Hindustan Unilever’s (HUL’s) efforts to arrest the fall in its market share appears to yield little fruit as the company continues to see share loss across categories barring shampoos, tea and coffee, states a report by brokerage firm Morgan Stanley.
Ironically, this is happening at a time, when the fast moving consumer goods (FMCG) industry faces a revenue recovery, adds the report.
On a year-on-year basis, that is, April 2010 versus April 2009, revenue growth registered in the FMCG industry was over 14 per cent. Month-on-month, that is, April 2010 versus March 2010, revenue growth has been over nine per cent, says the report prepared by analysts Hozefa Topiwalla and Girish Achhipalia.
HUL, in particular according to the report, has lost share in crucial categories such as soaps, laundry, oral care and skin care. Using Nielsen data, the report points out that the loss share in these categories has been both year-on-year and month-on-month respectively. The steepest loss has been in soaps, where year-on-year, the fall in share has been 316 basis points. Month-on-month, in contrast, the fall has been lower at 39 basis points. In laundry, where HUL is waging a pitched battle with rival Procter & Gamble (P&G), the loss in share year-on-year has been 283 basis points, while month-on-month, the loss in share has been 13 basis points.
In oral care, another category, where HUL faces stiff competition from rivals such as Colgate and Dabur, share loss has been 215 basis points year-on-year, says the report, while month-on-month, it has been 43 basis points, the report notes. In skin care, another competitive segment, where HUL has a number of rivals, including P&G, L’Oreal etc, share loss has been 78 basis points year-on-year, while month-on-month it has been 11 basis points.
HUL has some respite though in tea, coffee and shampoos, where there has been a share gain, says the report. In tea, for instance, share gain has been to the tune of 64 basis points month-on-month though year-on-year, there has been a share loss of 141 basis points, it states. Coffee, again, has seen a month-on-month gain of 294 basis points, while year-on-year, the loss in share has been 16 basis points.
Shampoos has been the only category for HUL, says Morgan Stanley, where the company has seen share gain both month-on-month and year-on-year. The gain has been 169 basis points year-on-year, while month-on-month, it has been 55 basis points, respectively.
Most analysts that Business Standard contacted admit that share loss issues are a concern for HUL. “Competitive pressures have increased for HUL in the last few months. This has further intensified post the Jan-March 2010 quarter,” says Anand Shah, senior FMCG analyst at brokerage firm Angel Securities. “This is showing in the April 2010 market share figures,” he says.
What is particularly worrisome for HUL, says Shah, is the performance of ITC over time. “That company is getting strong,” says Shah referring to the Kolkata-based company, whose revenue growth in the month of April 2010 was second only to L’Oreal at 24 per cent. L’Oreal’s revenue growth, for the record, was 26 per cent during the month. HUL’s revenue growth, in contrast, in April 2010, was a mere 4 per cent, in line with the full year ended March 31.
