HUL takes water wars with Eureka to the top

FMCG Powerhouse Targets Rival With New Product

HINDUSTAN Unilever has intensified its long-running battle with Eureka Forbes for domination in the fast-growing water purifier market by pitting a new product against its rival's in the premium category.
   By pitching Pureit Marvella against Aquaguard, the soaps-to-skincare company is hoping to break Eureka Forbes' ironclad grip over the market. HUL has priced Marvella at Rs 6,990, a tad below Aquaguard, and with the same USP as it did in 2004— that it does not run on electricity.
   "The base technology remains the same but it offers key additional features at that price such as a built-in storage for purified water that saves consumers the issue of refilling," says Vikram Surendran, head of Pureit at HUL.
   Eureka Forbes says there will be no knee-jerk reaction. "Comparing Aquaguard and Marvella is like comparing a Honda Accord and Maruti 800," says Marzin Shroff, CEO of direct sales at Eureka Forbes. "What is the difference between a Pureit kept on a stool or mounted on a wall? It is the same technology packaged differently and customers are being charged double the amount."
   HUL and Eureka Forbes have a history of feuds, notably a bitter legal tangle fought in the Bombay High Court. In 2009, HUL moved court against Eureka Forbes, alleging disparagement of Pureit by Aquasure advertisements. HUL alleged that the ads mocked the Pureit mascot and also the taste of water from its purifiers, attributing it to chlorine.
   The case has since been settled out of court.
   Eureka Forbes and HUL apart, Philips, Whirlpool and Kent are also key players in the water purifier market, estimated at more than Rs 1,500 crore and growing at nearly 20% a year. But the huge potential, especially in the mass or entry level, in a market comprising Ultra Violet-based purifiers, reverse osmosis purifiers and storage/resin-based purifiers, has attracted new players. For example, Hitech Plast & Clear Plastics, an Asian Paints offshoot, recently launched an instant purifier, a 650-ml personal water bottle. Likewise, the Tatas launched Swach.
   "The market is huge but it the business is serviceoriented and therefore not just another durable sold over the counter, " said an industry expert. "The money has really to be made in the upper end of the market. The question is whether companies will be able to effectively straddle the entire pyramid both at the front end and service-end."
   HUL says it has a portfolio that spans all price categories — the Pureit Compact at Rs 1,000, Pureit Classic at Rs 2,000 and Autofill at Rs 3,200 and Marvella. The success of Pureit is important to HUL, especially after constant catcalls that it lacks new growth pillars. But experts wonder if the FMCG powerhouse will succeed in selling a consumer durable product. Mr Surendran is unfazed. "We have the product across 15,000 outlets and are quite comfortable with the profile of distributors today. Also, our products does not really have the need for heavy duty after sales maintenance." HUL also has the support of parent Unilever in the water business because it wants to take the model to other markets.
   Even so, beating Eureka Forbes will not be easy. The company was fixated on expensive water purifiers and its direct selling business model was largely urban-focused. But after companies such as HUL launched low-cost products, Eureka Forbes decided a change in strategy was in order. The company recently launched Aquasure targeted at the mass segment and an inexpensive product is in the works. In any case, the company says Marvella does not compare with Aquaguard and could possibly compare with Aquasure. "And Aquasure will compete effectively, unit for unit and rupee for rupee."