FMCG cos go slow on launches despite growth

t a time when growth in consumer products sector is quite upbeat, there have been surprisingly very few brand launches in the personalcare category this year. 

According to a recent FMCG market survey by the UK-based DataMonitor, total new product launches in personal care in the FMCG market dropped to 360 in 2008 as compared to an all-time high of 483 in 2007. In categories like soap, shampoo, skincare and toothpaste, number of product launches have decreased from 144 (2007) to 120 (2008), 67 to 47, 244 to 182 and 28 to 11, respectively. 

Industry officials say the focus has been more on mass-market products in terms of new product launches or even relaunches. 

“Most companies have been unable to reinvent and margins too are thinner owing to competition. Also, new brand launches are much more expensive than launching variants,” said Hoshedar K Press, executive director and president of GCPL. Hindustan Unilever (HUL) too focused on relaunching mass brands like Sunsilk and Ponds, Procter and Gamble’s last big-ticket new product introduction was the launch of Olay in 2007. 

“The growth opportunity in the Indian market is across the value chain of induction, consumption and upgradation. Our portfolio which includes premium brands for the affluent, value-for-money brands for the middle-income consumers and affordable quality products for low-income consumers provide us a well entrenched capability to leverage the opportunity across the pyramid of consumer value chain,” said an HUL spokesperson. 

Comparatively, players like Dabur India and Marico launched a host of mass market products in personal care. 

“In the first six months alone, we have introduced at least 15 new products and variants ranging from a range of Vatika hair products, hard surface cleaners under the Dazzl brand, Gulabari skin care range and Dabur healthcare range. And, most of our new launches are targeted at the mainstream market,” said Dabur India vice-chairman Amit Burman. 

Industry analysts point out that this mirrors the general sentiment in the market. “With most industries reeling under recession and consumers tightening their purse-strings, it just makes better business sense to target the popular price points, a segment that has clearly not witnessed any drop in demand,” said an FMCG analyst.

Unilever copying HUL's project Shakti globally

nglo-Dutch consumer goods major Unilever is exporting Hindustan Unilever’s innovative rural distribution model led by women’s self-helpgroups to several developing world markets. 

Launched in 2001, the initiative, Project Shakti , helped HUL reach the so-called media-dark regions by turning rural women into direct-tohome distributors of its mass-market products. 

With emerging markets contributing roughly 44% to global revenues, Unilever—a Fortune 500 foods, home and personal care product giant with operations in about 100 countries—is betting on Project Shakti to reach to the bottom of the pyramid in Asian, African and Latin American markets. 

The project is being customised and adapted to Sri Lanka, Vietnam and Bangladesh. In Bangladesh and Sri Lanka, it is being promoted as Joyeeta and Saubaghya, respectively. 

The effort is expected to help Unilever tap fresh growth avenues in emerging markets in the face of recessionary trends in the US and Europe. 

The rural micro-enterprise has helped the Rs 13,717-crore Hindustan Unilever to push growth rates in several categories such as personal wash, fabric wash, shampoos, oral care and skin care. Brands like Annapurna, Lux, Lifebuoy, Breeze, Wheel, Fair & Lovely, Lakme, Ponds, Clinic Plus and Pepsodent have sold good numbers in smaller markets, company sources said, Overall, around 50% of HUL’s revenues came from the rural markets in India. 

The project was started in 2001 to empower underprivileged rural women by providingincome-generating opportunities, health and hygiene education. Shakti’s ambit already covers about 15 million rural population. Several rural pockets are populated by less than 2000 individuals but are seen as unreachable and remain untapped by consumer goods makers. 
Rural women are appointed as Vanis (communicators ) and trained to communicate in social forum such as schools and village get-togethers . 

Shakti operates in fifteen states: Andhra Pradesh, Karnataka, Tamil Nadu, Gujarat, Madhya Pradesh, Chattisgarh, Maharashtra, Uttar Pradesh, Punjab, Haryana, Rajasthan, West Bengal , Bihar, Jharkhand and Orissa. 

There are over 45,000 Shakti entrepreneurs covering over 135,000 villages across 15 states. 

Industry officials say the awareness of rural consumers about products and brands is lesser than the urban markets. Also, urban business models are not really successful in tapping the full potential of several small clusters of consumers across remote markets. 

REACHING TO THE BOTTOM 

Project Shakti is a low-cost distribution network HUL launched in 2001 in tie-up with rural women’s self-help groups A typical Shakti entrepreneur gets an income in excess of Rs 1,000 per month Project Shakti serves over 1,35,000 villages across 15 states through more than 45,000 entrepreneurs.

