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Procter & Gamble - Facing tough time

May 20, 2000

Some MNCs in India have set up 100% subsidiaries. This has become the cause of concern for their Indian counterparts, as new product launches take place through these subsidiaries. P&G Hygiene & Healthcare Ltd. (PGHH) is one such company which is facing a threat from its parent's 100% subsidiary P&G Home Products (PGHP). In the past few years, new product introductions from parentís product basket have been made through its 100% subsidiary. PGHP's present product portfolio consists of Ariel, Pantene, Head & Shoulder range of shampoos, Pringles, Camay and Gain Supersoaker detergent. On the other hand PGHH's product portfolio includes only two brands Whisper and Vicks. These two brands are facing stiff competition from the lower priced products and are suffering from the counterfeit products in the market.

Recently the parent has launched its world famous detergent brand Tide in India through its 100% subsidiary PGHP. It is P&G's largest brand with an annual turnover over $3 bn. The brand is targeted at the quality conscious consumers and offered at a comparative discounted price as compared to Leverís Surf and PGHP's Ariel. In the Rs 15 bn Indian detergent market Ariel enjoys the market share of 8%. Introduction of Tide might impact Ariel's sales growth.

Nevertheless, PGHH's bottomline continues to grow as a result of cost control initiatives taken by it and premium pricing of its products. However in the near future the company is likely to face tough competition not only from domestic companies but also from international players. As with the removal of quantitative restrictions easy imports of low priced products in different categories is likely to affect the revenue growth of Indian companies. To sustain in the scenario of intensifying competition, PGHH may have to launch new product in other categories to diversify the risk of being dependent on two brands.

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