer Products Ltd Colgate Palmolive Ltd Wipro Consumer Care

In Indian Soap Industry the entry of new players in the 6,500-crore toilet soaps industry is expected to bring about a new twist in the "Indian soap opera". ITC Ltd has started investing in aggressive brand-building and product development projects to promote its brands, Fiama De Wills, Vivel and Superia. Godrej Consumer Products Ltd and Wipro Consumer Care Lighting are established players in the Industry which are beefing up their research projects and advertising plans to take on new rivals. With increasing competition, the Indian Soap Industry is expected to register a healthy growth this fisca. The sector registered a 15% value growth. GCPL is hiking its advertising budget by 20% to gain high visibility for its brands.

Latest developments

Indian Soap Industry has tremendous opportunities in the manufacturing companies of soaps for Graduates and post graduates in the areas of Marketing, Finance, Administration, Advertising and even opportunities for the models to act in ads for the soaps.

Employment opportunities

The Indian Laundry care market is estimated at Rs 92Bn.

Laundry detergents accounts for more than 85% of the total Laundry care market.

CAGR : over 11% between 2008-2011.

(Compounded annual growth rate)

INTRODUCTION

Laundry Care Market

Washing Powder

Detergent Bars

Liquid (New

Entrant)

• 7 million tons market laundry soaps & bars as well as a small amount for oil based laundry soaps.

• 16 million tones market synthetic detergents

• 30% detergent cakes

• 70% detergent powder

DETERGENT CATEGORY

Evolution of the Indian Market

The first companies to manufacture detergents in India were HLL and Swastik. HLL test marketed Surf between 1956 and 1958 and began manufacturing it from 1959. Swastik launched Det, a white detergent powder, in 1957.By 1960, Det had made rapid inroads in eastern India. Surf, a blue detergent powder, became the national market leader with dominant positions in the west, north and south.

In the early 1960s, the total volume of detergents manufactured in India grew from around 1600 tonnes to 8000 tonnes. HLL dominated the market with a share of almost 70 % compared to Det's 25%. In 1966, another player entered the fray. Tata Oil Mills Company (TOMCO)2 launched its detergent powder 'Magic'.

In 1973, TOMCO introduced 'Tata's Tej' in the low-priced segment. TOMCO unveiled another economy detergent powder called OK in 19

DETERGENT CATEGORY

Segmentation of

Detergent Powder Market

Ultra – Premium

- Amway(SA8)

PremiumSurf Automatic,

Ariel Ultramatic,

Comfort fabric softener &

Ezee

Mid – Priced

- Surf Excel Blue, Tide, Rin, Henko

Mass – Market

Wheel, Fena,Nirma

Ghari, Mr. White

MARKET SEGMENTS - INDIA

HUL◦Wheel◦Rin

P&G◦ Tide Natural

NirmaHenkel

◦ Mr. White

KEY PLAYERS

COMPANY PRODUCTS QUANTITY PRICE

DETERGENT CAKE

HUL Rin advance 125,200,250gm 5,10,12rs/-

Rin Super excel 75,125,250,400gm 7,13,25,40rs/-

Wheel green 190,125gm 5,3rs/-

Wheel blue 200,270gm 6,8/-

P&G Tide 250,105, 125gm 17,6,10rs/-

DETERGENT POWDER

HUL Surf excel 200gm, 500gm, 1kg 36,78,152rs/-

surf blue 500gm, 850gm, 1.5kg,

(3kg.100gm+bucket free)

