The recent launch of Rin Perfect Shine (RPS) fabric whitener by HUL is likely a case of proactive targeting of potential competition (Ujala of JYL which accounts for 80% of its profits) as most of JYL-Henkel brands compete head-on with HUL, says a Kotak securities report.
RPS has a seemingly superior packaging in a shrink-sleeve versus mould-based packaging of Ujala, it said. The biggest potential worry for JYL is product sampling by HUL, i.e. if RPS is bundled free with Rin detergent powder.
Higher ad spends for JYL is likely and JYL needs to surmount the RPS challenge.
While it appears as a 'normal' new launch by HUL, it is much more than that. HUL comments that this is just another 'category-adjacency' launch (that Rin detergent's proposition is brightness/whiteness and hence it is logical for the brand extension into fabric whitener category).
In our view, the biggest surprise is that HUL has ventured into a greenfield launch in a category which is relatively small in size (Rs 3 bn) and growing at low single digits.
We understand the thought process of the 'new HUL' of targeting entries into various small categories which collectively can provide it the tailwind of growth (essentially categories which are deemed as 'categories of tomorrow' with high growth prospects). Launch of RPS appears to be an exception to this thought process"" the report stated.
HUL may be tackling competition quite proactively accordign to the report. "We highlight that most of the products of Henkel India (now renamed as Jyothy Consumer Products Ltd) are in direct competition with HUL" it said.
Source-: economictimes.indiatimes.com