Detergents and soaps are basically meant for cleaning. These are extremely vital parts of our everyday lives. These help in removing all kinds of impurities and dirt from our bodies as well as clothes and giving us a cleaner and more hygienic life.
The global soap and detergent market is expected to reach USD 207.56 billion by 2025
The soaps used as part of toiletries account for about 10 percent of the total FMCG industry. That’s a 480 billion worth of an industry. The penetration level in this market is of about 98 percent and the growth has been quite modest lately. Once, toilet soaps were just a myth in the rural area. But today, the picture is drastically different. This commodity has effectively tapped the rural as well as the urban areas. As the population and incomes increased, so did the demand for toilet soaps. Also, people’s need to lead a clean and hygienic lifestyle, free from diseases also led to an increase in the demand.
Several brands, both big and small from across the globe are invested in this market. Various products such as Lifebuoy, cinthol, Nirma and Dettol are all over this bandwagon. Of course, the inventory for all respective brands keeps on fluctuating. This market is about to undergo a growth which can be anywhere between 4 percent and 4.5 percent. This is quite modest. But the change of pace in the rural areas is a very interesting shift. The leader in the toilet soap category, HLL enjoys a high market share, followed, a way behind by Godrej HLL enjoys a very clear monopoly in this area. It remains the undefeated king in the toilet soap category.
Detergent powders are made up of some synthetic substances and not the usual metal acid salts that are used In the production of soaps. Detergents are made in a powdered form. These are used for hard cleansing. Petrochemicals are a vital ingredient in the production of detergents. The petrochemical majorly used is called the linear benzene. Soaps usually make huge use of caustic soda.
Detergents, along with a powdered form are also available as bars and washing liquids as well. Bars are usually the most popular goods, with having almost half the market in its bad. Liquids fare at a moderate 12 rate in the market. When it comes to bars, HLL is a major name. Its various brands such as 555, Rin, Shakti and Wheel have captured almost 40 percentage of the market. Other players such as Surf excel, Ariel are also going places every day.
Nirma from Nirma Soaps and Wheel from HLL are the major players in the sub premium segment. They have a small presence from a variety of brands such as tide and chek. Toilet soaps as well as the detergents have some very divergent brands. These are not exactly differentiated because little can be done in order to differentiate one FMCG from another. In a competitive market that is prevailing today it can be said that most of the brands gain their customers by deploying heavy marketing strategies and sparkling media.
Market Size and Share
The global soap and detergent market is expected to reach USD 207.56 billion by 2025, according to a new report by Grand View Research, Inc. The rising disposable income and rapid urbanization in developing countries are expected to increase the demand for soaps and detergents. The rising healthcare awareness coupled with government regulations to maintain hygiene and cleanliness in food processing, product manufacturing, and hotel is expected to drive the market growth.
Soaps and detergents are vital necessities as consumer goods and are used by the large population base. The vendors are expanding their business by building manufacturing facilities in the developing economies such as China and India, which have high potential in terms of revenue. In addition, the escalating penetration of washing machines in the developing countries is projected to drive the market growth. The large chunk of demand for washing machines is from the urban cities, however, the demand for this machine is rising in rural areas as well. Thus, there is sustainable consumption of powder and liquid detergents required for washing machine.
Toilet Soap Industry in India
Today, the FMCG sector is the fourth-largest sector in the Indian economy, with an estimated total market size of around Rs 450 bn. Further, the growth potential for all the FMCG companies is huge, as the per capita consumption of almost all products in the country is amongst the lowest in the world. Further, if these companies can change consumer’s mindset and offer new generation products, they would be able to generate higher growth. For example, Indian consumers used to wear non-branded clothes for years, but today, clothes of different brands are available and the same consumers are willing to pay almost 5 times more for branded quality clothes. It is the quality and innovation of products, which is really driving many sectors. Thus, FMCG companies should use their imagination and respect the tastes of Indian consumers by offering quality products.
Toilet soap industry is one of the oldest Fast Moving Consumer Goods (FMCG) industry in India. It is among the highest penetrated category within FMCG sector reaching an estimated 95% urban and 87% of the rural households. In value terms the industry is worth Rs.45000million and in volume terms it is worth .53 million . The main characteristic of the industry was severe competition and high level of brand proliferation. Toilet soaps account for more than 50% of the Consumer
The industry had witnessed many innovative sales promotion activities in the recent past. Numerous factors were responsible for such a phenomenon. One of the reasons being that the market being sluggish, companies were trying to increase market share in stagnant to declining (volume terms) market in order to retain consumers, to encourage switching, to induce trials and liquidate excessive inventories. Another reason possible was that with the presence of so many brands the competition had increased severally leading to fight for market share and shelf space. Inflationary trend had made both the consumer as well as trade deal prone.
Today big players in Indian bath-soap market are:
- HLL (Hindustan lever limited –a subsidiary of Unilever)
- P&g (Procter and gamble)
Among these players HLL is the biggest player with around 67% of market share. For HLL most of the soap has become a brand they have their own identity.LUX is the most recalled soap in the mind of the consumers.
India is one of the world’s largest producer for a number of FMCG products but its FMCG exports are languishing at around Rs 1,000 crore only. There is significant potential for increasing exports but there are certain factors inhibiting this. Small-scale sector reservations limit ability to invest in technology and quality upgradation to achieve economies of scale. Moreover, lower volume of higher value added products reduce scope for export to developing countries.
INDUSTRY SWOT ANALYSIS
- Well-established distribution network extending to rural areas.
- Strong brands in the FMCG sector.
- Low cost operations
- Low export levels.
- Small scale sector reservations limit ability to invest in technology and achieve economies of scale.
- Several “me-too’’ products.
- Large domestic market.
- Export potential
- Increasing income levels will result in faster revenue growth.
- Tax and regulatory structure
- Slowdown in rural demand