Holding the Helaimas sachet at nine millilitres when costs rose
In the first half of 2022 the cost of palm-derived surfactants, fragrance and laminate film for Helaimas rose by 27 per cent. In Indonesia the brand sold 61 per cent of its volume as 9 ml shampoo sachets at Rp1,000, and the sachet's contribution margin had fallen from 31 to 14 per cent. Two large competitors had already cut their fills at an unchanged price. Helaimas was 38 per cent of group revenue, and this sachet was its largest single product.
Our chief financial officer, Melvin Gan Kok Leong, and our Indonesian general manager, Bambang Wirawardhana, proposed cutting the fill to 7.5 ml at the same Rp1,000. It would have restored most of the margin within a quarter and almost nobody would have noticed, which was my objection. At 9 ml the sachet already cost 27 per cent more per millilitre than our 170 ml family bottle; at 7.5 ml it would have cost 52 per cent more, paid by the shoppers least able to afford a bottle.
I proposed keeping 9 ml, raising the family bottle's price by 6 per cent, retiring 17 slow-selling variants and cutting S$5.2 million of Embunsari television, with a rule that the sachet's price per millilitre should not exceed the bottle's by more than 30 per cent. Melvin argued, fairly, that I was asking bottle buyers and another brand to pay for a choice made on behalf of sachet buyers. The board approved my plan for twelve months, with a review at six.
Helaimas gross margin fell 3.4 percentage points in 2022, about S$9.6 million less gross profit than the shrink plan would have produced, and bottle volumes fell 6 per cent. Helaimas's value share of Indonesian general trade rose from 11.2 per cent in 2021 to 13.4 per cent by the end of 2023, and a thinner laminate introduced in 2024 restored the sachet's contribution margin to 26 per cent.
The sachet premium now appears for every brand and market in the quarterly board pack, beside gross margin.
I would do two things differently. I would have briefed distributors earlier, before they absorbed shoppers' complaints about competitors' smaller sachets. And I would have set separate caps for markets where sachet and bottle buyers shop in different stores; a single regional number was easier to defend than to apply.