HLL, P&G to end bruising war, up prices

After a spate of hurting price cuts in 2004, FMCG rivals Hindustan Lever and Procter & Gamble are planning to raise the prices of some key detergent brands.

Hindustan Lever is planning to raise the prices of Surf Excel and Rin, while Procter & Gamble would raise the prices of Ariel and Tide by about 5 per cent from March.

The extent of Lever's price hike could not be ascertained, but sources said it would be nominal and in line with competition.

Rising raw material prices and transportation costs has forced consumer goods companies to review their pricing strategy, said an analyst tracking with the consumer goods sector.

A Hindustan Lever spokesperson said: "Pricing in our company is determined by several factors including market forces, product standing and cost of formulation and packaging and we are engaged in this evolution."

A Procter & Gamble spokesperson said, "In keeping with rising raw material costs that have led to inflationary pressures, prices of Ariel and Tide large packs will be increased marginally in the range of 5 per cent effective early March. The superior quality and grammage per pack will remain the same."

However, the prices of 1kg of Ariel and 200gm pack of Tide as well as sachets of both the brands will remain unchanged.

Surf Excel, Lever's best selling brand, is currently priced at Rs 99, while Rin costs Rs 42 per kg. Last year Lever had hiked the price of Surf Excel Quick Wash sachet by 50 paise, taking its price to Rs 2. Last year, the Ahmedabad based Nirma has increased the price of its Nirma brand by about 10 per cent.

Analysts expect that other companies like Henkel Spic and Jyothi Laboratories will also follow suit.

According to them, the quantum of price reduction undertaken by companies last year, was in the range of 25 to 50 per cent and the current move of price hike, due to rising costs, just neutralises the actual price increase. The price cuts has led to an improvement in the Rs 4,000 crore plus detergents category.