The evolving Indian hair care industry - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

The evolving Indian hair care industry

Apr 12, 2007

Indians have evolved from the 'champi' times, wherein hair oil was considered to be the only product meant for hair care. Today, there are a plethora of options available from shampoos and conditioners to hair dyes and post wash products. In this article we focus on the shampoo segment, which is considered to be one of the fastest growing segment in the hair care industry. The India shampoo industry is estimated at Rs 14 bn and is growing at an average rate of 20% per annum. According to AC Nielsen, shampoo is one of the fastest growing categories within FMCG sector and is expected to grow at 25% per annum in the coming years.

Segmentation: The shampoo industry is segmented on benefit platforms: cosmetic (shine, health and strength), anti dandruff (AD) and herbal. 20% of the total shampoo market is accounted by the AD shampoos. The AD segment is the fastest growing segment, growing at 10% to 12 % every year

Usage: The frequency of shampoo usage is very low in India. Most consumers use shampoo only once or twice in a week. In many cases, these products are used on special occasions such as weddings, parties etc. About 50% of consumers use ordinary toilet soaps to wash their hair. About 15% of consumers use toilet soaps as well as shampoo for cleaning their hair. Also 70% of the total shampoo sales are through sachet sales. HLL has higher stakes in the rural market with an 80% share. The bottle sales are popular in the northern region where 50% of the shampoo bottles are sold.

From a penetration level of 13% in 2000, now almost a third of the country's rural population uses shampoo with penetration levels zooming to 32% in 2005. While the north and west zones have tripled in penetration, the south and east zones have doubled during the period between the years 2000 to 2005

After a sober growth in 2004 due to the downturn of the FMCG sector, shampoo sector saw strong growth in the next two years due to the introduction of sachets and a surge in rural demand. The overall shampoo market, which sees annual volume sales of approximately 63,000 tonnes, saw rural offtake grow by 40% last year, while urban demand grew half that at 21%.

Market players: HLL is the undisputed leader from the early 1990s with brands like Sunsilk, Clinic All Clear and Clinic Plus. P & G entered India in Nov 1995, with the world's largest selling brand - Pantene. It also launched Head &Shoulders, which is the leading AD shampoo. Amongst other players are Dabur, CavinKare and Ayur.

Opportunity: Penetration of shampoo is very low in India. The average per-capita consumption of shampoo in India is very low at approximately 13 ml and many people in rural India still use toilet soaps. People still perceive shampoo as high end product in the rural areas. This provides a huge opportunity to the players. The huge size of the untapped market leads to a great potential for the existing players.

Percapita consumption (ml)
Thailand 330
Indonesia 160
India 13

India is and will remain for some time one of the youngest countries in the world. Currently there is a population of 163 m teen in India. Approximately half of the 1 bn plus population is under the age of 20, which is one of the largest consumer of hair care products. This provides huge market for the shampoo players. Also, with the increasing income levels of the middle class population, the usage of shampoos has increased.

Despite its undisputed potential, the rapid expansion of the shampoo market was interrupted in 1999. Overall growth rates in the market slowed to 1.7% in 1999, from 16% the previous year. Lack of innovation was the major reason for slowdown. The perception that shampoos contain harsh chemicals that could damage hair, high price and the view that the shampoo is more of a glamour product rather than a hygiene product led to lower sales. The players came out with the idea of smaller packs, which were a success. Also, products like anti dandruff started getting attention and became the fastest growing category. Players like Dabur and Ayush came up with herbal shampoos.

However in recent times, the value-added shampoo segment is getting quite crowded, with a range of pharmaceutical and cosmetics companies launching specialised products. Godrej Soaps has leveraged its dominance of the hair colour market to launch Godrej Colourgloss shampoo, for users with coloured hair, while pharma companies (including Johnson & Johnson) have launched medicated anti-dandruff shampoos (which will probably carry higher credibility with buyers).

Going forward, by 2015, the under 20 crowd will make up 55% of all Indians providing a huge opportunity to players in this sector. Further, there is potential for converting users of toilet soaps and occasional users. With increasing awareness and advertising campaigns, the overall penetration of shampoos in India is likely to multiply manifold in the next two to three years.

Equitymaster requests your view! Post a comment on "The evolving Indian hair care industry". Click here!

  

More Views on News

What Happens if ITC Hives off ITC Infotech? (Views On News)

Nov 20, 2021

The cigarette to hotel conglomerate is reportedly mulling the demerger of its software business at a valuation of around Rs 250 bn.

What Sparked an 8% Rally in ITC Shares Today? (Views On News)

Sep 16, 2021

ITC did not participate in the rally after the second wave and continued to underperform its peers. Is this about to change?

HUL's Marketcap Tops Rs 6 Tn. Key Factors Driving the Stock (Views On News)

Aug 21, 2021

HUL became the fifth Indian company to achieve the milestone of a Rs 6-tn market capitalisation.

Adani Wilmar IPO to Hit the Market Soon. Should you Apply? (Views On News)

Nov 29, 2021

The parent company of the brand Fortune is set to raise Rs 45 bn from the market.

Key Points to Know Before Applying to Dodla Dairy's Public Issue (Views On News)

Jun 14, 2021

What you should know before applying to Dodla Dairy's IPO.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

Don't Sell these Stocks if the Market Falls (Profit Hunter)

Nov 17, 2021

These are the 3 types of stocks that you should not sell in a market crash.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE FMCG


Nov 29, 2021 (Close)

S&P BSE FMCG 5-YR ANALYSIS

COMPARE COMPANY

MARKET STATS