‘HUL will reduce prices by 710%’
GST rate cuts will be passed on to consumers in the form of lower prices or increased grammage, says Mehta
MUMBAI: Hindustan Unilever Ltd, India’s largest consumer packaged goods company, will reduce prices by 7-10% on an average across categories following the reduction in the goods and services tax (GST) from 28% to 18% for categories like detergents, cosmetics, deodorants and packaged foods, CEO Sanjeev Mehta said in an email interview. The impact will be seen across almost 600 of its stock keeping units (SKUs), with some items seeing an almost 20% reduction. Prominent products that will see price reductions include its Fair and Lovely 15 gram pack, from ₹25 to ₹20; Sunsilk Shampoo 340 ml from ₹204 to ₹165 and Wheel 1 kg pack from ₹52 to ₹48. Edited excerpts from the interview:
Will HUL reduce prices in categories where GST has been cut?
The recent rate reductions have come across multiple categories, such as shampoos, detergent powders, cosmetics, instant coffee, skin care, deodorants, dishwash bars and packaged foods. We are committed to ensuring that all benefits to the business in terms of the reduction in GST rates will be passed on to the consumers in the form of lower prices or increased grammage.
By how much and when will these new prices come into effect?
As we pass on GST rate reducAs tions the benefits to consumers across the categories will be in the range of 7-10%. On certain consumer packs, the benefits will be lower and in some others, it will be as high as 20%. Nearly 600 of our stock keeping units (SKUs) are being impacted by MRP reduction/ increase in grammage, consequent to our decision to pass on the benefits of GST rate reduction to buyers. In normal circumstances, changes to a network of this magnitude would run into a few months. However, to ensure that consumers enjoy these benefits at the earliest we have already commenced production of many of these packs. We are discarding our old packing material to ensure that the price changes can be printed on the packs at the production stage itself.
Will you also be reducing prices on the existing inventory?
an immediate measure, to address the stocks with trade, we have advised our modern trade customers to pass on the benefits and you must have seen that many of these have started to land in the market. With reference to general trade, we have asked our distributors to communicate to the trade that the benefits that would be accruing to them during the transition should be passed on to the consumers.
Will you be advertising the new prices?
We will be communicating the benefit to consumers, attributing it to GST. You have already seen the first of our advertisements starting with Bru Gold and we will continue to communicate over the next few weeks as we land the networks to ensure that the consumers are fully aware of the benefits.
While the GST has been reduced, commodity prices are firming up. Will this restrict you from passing on the benefits of reduced GST to consumers?
... For example, crude that was hovering in the $40/barrel range is now close to $60/barrel. We will continue to monitor them and use all available levers such as our portfolio, savings, leverage etc., to manage the business.
However, our immediate priority is to pass on the benefits to the consumers in the form of lower prices or increased grammage.