Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Personal preferences are riding the wave... - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jan 4, 2000

    Personal preferences are riding the wave...

    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.

    Personal Products Segment

    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?

    • 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.
    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.

    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.



    Equitymaster requests your view! Post a comment on "Personal preferences are riding the wave...". Click here!


    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    P&G: Strong Core Growth (Quarterly Results Update - Detailed)

    Dec 9, 2016

    Procter & Gamble Hygiene and Health Care has announced the first quarter results of the financial year ended June 2017 (1QFY17). The company's sales rose by 12.5%YoY while net profit rose by 50.1% YoY during the quarter.

    Nestle India: Sales Traction From New Products (Quarterly Results Update - Detailed)

    Nov 30, 2016

    Nestle India declared results for the quarter ended September 2016. Here is our analysis of the result.

    GSK Consumer: Price Hike Hurts Volumes (Quarterly Results Update - Detailed)

    Nov 30, 2016

    GSK Consumer Healthcare declared results for the quarter ended September 2016. The revenues dropped by 1.3% during the quarter as compared to a year ago; while the profits declined by 16.6% YoY during the quarter.

    Marico: Margin Expansion Drives Profit Growth (Quarterly Results Update - Detailed)

    Nov 28, 2016

    Marico has reported a flat topline while the bottomline has grown by 18% YoY during the quarter.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)