Dabur, Patanjali’s MNC’s tough fight against GST

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Unilever has formed several teams at different levels to compete with the opponents and they have been prepared for the offensive role.

Updated: May 22, 2017, 02.38 PM IST

Amit Mudgil
Multinational companies Colgate-Palmolive and Hindustan Unilever are now getting signs of relief from Dab-Patanjali, which is giving strong competition in the herbal toothpaste segment. The GST Council has announced an 18 per cent tax on tooth paste, which is much lower than the effective tax of 25-26 per cent in the current tax structure. The brokerage believes that if companies move to cut prices on key products, it could help them compete with counterparts like Patanjali and Dabur India.

In a note to clients, brokerage Equus Securities said the new tax structure is positive for Colgate, as it may allow the FMCG firm to reduce the price of tooth paste.

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The brokerage said, “In addition, a major breakthrough for Colgate can be to change its Ayurvedic portfolio to introduce a new product, which is the fastest growing category in the industry today. After the recent sharp price hike, it will be interesting to see how Colgate cuts the price.

The company’s market share in the toothpaste segment declined by 180 basis points during FY17 under the biggest decline in a decade. The reason for the weakness in market share is a dramatic attraction of people towards Ayurveda / herbal products.

In a March quarter earnings call, a spokesperson for Hindustan Unilever said, “We have to do more, and we ourselves are not happy with the performance of the oral care segment.” If we look at the macro category perspective today, the growth is mainly in the natural segment, which now accounts for about a quarter of the market. For us, increasing the share in the natural segment is important. We have introduced three variants with Lever Ayush. And I am very happy that people are liking Lever Ayush. To compete with the opponents, the company has formed several teams at different levels and they have been prepared for an aggressive role.

Topic

Market

earnings

market share

Hindustan UniLever

GST

Financial Services

patanjali

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