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Race For Crowning Glory
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In Mumbai, Vismay Sharma looks forward to December when L'Oreal's R&D centre will come up in the city. It will be the fifth globally, after units in France, the US, Japan and China. "We want to be quick and be close to the market for developing new products," says Sharma, director-consumer products at L'Oreal.
Mittal and Sharma know India's Rs 10,000-crore hair-care market is not a place to skip. At an eighth of the fast-moving consumer goods industry, and a CAGR of 15-20 per cent, it is reason enough to let out a whoop of joy. But look deeper. You have to jostle in shampoos and conditioners, and hair oils have high penetration rates of 88 per cent. Sure, it is lower at 33 per cent in colours and dyes.
Dabur wants to lure sarson and coconut oil users to amla oil. It also sells coconut oil under Vatika to cut into Marico's Parachute. Says Mittal: "While we have a greater canvas, as our approach will also see how we can convert coconut oil users to amla oil." Meanwhile, Emami runs on the back of the Rs 300-crore oil Navratna. It will chart a new course by 2011 end and launch a new range. About two months ago, Bajaj Corporation, the leader in the Rs 350-crore almond hair oil market added a cooling oil, Kailash Parbat.
Emami has 50 per cent market share in the hair-cooling oil segment. Over half of this is urban consumption; 45 per cent rural. It has managed to garner strong brand equity by roping in big names in Bollywood. Says Harsh Agarwal, director, Emami Group: "We have a rural pack priced at Re 1, which is a one-time usage pack." It is slapped on in a big way in Uttar Pradesh, Bihar, Andhra Pradesh and Maharashtra.
On the contrary, Avon operates in the shampoo and styling market, and is staying away from oil. Says Swati Soli Pal, director (marketing) at Avon India: "We see no money making in oil." Meanwhile, L'Oreal seems to have caught the pulse for oil. A year ago, it launched its shampoo with oil under the Garnier brand. Some say it is a marketing gimmick, but for Sharma, the strategy has worked well. The battle is between the top three international brands (HUL, P&G and L'Oreal). "Many regional players have reduced investments. It could be a temporary phase, but seems significant," says Sharma. "The market is no more generic. Niche is becoming common. There are shampoos for hair fall, coloured hair and shampoo with oil," adds Pragya Singh, principal consultant at Technopak.
With the largest share in the market, Hindustan Unilever (HUL) comes with an enviable portfolio. About four years ago, it launched the premium Dove, added to Sunsilk's variations and brought in conditioners in a big way. The company is now eyeing the relatively small (Rs 100-150 crore) market of conditioners. But the plot will change soon. "We are anticipating double digit growth (30-35 per cent) in conditioners driven by urban consumers," says Piyush Jain, general manager of hair care at HUL.
HUL's Clear leads the anti-dandruff category, which has undergone a re-branding exercise. "About 60 per cent of the shampoo-using population suffers from dandruff," says Jain. Clear is in close competition with P&G's Head & Shoulders. But L'Oreal is clear on staying away from the dandruff market. "The population with dandruff problems is small at 28 per cent," says Sharma.
In parallel, HUL's Dove and P&G's Pantene have been vying for market share. This battling leaves little space for domestic brands to flourish in the shampoo market. "The shampoo market is in a state of influx," confesses Mittal. "It is not just consumer end, but also the trade end that is pressured." He explains how wholesale trade is driven by sachets, which comprise of 70 per cent of shampoo sales. "Till three years ago, wholesalers had only 3-4 brands to chose from, against nine today." As a result, the inventory level per brand has declined; so have trade margins. "Some people do not want to make money. They want to focus on market-share first, profits come later," he concludes.
Black And White
As the battle for market share in oils and shampoos heats up, the Rs 1,700-crore hair colour market is set to get a new hue. With the least level of penetration, it is the next growth driver. Market share wars in other segments command huge ad-spends, but fresh investment in hair colours will add momentum to it. "Many of those in their early 20s are colouring their hair. So, it is for both grey coverage and fashion," says Tarun Arora, executive vice-president of marketing at Godrej Consumer Products. Leader Godrej has 29 per cent share in the hair-colour segment brands such as Godrej Expert, Renew, Colour Soft and Kesh Kala. It plans to enter the hair styling or post-pre cleaning segment and continue to extend its range.
L'Oreal has 75 per cent share in the liquid hair colour space. "The biggest challenge is to grow it," says Sharma. "In developed markets, hair colour penetration is 50 per cent. We want to make it more accessible in price, distribution and ease of use." It will soon step into the Rs 10-crore niche of serums, which has annual sales of 10 million units. Paras Pharma's Livon tops in serums. Bajaj is considering entering the hair colours market. It will launch a mid-market product by end of this year. So is Emami. It has started test-marketing two new products. "This could be a new brand all together or a brand extension," says Agarwal.
(This story was published in Businessworld Issue Dated 05-09-2011)