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Insecticides: Operation ‘hit’ - Views on News from Equitymaster
 
 
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  • Nov 24, 2001

    Insecticides: Operation ‘hit’

    The Rs 6 bn household insecticide industry can be classified as two sub segments. One segment is the insect repellents, which comprise mats, coils, vapourizers, lotions and creams. The other segment are the insect killers comprising aerosols, oil based sprays and baits, and chalks.

    The industry has recorded rapid growth over the last few years (12% growth over FY00), but it still has a lot of potential. Recent studies by ORG-MARG show that while 95% of households in India have an insect problem, household insecticides penetration is only 16.5%. India’s per capita usage of household insecticide is even lower than smaller countries like Malaysia, Sri Lanka or Thailand. While around 84% of the total size of the market is urban in nature, the urban penetration is only 42.2% as of December 1999. The rural market penetration is even paltrier at 6.9%.

    Industry players
    Company Presence Prominent Brands
    Godrej Sara Lee Ltd All segments Good knight, Jet, Hit, Hexit & Banish
    Reckitt & Coleman Coils, Mats, Vapourizer and Aerosol Mortein
    Bayer Aerosol, Spray, Mat Baygon
    Bombay Chemicals ltd Mosquito Coils Tortoise
    Karamchand Industries Vaporiser All Out

    In the late 1970s, a few small players began extending the household insecticides market, the principal among them being the mosquito coil sellers. The ‘Tortoise’ brand of coils emerged and so did some other brands of a few small players, which began to create a niche market by targeting only mosquitoes. The success of Tortoise coils owed to two factors. Firstly though Baygon could clinically kill mosquitoes, Bayer had never used its head start in the household insecticides market to exploit its strengths as an all-purpose insect killer. Also, coils were much easier to use than the oil-based Baygon.

    There are a limited number of players in the organized sector. Other than three multinationals i.e. Reckitt & Colman (Mortien), Bayer (Baygon) and Lever Johnson (manufacturers of Raid brand of aersols) most other companies are privately held and small in size. For example, Karamchand Appliances (manufacturers of ‘All out’ brand of liquid vapourizers) and Bombay Chemicals (manufacturers of Tortoise brand of coils),

    The industry was traditionally mat or coil dominated, but the entry of MNCs like Reckitt & Colman, Bayer and Lever Johnson (Raid) with their international brands has given Indians a taste of the different variants of household insecticides. Increased competition has led to greater advertising spends and hence, increased consumer awareness and market size. As a result of all these new product variants, the consumption of mats is on the decline.

    The industry is strongly marketing-driven. Entrants in the last few years, like Godrej Sara Lee, can be credited with creating the domestic household insecticides industry from scratch through aggressive marketing and advertising. In fact, prior to 1984 when the company introduced electronic mats, the number of pest-control products itself in the market were limited.

    Market pie
    Category Rs (m) % share
    Mats 1,640 28%
    Coils 2,280 40%
    Vapourizers 480 8%
    Creams 150 3%
    Mat machines 170 3%
    Vapourizer machines 190 3%
    Baits 220 4%
    Oil Based Sprays 250 4%
    Aerosols 390 7%
    TOTAL 5,760 100%
    * 1999 market share figures
    Source: ORG

    In the mats segment, Godrej Sara Lee’s brands Goodknight, Jet and Banish together dominate 64% market share. Mortien heads the coils segment with a 34% market share, followed by Godrej Sara Lee at 26%. In the vapourizers segment, Karamchand Industries’ ‘All Out’ holds the major of the market with a 67% market share. And in the Aerosols segment, Godrej and Bayer are slugging it out, though Godrej till now has the upper hand.

    The next few years are likely to see a feverish pitch being made by these players not only to increase their respective market shares but also to increase the market size. For the consumers it is good news, as greater competition has always resulted in reasonable prices and good quality products for them.

     

     

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