HUL to take water purifiers to villages

Friday, September 19, 2008

The country?s largest consumer products company by turnover, Hindustan Unilever Ltd, or HUL, plans to launch Pureit, its water purifier brand, in rural markets by year-end, targeted at relatively well-off village households that are able to afford its recurring cost.

Pureit, which marked the company?s entry into the consumer durables business, was introduced in 2005 in Chennai and then in other southern markets before its national launch early this year.

Once the roll-out of the product in the urban markets is completed, HUL will launch Pureit in rural markets, according to three people familiar with the plan who spoke on condition of anonymity because they aren?t authorized to speak to the media.

?The company is making substantial investments in sales and distribution and advertising and promotions to ramp up its presence in the urban markets,? one of them said. ?For rural markets, it is planning to tie up with various government agencies and non-profit organizations.?

The company plans to add 2,500 more executives over the next nine months to Pureit?s existing sales team of 7,500. Besides traditional advertising such as television commercials, the company is promoting the product through non-traditional channels such as hospitals, clinics, government and non-government bodies and health care agencies.

The water purifying business is a potentially lucrative opportunity in a country where large areas lack access to safe drinking water. About 80% of India?s domestic water supply comes from groundwater, according to the World Bank, in a country where water-related diseases are common.

The market is estimated to be worth around Rs1,000-1,200 crore by annual sales. Competitors like Eureka Forbes Ltd. are also looking at the rural markets to expand. ?The bottom of the pyramid has a huge potential. It is growing around 70-100% year on year,? said Zarine Commissariat, general manager, strategy and business development at Eureka Forbes.

Pureit, priced at Rs1,800, will be pitched at farmers and educated rural families who would be able to bear the recurring cost of the GermKill battery-kit used in the product that typically lasts for about 1,500 litres. The replacement kit is priced at Rs300.

But some analysts say HUL is unlikely to turn a profit from the water-purifying business anytime soon. ?Pureit is currently a very small contributor to HUL?s sales and the business is not likely to break even before the next two to three years,? said Anand Shah, an analyst at Mumbai-based brokerage firm Angel Broking.

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