“For advertising spends, new launches and even innovation, we need profitability,” said a senior executive at a multinational consumer goods company. “The margin for us and trade is not very high since they are nascent categories and we are focussing on increasing usage by squeezing margins already. Also, it is still not clear whether all price points will be covered.”
“Prices of adult diapers or feminine hygiene in India are among the lowest in the world. And there is no question of making super-profit in an open market. However, we feel the government must be referring to products and prices that consumers have to pay at institutions and hospitals, where such products can be classified as essentials,” said Kamal Johari, founder of Nobel Hygiene, which is a leader in the adult diaper category with their brand, Friends. “Patients end up paying more due to monopoly of these hospitals which dictate prices by marking them up several times over retail prices.”
Lower prices typically lead to a rise in sales but not necessarily in discretionary segments. About six years ago, the government included condoms in the list of essential medicines and fixed their ceiling price in the Drug Pricing Control Order (DPCO). This in turn led to sales of the contraceptive declining a year ago for the first time as companies lowered marketing spends and halted innovations.