Introduction:

The major players are : HLL (Hindustan Lever Ltd.), P&G India Ltd., Nirma Ltd, Godrej, etc. The
soaps industry is a mature industry and growing at an average rate of around 5-6% per
annum, by volume and is expected to increase its rate of growth to around 7-8% in the next
couple of years.
Under soaps the industry falls into two segments: Laundry and Toilet soaps. But there we will
concentrate on the brands of toilet soaps as the laundry soaps are preserved for the small scale
industries apart from a few like OK & 501. For toilet soaps the growth rate has been around 4-
5% per annum, the average per capita consumption of toilet soaps is 470 gms a year.
The toilet soaps segment has faced a shortage of industrial oil, the basic raw material. There is
an approximate gap of 2 lakh tonnes. But the gap is now bridged through imports caustic in
excise duty on the soaps it he industry expects the demand to increase and the industry to
grow.
In tune of the increased disposable incomes of both the urban and the rural population the
industry has witnessed aggressive promotion of its premium brands, which has benefited the
industry. This is the fastest growing segment in the toilet soaps, the market of which grew at
15% in the while the larger manufacturers are engaged in major media battles in their bid to
increase market share, the smaller producers are also trying for a price of the cake through
mostly regional marketing efforts.
The measure of quality in toilet soaps is the proportion of TFM. (Total fatty matter) this is the
Essence of the soap. Market source says that the belief on high TFM content related to quality
may have held in the past but today efforts TFM content in soaps, that should nonetheless
wash well and be soft on the skin. This he says is because a lot of TFM gets washed off without
being active and increase that if this were the case why is that premium soaps have TFM
upward of 70%.
Indeed innovation has encompassed product. Forms as well company’s have products that
could once be found only on in hand up squeeze tubes not to mention liquid soaps in pump
raising the consumers outlay on personal hygiene is vast even where usage penetration is high.
In village heat and dust is reason enough to press on. Most soap marketers are busy making
the best, of what they can overall a sharpened consumer focus has meant better corporate
performance.

THE new soap opera

Innovation seems to be the main theme of the Indian soap industry in 2008. With the entry of ITC, the
stage is all set for a major tussle between the new entrant and existing players in the Rs 6,500-crore
branded toilet soaps sector in India. To fight competition, major players Hindustan Unilever Ltd (HUL),
Godrej Consumer Products Ltd (GCPL), Dabur India and Wipro Consumer Care & Lighting are now
drawing up fresh game plans. And the accent is clearly on innovation to gain mind share as well as
market share in this overcrowded category.

At the present, HUL leads the pack with a 53.2% (AC Nielsen, September quarter 2007) market share
and Godrej Consumer Goods is a distant second lead player with a market share of 10%. “Today HUL
and GCPL are the major players in this sector. GCPL is consistently increasing its market share every
year to race ahead, though. Wipro is quite aggressive about its growth plans, too. I am sure ITC’s entry
will certainly change the market dynamics in this sector,” says Akhil Kejriwal, an analyst with Enam
Securities.

Industry analysts point out that ITC with its distribution strength will try to grab market share from existing
players in this sector. Small wonder then that major players are also beefing up their distribution network
and brand building exercises to retain and woo consumers.
What’s going to be Wipro Consumer Care’s core strategy to gain a competitive edge in the branded toilet
soaps sector? Says Vineet Agrawal, president of Wipro Consumer Care, “We have always believed in
giving higher value to customers. We have invested heavily in the soap formulation to give customers a
great bathing experience at reasonable pricing.” He adds, “Santoor is the third largest brand in toilet soap
industry and going ahead we will consolidate out position through Santoor and offer various forms.” The
company has recently introduced Santoor-White to cater to the luxury segment, Glycerin variant to
address extra-moisturising needs during winters, and Santoor- 45 gm (at Rs 6) to address the price
sensitive customer.

As part of its strategy, Wipro Consumer Care & Lighting is strengthening its distribution network to reach
out to a wider target audience. “Our critical priority is to beef up our distribution network in rural markets in
2008. Our sharp focus is on high quality products as well,” says Agrawal.

Last year, Wipro acquired Unza brands, but it is in no hurry to launch it in India. “We are in the process of
doing consumer research in various categories. We have not firmed up our plans as yet,” says Agrawal.

According to Agrawal, the Indian toilet soap industry is growing at approx 3-4% in volume terms and
around 10% in value terms. “The value growth is higher because prices have gone up during the last
year. The input raw material (vegetable oil) cost has gone up by more that 40% last year. We are
expecting vegetable oil prices to go up further. We expect industry to grow by 9-10 % in value terms going
ahead,” he adds.

