SOAP INDUSTRY ANALYSIS
The origins of personal cleanliness date back to prehistoric times. Since water is essential for life, the earliest people lived near water and knew something about its cleansing properties - at least that it rinsed mud off their hands.
A soap-like material found in clay cylinders during the excavation of ancient Babylon is evidence that soap making was known as early as 2800 B.C. Inscriptions on the cylinders say that fats were boiled with ashes, which is a method of making soap, but do not refer to the purpose of the "soap." Such materials were later used as hair styling aids.
Soap got its name, ...view middle of the document...
1.1 ABOUT THE INDUSTRY:
Soap industry is one of the oldest Fast Moving Consumer Goods (FMCG) industry in India. India is a country with a population of 1,030 million people ,with 98% of household penetration of soaps .
People belonging to different income levels use different brands, which fall under different segments, but all income levels use soaps, making it the second largest category in India. Rural consumers in India constitute 70% of the population. Rural demand is growing, with more and more soap brands being launched in the discount segment targeting the lower socio-economic strata of consumers.
Soap manufacturers originally targeted their products to the lowest income strata in urban as well as rural areas, positioning their brands as a way to remove dirt and clean the body. For some brands, that positioning persists even today with a focus on removal of body odour and keeping the user healthy. Medicated positioning like germ killing and anti-bacterial are marketed to families. However, soap positioning are moving towards skin care as a value-added benefit.
The market is growing at 7% a year. This means that the incremental demand generation is 5% over and above the population growth. With increasing awareness of hygienic standards, the market for the Soaps could grow at a rate higher than 8% annually. Interestingly, 60% of the market is now sourced from the rural sector. This means that the variance between the two segments is not very large. Since upper-end market focus is the urban areas, margins come from the urban sector.
Total annual soap sales by companies marketing their brands at national or state levels is estimated at 14,000 tonnes of a total soap market considered to be about 126,000 tonnes. The main characteristic of the industry is severe competition and high level of brand proliferation.
1.2 SIZE OF THE INDUSTRY:
The Indian Soap Industry includes about 700 companies with combined annual revenue of about $17 billion. Major companies in this industry include divisions of P&G, Unilever, and Nirma. The Indian Soap Industry is highly concentrated with the top 50 companies holding almost 90% of the market. The market size of global soap and detergent market size was estimated to be around 31M tonne in 2004, which is estimated to grow to 33M tonne in the coming years. Toilet soaps account for more than 10% of the total market of soap and detergents. India’s soap market is Rs 41.75 billion. Indian Soap Industry volume is Rs 4,800 crore.
1.3 MAJOR PLAYERS:
In the Indian toilet soaps market, the lead players include:
* Godrej Consumer Products Ltd
* Colgate Palmolive Ltd and
* Wipro Consumer Care
1.4 MARKET SHARE:
In terms of market share for Indian Soap Industry the data indicates that HLL had a market share of 64 % in the soap market, followed by Nirma at 16.8 % and Godrej at 4.4%. Nirma’s market share was in the northern region was 21 %. The largest...