55,82,186,396rs/-

Rin 200 gm, 500gm, 1kg

10,25,50rs/-

Wheel active 635gm,675gm,&1kg

10,20,30rs/-

Wheel gold 300gm ,600gm 15,30rs/-

P&G Tide 170+75gm,500gm+125gm,

1kg+250gm

15,35,70rs/-

Tide natural 250gm,500gm 10,20rs/-

Arial 200gm,500gm,1kg 36,78,152rs/-

Arial fresh 1kg 167/-

Ariel 2in1 oxy 500gm 84/-

Arial Oxy Blue 500gm 100/-

PORTFOLIO OF HUL AND P&G

COMPANY PRODUCTS QUANTITY PRICE

DETERGENT CAKE

NIRMA Super nirma 125,235gm 5,9rs/-

SASA Sasa 190gm 5rs/-

LOCAL BRANDS Power 150gm 5rs/-

Sargam 190gm 5rs/-

VATAN 100-150gm 5rs/- per pc

UTAM 100-150gm 3rs/- per pc

NIMA 100-150gm 5rs/- per pc

AMBER 100-150gm 26rs/- 6 pc

AMAR 100-150gm 30rs/- 6 pc

DOCTOR 100-150gm 30rs/- 6 pc

DETERGENT POWDER

NIRMA Nirma 325gm,650gm 10,20rs/-

Sasa 650gm 20rs/-

HENKEL Henko 400gm,1kg 48,119rs/-

Detergent price list.

COMPANY PRODUCTS

QUANTITY PRICE

LOCAL BRANDS

Hippolin 1kg,2kg 30,60rs/-

Charli 1kg 30rs/-

Ujwal 800gm 20rs/-

Mr.white 4.5kg 220rs/-

Dhara 1kg 30rs/-

Dharti 1kg 29.50rs/-

Dharti super

1kg 23.50rs/-

Yes 600gm,2kg,5kg 20,48,115rs/-

Doctor 800gm 25rs/-

Shilpa 1kg 32rs/-

Detergent price list.

SWOT Analysis

Strengths• Low operational costs• Presence of established distribution networks in both urban and rural areas• Presence of well-known brands in FMCG sector

Weaknesses• Lower scope of investing in technology and achieving economies of scale, especially in small sectors• Low exports levels• These products narrow the scope of FMCG products in rural and semi-urban market.

Opportunities• Untapped rural market• Rising income levels, i.e. increase in purchasing power of consumers• Large domestic market- a population of over one billion.• Export potential• High consumer goods spending

Threats• Removal of import restrictions resulting in replacing of domestic brands• Slowdown in rural demand• Tax and regulatory structure

Hindustan Unilever - SOAP

SOAP BRANDSLUX BREEZE REXONA LIRIL HAMAM LIFEBOY DOVE PEARS

60% Market Share The strategy for 2006-07 would be to

increase the market share from existing 60% to 70%.

Competitors :GodrejSoap: Cinthol , Shikhakai, Evita, Cinthol

Strategies New product offering i.e. Fair & Lovely soap Share went down from 3.6% to 2.4% 2006-

2007

Hindustan Unilever - SOAP MARKET

Market share 2.5% -35%Surf Excel, Rin,WheelCompetitor - P&G - Ariel and

Tide , Nirma STING Policy against Nirma

Hindustan Unilever - DETERGENTS

HUL's products, are distributed through a network of about 7,000 redistribution stockists covering about one million retail outlets.

The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores.

Company provides tailor made services to each of its channel partners.

HUL is using the point of purchase method for much higher level of direct contact, through in-store facilitators, sampling, education and experience.

Hindustan Unilever - Distribution System

The distribution network of HUL is one of the key strengths that help it to supply most products to almost any place in the country from Srinagar to Kanyakumari

This includes, maintaining favorable trade relations, providing innovative incentives to retailers and organizing demand generation activities among a host of other things

Each business of HUL portfolio has customized the network to meet its objectives

There are 35 C&FAs in the country who feed these redistribution stockists regularly. The general trade comprises grocery stores, chemists, wholesale, kiosks and general stores.

Developed customer management and supply chain capabilities for partnering emerging self‐service stores and supermarkets. Around 2,000 suppliers and associates serve HUL’s 40 manufacturing plants which are decentralized across 2 million square miles of territory