Will sanitaryware market see price war?

Will sanitaryware market see price war?

Will sanitaryware market see price war-min

Will sanitaryware market see price war-min
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One of the reasons to go for price cuts is the aggressive marketing strategy displayed by Jaguar in recent months. Jaguar has around 29% market share presently in the organised sanitaryware market and the brand is gaining further popularity, thanks mainly to its aggressive marketing strategy

Sanitaryware segment in ceramics sector is now being closely watched by the people in the building material sector. It is believed that a leading South based sanitaryware maker having presence all over the country cut its price for most of its sanitaryware brands a few weeks ago to push up its top line. This may trigger price cuts in the coming months by other brands too to retain their market share.

One of the reasons to go for price cuts is the aggressive marketing strategy displayed by Jacquar in recent months. Jacquar has around 29% market share presently in the organised sanitaryware market and the brand is gaining further popularity, thanks mainly to its aggressive marketing strategy. Other players in the industry are also alarmed by the decision of Jacquar to double its sanitaryware capacity in the coming months.

Cera recently expanded its sanitaryware capacity by 10%. While Cera has launched mass economy brand for Sanitaryware products – ‘Jeet’ to cater to affordable housing segment, Kajaria and Somany are relying on their outsourced partners for such supplies. Jacquar, HSIL, Roca and CERA are the leading players in Indian sanitaryware market while Kajaria and Somany derive their major revenue from tiles.

Sanitaryware market share in organised sector
     
  Manufacturer Market Share %
1 Jacquar 29
2 HSIL 15
3 CERA 12
4 Roca 12
5 Kohler 8
6 Hafele 5
7 H&R Johnson 5
8 Others 14

 

While CERA has major presence in tier 2-3 cities, Parryware is dominating the Southern market, especially Tamil Nadu. While Western India provides huge market, competition there is also intense, partly due to its proximity to source of supply, that is, Morbi. Northern India is a growing market where sanitaryware manufacturers see huge potential in the coming years.  

The current market size of sanitaryware is around Rs 4,000-4,200cr. Rush to capture market share in sanitaryware segment by the leading manufacturers is not without any reasons. The market is expected to grow at 10-15% CAGR going forward on the back of increasing disposable income, urbanization and evolving preferences. “I believe the sanitary ware segment is likely to be the fastest growing in the building materials space, given government focus on sanitation,” says an analyst tracking the sector.

Further, sanitaryware sector will be one of the major gainers of government’s big push to sanitation, housing and urban development. In fact, NDA government’s Swachh Bharat Abhiyan has played a big role in reviving the ceramics industry of Morbi. Government’s other programs like ‘Housing for all’ and Smart City Mission are also expected to drive up demand for sanitaryware products.

While tiles segment in ceramics is mostly dependent on real estate sector for its growth, faucets’ demand comes from high end segment. Subdued growth in real estate sector has kept the growth rate of tiles at lower levels, though recent big push to affordable housing may revive the market for tiles in the coming years. On the other hand, sanitaryware sector is not entirely dependent upon real estate sector for its sustenance and growth as it derives demand from home improvement and home renovation also. This has helped the sanitaryware segment to register highest growth rate in ceramics sector.

Further, GST implementation continue to impact even after 6 months of operation as government removed check posts without implementation of E-Way bill (tax evasion increased substantially resulting into higher selling by unorganised players). However, this will become part of the history as the government is introducing E-Way Bill from 1st April which will level the playing ground for both unorganised and organised sectors. According to players in the organised sector, eventually market share of unorganised sector, which is almost equal to organised sector, will have to shift to the organised sector. And this is the eventuality, every manufacturer in the organised segment is eyeing and preparing for. In other words, sanitaryware market is expected to see lot of action on price front as everyone will be trying to capture substantial portion of the market share which is up for grabs.

1 Comment

  1. this is an awesome insight about the sanitary ware market. I am sure, the price war will effect and help the building construction industry in a major way and make it affordable pan India

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