Market leader HUL is busy chalking out a fresh game plan to sustain its leadership in this sector. “AT HUL
, we will continue to focus on building strong brands. Since we are a market leader in the personal wash
category, competitive growth for us means both expanding the existing market and also growing within
the existing market. We will continue to invest strongly in our brands and this is reflected in our continued
and A&P spending. Also we have strong support in brand activity in terms of relaunches and new
launches,” explains a spokesperson from HUL.

The company’s new launches include Lux Crystal Shine, Lifebuoy Skingaurd and Breeze Morning
Muskan among others. The company is currently beaming a high-voltage advertising campaign featuring
cine star Priyanka Chopra to promote its flagship brand Lux.

Interestingly, the company’s journey in India started with Sunlight soap in 1888. Sunlight was followed
soon after by Lifebuoy in 1895 and other famous brands like Pears and Lux. Currently, Lifebuoy and Lux
are the largest selling toilet soaps in India.

India’s two largest FMCG companies ITC and HUL, which have largely competed in urban India, are now
engaged in market fare in rural India, too. Interestingly, HUL’s Project Shakti (a rural women
entrepreneurship initiative) and ITC Choupal Saagars (rural super stores) not only have the same target
audience but also retail products through rural folks. At the present, HUL’s rural initiative Project Shakti
covers 15 states in India and has over 37,000 Shakti Ammas (women entrepreneurs) reaching 1 lakh
villages. “By the end of 2010, Shakti’s vision is to have 1 lakh Shakti entrepreneurs covering 5,00,000
villages, touching the lives of over 600 million people,” says the HUL spokesperson.

As part of its rural initiative, HUL has kicked off cause-related marketing to promote its brand Lifebuoy.
Lifebuoy has been at the forefront of a sustained direct-contact health education programme aimed at
raising hygiene standards in Indian rural communities. Lifebuoy Swasthya Chetna, the largest hand wash
programme ever to be taken up in India, has touched the lives of over 80 million people in 30,000 villages
across India, explains the company spokesperson. How is the Godrej group planning to sustain its
leading edge in the branded toilet soaps industry? Currently, GCPL is the second lead player in the
industry. Says Group chairman Adi Godrej, “Our core strategy is to continue to increase our market share
in the toilet soaps industry by 1 % per annum. We will employ a lot of tactics to achieve this goal. To
create growth, we are looking at new launches and re-launches.”
In 2008, GCPL is planning to use star endorsers to promote its brands in competitive markets. “We plan
to increase our ad spend by 2% at points of sale. We are also looking at celebrity endorsement route this
year,” he adds.

To take on new as well as old rivals, GCPL is going to rely on superior quality products, according to
Godrej. Elaborating about Godrej’s strategy, HK Press, executive director, GCPL, says that the
company’s prime focus will be on innovation. “We strive to provide innovative and meaningful products at
the right price. We will continue to grow our market share in 2008,” he adds.

Meanwhile, ITC is in the process of rolling out its premium brand Fiama Di Wills soaps across the nation.
In the mass-market segment, the company is currently test marketing its new brand in Andhra Pradesh
and Orissa. “Our aspiration is to be the leader in the personal care sector. With the launch of Superia, we
are present in three segments—super premium, premium and mass-market,” says a spokesperson from
ITC. The company has recently set up a soap manufacturing facility in Uttaranchal.

Dabur India is also planning to strengthen and expand its presence in this sector. Says Sunil Duggal,
chief executive officer, Dabur India, “We are planning to launch a slew of new products in 2008. We are
looking at engaging celebrities including film stars to endorse our soap brands in competitive markets,” he
adds.

According to Kejriwal, the major growth driver in this sector in the year 2008 will be high quality innovative
products that will be launched by the players. “Consumers today look for functional benefits. I think
modern retail format will also play a key role in pumping up volumes,” he elaborates.

What are the key challenges that the industry will face? “Input costs will be the biggest challenge for
companies. Increasing competition will also pose a big challenge for established players," says Kejriwal.

Sharing Kejriwal’s views, Press says the rising input cost poses a major challenge for soap companies in
2008. “Price increase will be indicative of the rising input costs. However, we will have to wait and watch
for the response from the industry,” he says. With the changing complexion of the branded toilet soaps
industry, the sector will witness a lot of action in 2008, predict analysts.