Financial Times

New soap from Hemas to compete with Unilever's Lux
The Hemas Holdings Ltd. (HHL) conglomerate has just launched a new adult soap called 'Velvet' that will compete with Unilever's market leader 'Lux'. The entry into the adult soap market had been expected amidst surplus capacity at Hemas' recently set up plant at Welisara, brokers Asia Research said in a market report.

"Velvet is competitively priced at a discount to Unilever's market leader 'Lux', although on par with recent imports," it said. An 80-gramme cake of Velvet soap is priced at Rs 20 while the 85-gramme Lux is Rs 22.

The new soap contains a moisturising vitamin complex and is likely to be primarily targeted at female users. HHL is expected to continue to produce its Rs 18 'Kumarika' soap, with its herbal focus targeting a different market segment.

"Significant marketing communication expenditure is likely to be required for Velvet to gain substantial market share in the highly competitive adult soap market, with several aggressively priced imported soaps entering the market in 2004," Asia Research said.

"While the response of market leader Unilever will have to be monitored, we are optimistic that HHL will leverage its mass market brand development expertise and extensive distribution network to gain a reasonable market share in the medium term."

Hemas has just reported improved net margins in its personal care sector despite a fall in revenue. This was achieved by revising product pricing and also because of lower sales taxes that were not passed on to consumers.

The new soap will also be competing with products from Swadesh Industries, another listed firm, along with those made by Harischandra and Indonesian imports.

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