Hpl Within the Private Label Industry

Topics: Marketing, Capitalism, Personal care Pages: 2 (406 words) Published: February 18, 2012
1)How would you describe HPL and its position within the private label personal care industry?

To fairly describe Hansson Private Label (HPL) and its position in the certain industry, we firstly review the company’s historical performance. The company’s 5 year financial statements reveal that its growth in revenue and sales are stable. On average, the sales grew around 7.7% annually from 2003 to 2005, outperformed the market sales growth of 1.7%. Almost all indexes such as Gross Profit, EBITA, Net income, Working Capital and Operating cash flow are increasing, showed the maintainable profitability of the company, which are the result of HPL’s conservative management of expansion and the potential increasing market.

From the data given we know that US sales of personal care products totaled $21.6 billion in 2007 ($4 billion of sales in retailer, $2.4 billion in wholesale from the manufacturer). For HPL, the sales got $681 million in 2007. HPL had more than 28% share of $2.4 billion in wholesale from the manufacturer in 2007. Also, HPL secured most major national and regional retailers as customers. We can think HPL’s market position is currently in safe harbor.

But we can estimate that in future years, HPL will inevitably be involved in intense competition. On the one hand, as shown in Exhibit 2&3, the market of personal care products, as well as private label industry, tends to increase steadily but slightly annually. This growth is driven by modest price increase and consumer acceptance. On the other hand, 80,000 new products launched each year. To cling to its market position and further develop to satisfy its mission, HPL may need greater share of the value chain, more shelf space and more products.

In the past decade, HPL focus on manufacturing efficiency and its expansion is conservative. According to the case description, the company was operating on almost full capacity. The conservative expansion also made the company is able to afford more...
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