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Washing powder war hits local brand

The fierce competition in the washing powder sector has negatively impacted on the washing powder manufacturer.photo by Simphiwe Mbokazi 453

The fierce competition in the washing powder sector has negatively impacted on the washing powder manufacturer.photo by Simphiwe Mbokazi 453

Published Mar 27, 2014

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Johannesburg - As the price war in washing powder and liquid soap continues to benefit consumers, manufacturers have to absorb production costs and fight for shelf space.

Consumers had enjoyed low prices on washing powder for more than eight months, local producer Bliss Chemicals, which makes Maq washing powder, said yesterday.

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The washing powder and liquid soap landscape in South Africa has changed dramatically over the past three years.

Once dominated by Unilever brands such as Omo, Surf, Skip and Sunlight, the market for laundry detergents has been shaken up by the entrance of Maq, Procter & Gamble’s Ariel product as well as no-name house brands.

Price tracking website retailpricewatch.co.za records the price of 1kg of washing powder as R26.99 for Sunlight, R22.99 for Maq, R31.99 for Omo and R31.99 for Ariel.

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The arrival of new brands had increased competition for shelf space, Pick n Pay’s head of groceries and perishables, Brian Austin, confirmed.

“This is good for our customers as our buyers are in a position to negotiate robustly with suppliers in order to offer the best possible price and widest range possible,” he said.

There were often special offers on washing powders and liquid detergents. “Total volumes in this segment are trading up, with a lot of brand competitiveness,” he added.

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In its most recent laundry care report, global market research organisation Euromonitor predicted that Unilever, which has enjoyed a large share of the South African market for more than a century, would lose ground to new brands in the detergent sector. The report was released in August last year and looked at trends between 2011 and 2012.

The value of the laundry care market in South Africa reached R9.1 billion in 2012.

It in its prospects insight for 2013, Euromonitor said there was expected to be growing competition in laundry care.

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It said: “Unilever saw little challenge to its dominance.

“However, the entry of Ariel in the first half of 2013 is expected to dramatically change the competitive environment.”

Euromonitor predicted a 9 percent constant value unit price decline in hand wash detergents in the forecast period.

Elsewhere, market data show Sunlight’s volume share in washing powder fell from 45.5 percent in July 2012 to 41.1 percent in June last year.

In May last year, Ariel held 6 percent of the market, which rose to 8.5 percent in June.

Maq came onto the market more than six years ago. It had a volume share of 7.5 percent in July 2012, which increased to 8.7 percent by June 2013.

Bliss Chemicals said it had to fight for shelf space but was holding its own in view of the activity from multinationals.

It said its value share in the hand washing powder market was about 11 percent.

“Maq washing powder welcomes competitors. However, it is concerned about the devaluation of the category and unrealistic prices in the market.”

Bliss Chemicals added that local producers felt the pressure of low prices when competing with imported products.

“All prices of washing powder have decreased over the past eight months due to aggressive activity in the washing powder market,” it said.

Unilever said the arrival of other brands in the market had provided it with an opportunity to strengthen its brands. The Anglo-Dutch firm’s Omo brand turns 50 years old this year.

Unilever did not agree that developments in the laundry care sector should be viewed as “a price war”.

It saw the activity as an opportunity for its brands to get stronger.

“This is the nature of the free market space we operate in. We are unable to divulge our market share at this stage.”

Jean Pierre Verster, an analyst at 36One Asset Management, said yesterday that Maq shook up the market with its aggressive entry in 2008 with the help of Industrial Development Corporation funding.

In the past year, Ariel had shaken it up further.

He believed that before the entry of these two brands the washing powder market was a “bit cozy” and was dominated by Unilever brands.

Verster said while heightened competition was good for consumers, it was putting pressure on producers’ margins. - Business Report

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