Hindustan Unilever (HUL) has announced that it will be reducing the prices of Lifebuoy sanitisers, Lifebuoy Liquid Handwash and Domex floor cleaners by 15 per cent. The country's biggest FMCG company has said it's scaling up production to meet the supply-demand arising out of coronavirus outbreak. Sanjiv Mehta, Chairman and Managing Director, HUL said, "In a crisis like this, companies have a big role to play. We are working closely with the governments and our partners to ensure that we overcome this global health crisis together."
The company has said it will donate two crore pieces of Lifebuoy soaps in the next few months to the sections of the society, which need it the most. It will also partner with medical institutions that are providing testing and care facilities to affected people and provide them free supplies of sanitation and hygiene products such as hand sanitisers, bar soaps and floor cleaners. HUL will also donate Rs 10 crore to upgrade the health care facilities in testing centres and hospitals.
The panic around the outbreak of COVID-19 pandemic in India has led a large segment of consumers hoarding basic food items such as milk, curd, rice, atta (flour), oil and lentils, as well as personal care products such as soaps, handwash and sanitisers. One often gets to see empty shelves not just in neighbourhood kirana stores but also in supermarkets. Even e-commerce platforms have been complaining of running out of stocks of necessities, especially products such as handwash and hand sanitisers.
Apart from HUL, other consumer goods manufacturers such as Amul, Godrej and ITC have also increased their production. According to RS Sodhi, MD, Amul, demand for long-shelf-life milk, milk powder and cheese has gone up by 20 per cent over the last two weeks. "Consumers not only are hoarding out of panic, but they are also buying more milk-based products because there is an advisory against consuming eggs and meat. People are substituting it with milk-based protein," says Sodhi. Amul has increased its production by over 20 per cent to meet the increased demand.
Godrej Consumer, which was planning to increase its soap prices due to a 30 per cent increase in prices of raw materials, has now shelved the plan and is instead going all out to increase production and cater to the increased demand. According to Sunil Kataria, CEO (India & SAARC), Godrej Consumer Products, "We have ramped up production of our soaps, Godrej Protekt handwash and sanitisers in our units as well as through our vendor partner units. We are working closely with raw material and packaging material suppliers to facilitate uninterrupted supplies. Our teams are also working round-the-clock to ensure that adequate stocks are available across channels."
Similarly, ITC claims to have doubled production across its food and personal care business to ensure availability. "Given the challenging circumstances, we have redoubled our efforts to ensure an adequate supply of all our FMCG products including Savlon handwash and soaps across all channels. We would like to assure consumers of the availability of products and would like to urge them not to panic in this situation," says an ITC spokesperson. He also added the company has redoubled its efforts to make sure that the various retail channels don't fall short of basic food items such as Aashirvaad Atta.
Will an increase in production and sale of basic food and FMCG products reflect in higher revenue growth for the manufacturers? Not necessarily, say consumer goods and industry experts. Most of these products, according to them, are low margin products, which may ensure volume growth but will not reflect too much in the revenue growth.