Despite a contraction in categories such as soaps, Godrej Consumer Products Ltd (GCPL) is set to increase prices, while relying more on consumer promotions to stimulate demand.
“Global commodity prices and rupee movements will ensure that there is price increase, but it would be lesser than before,” said Adi Godrej, Chairman.
Though there has been an improvement in margins due to a recent reduction in import duty on raw materials used in soaps, the FMCG company has said it may not be able to pass on the benefit to the consumer by lowering prices.
“We will definitely not be taking down prices,” said Godrej. He remains confident that demand for consumer goods would bounce back when the economy improves. “The feel good factor has returned after the Budget. We expect demand for all products to rise with better GDP growth in the second half of the year,” he told
“Rural growth will be better than urban growth. We are increasing direct reach and the number of SKUs (stock keeping units) for this market,” said Godrej. Incidentally, the company’s popular soap brand, Godrej No. 1, suffered the most during the quarter, with declining volume growth.
Improve soaps portfolio“Smaller soap players have not done well, and we are taking steps to improve the soaps portfolio, where category dynamics have hurt the Godrej No. 1. There will be tactical measures taken, with compelling consumer propositions and campaigns to reinforce the brand,” said Vivek Gambhir, Managing Director, GCPL, during an analyst meet.
Besides, delayed monsoons have affected the household insecticide category, where GCPL is the leader with brands such as Good Knight and Hit.
“When it does not rain, mosquito infestation comes down. This has affected our household insecticide sales, which grew at 9 per cent during the (June) quarter,” said Gambhir.
GCPL is now focussing on the mass premium category with new brands such as Protekt to get better margins. Protekt has expanded its range from hand sanitisers and hand washes to products such as anti-mosquito sprays.