The big companies in the FMCG sector are facing a tough time with shrinking category and threat of low-cost competition from regional players.HLL's Surf Excel now costs Rs. 99 per kg, while P&G's Ariel and Tide cost Rs. 99 and Rs. 46 respectively, for a similar sized pack. This is not an advertisement for these companies. This is the bitter reality about the domestic industry top players who are facing a tough time. Despite the initiatives taken by major players, the struggle to be on the fast track continues. This is in contrast to the 1990s' domestic FMCG players who witnessed double-digit growth. It was a period when P/E ratios of 25 companies like HLL, Nestlé, Gillette etc., was considered very low as prices shot up and half of the industrial growth came through price increases. But after 2000, the whole scenario for the industry changed with growth rates going down to low single digits even for companies like HLL which has one million retail outlets across the country.

What worried the big players further was that this was in spite of good monsoons. Categories like soaps, detergents, oral care, skin care, and beverages witnessed negative volume growth during 2003. To survive in such a difficult period, most of the heavyweight companies opted to restructure in order to boost the bottom line. HLL merged its subsidiaries (where there were synergies) with existing businesses. P&G tried to improve the supply chain to pass the benefits to the consumers in the form of reduced prices. Marico reduced its ad-spends, whereas, several other companies launched new products in the market.