Jan 4, 2000|
Personal preferences are riding the wave...
Personal Products Segment
India's middle class is becoming more aware of personal care and their preference for branded products is increasing. This is mainly due to the rise in income levels and the impact of the western culture. The personal care products segment is growing at around 30 percent per annum. The main personal care product categories are soaps, shampoos, hair oils, hair colour, skin care products and cosmetics.
Consumer product companies are not complaining as this is good for them. They are flooding the Indian market with new brands, product categories and product ranges. For example a few years ago in the hair care segment Godrej was the only trusted name in the hair dye segment. However with liberalisation and the opening of the economy foreign brand names have swarmed this market. The foreign brands like Loreal, Wella, Clairol have become widely available in the market now. The Indian consumers have too much choice on their plates compared to five years back probably much more than they can handle.
Soaps are the largest segment in the personal care sector. Hindustan Lever Ltd. (HLL) is the market leader in this segment followed by Nirma. Godrej Soaps is the third largest with a market share of 5.2 percent. Besides these two players there are a couple of MNCs who are vying for their share in this category like Reckitt & Coleman, Colgate Palmolive and Henkel Spic.
In the hair colour segment Godrej Soaps has been the undoubted market leader, however with the entry of other foreign brands they can well see their market share decline in future. The hair colour segment has been growing at around 20-25 percent per annum over the last couple of years and it has got a boost from reduction in excise duties over the past few years. As the younger generation is becoming aware of the use of hair colour this segment is on a high growth path.
With new brands being launched fiercely and frequently competition is becoming very aggressive.
It would be interesting to see which of the consumer products companies are able to survive in the long term?
Currently HLL is the market leader in the overall personal products categories and it has a presence in soaps, shampoos, toiletries, cosmetics, hair oils, skin care products and fragrances. It is also the only company which currently fits all the criteria given above. Besides them the other players in this segment are Godrej Soaps, Colgate Palmolive, Marico and Smithkline Consumer.
- those with strong and wide distribution networks who are able to increase their reach in urban areas and also increase penetration in the rural areas. Though rural population may be conservative in their approach to buying things like shampoos and hair dyes, the long term benefits of investing for marketing to them will pay off.
- considering that agriculture income in the country does not come under the tax net currently in years of good agricultural prospects this segment is flooded with funds. If their mental make up shifts even slightly towards personal hygiene and enhancement this will have a large positive impact on the future of the consumer products market.
- the companies having a balanced portfolio with strong brands. This is important as they do not depend totally on a single category of products and have presence across a value chain of products.
- those companies who can afford large advertising budgets as product launches and relaunches are the name of the game.
- the companies which are able to manage cost structures and keep a control of their costs will be in a position to maintain their margins even in difficult times.
- those who can spend on research and development to develop new products and processes, innovations, improve benefits from existing products and optimally use their resources will gain in the long term.
As this segment is governed more by personal preferences it is less affected by the economic scenario and the political instability than other sectors. Also it is not cyclical like many other sectors and enjoys a more stable growth rate. The main change in this sector over the last few years has come from the fact that consumerism has picked up in India. Personal care products are no longer considered a luxury item but have become more of a necessity.
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