Giving depth to Pond’s

Do consumers really downtrade in times of a slowdown? The makers of Pond’s, Hindustan Unliver’s premium skincare brand, think otherwise. This winter, it has devised a new concept show based on romance with TV channel StarOne to ensure th e brand remains top of mind for its ‘affluent’ set of consumers. Branded as Pond’s Age Miracle Salaam–e-Ishq on Star One, the new show features couples reliving the romance of their relationships. With its new reality show this season, Pond’s is out to capture its association with the essence of romance based on these real life couples.

With continuous investments in the brand, Pond’s is the ‘growth driver’ for Hindustan Unilever Ltd’s (HUL’s) skincare portfolio. While making money at the premium end of the market may take a while, the media spends will continue. As Govind Rajan, General Manager (Skincare), HUL says, “The challenge for us is to figure out what the next growth opportunity is, which is why we have decided to invest ahead of time and be in investment mode.”

For the past two years HUL has made a conscious effort to focus on the premium end of the skincare market, positioning its heritage brand Pond’s as a ‘masstige’ brand. With its two ranges under skin lightening and anti-aging, Pond’s is now geared to aggressively build the category and capture consumers who are willing to upgrade to this segment. “We have decided to amplify on romance with Pond’s. The focus is on the quality of how to reach people rather than the frequency and quantity of reach,” claims Rajan. Considering the slowdown has not affected the top end of the market, Pond’s would continue to lure more consumers into its franchise. Helping it grow the premium category further is its nearest competitor P&G with Olay which is targeting a similar consumer group.

Convinced that the slowdown is least likely to affect the relatively small and nascent premium skincare category, Pond’s is going all out to woo its consumers.

“The slowdown will not immediately impact volumes, in what is anyway a small segment. People who use these products are not facing the heat. In an economic downturn it’s discretionary spending of big ticket items such as holidays which usually get impacted. The premium skincare segment is not even 10 per cent of the face care market today and is the least affected by the slowdown,” elaborates Rajan.

At the same time attractive pricing is being introduced to lure more consumers into sampling the brand. For instance, last year, Pond’s had offered a trial price of Rs 295 (from Rs 595) for its 50 ml Pond’s Age Miracle Cream. It even followed the practice of its nearest competitor Olay by giving out a new jar of cream in exchange for an old one. “In the last two quarters we have not cut prices for Pond’s but we did have a programme for a trial price as the purpose was to get in as many consumers as possible,” says Rajan. In fact, currently that is the main challenge for the brand compared to the rest of the brands in its skincare portfolio. “The challenges faced by Pond’s will be different from the challenges it faced in the past. Getting in as many consumers to try the revolutionary new products under Pond’s is the challenge today. Also, educating consumers on the right regime is another challenge,” says Rajan.

Meanwhile, the rest of HUL’s skincare brands such as Fair & Lovely and Vaseline have been extending their franchise. Vaseline has graduated from being a petroleum jelly to entering the men’s care segment with a range of products. With a 65 per cent share in the body lotion category, Vaseline too has entered the premium segment with a slew of intensive body care moisturisers. “We have kept up the brand salience for Vaseline and the objective is to increase its penetration as the category is growing at 30 per cent,” claims Rajan. Shedding the image it had of being a winter care brand, Vaseline has also launched an aloe vera variant for the summer.

As for HUL’s mass brand of Fair & Lovely, its extension into the premium segment (under the brand of Perfect Radiance) did not work in the past and since then it has gone back to its original positioning. With a 78 per cent share in the fairness cream category, it has held on to its dominant position for the past 25 years with four variants under its fold. Last year HUL re-launched the core Fair & Lovely brand with multivitamins and enhancement will be an ongoing exercise. “The challenge for Fair & Lovely is to be better than today’s product and keep improving it so that consumers continue to bond with the brand,” says Rajan. A possibility is extending its franchise to a cleansing range. “We have to have a portfolio approach with Fair & Lovely and it could go beyond being a single product. After all, Fair & Lovely cannot be expected to do everything,” says Rajan.

Besides, HUL’s acquired brand of Lakme today complements its skincare portfolio with its sun care, cleansing and moisturising range and its ‘cosmetic’ positioning. “Lakme has a heritage as a cosmetic brand and fits into the skincare range with its sun care and moisturising range,” says Rajan

Meanwhile, controlling prices will be an ongoing effort for HUL. “We have the ability to control costs with our scale. At the same time since we have strong brands we have better pricing power,” states Rajan. In fact, HUL believes that as it has these heritage brands in its kitty, consumers would be more acceptable to it commanding a premium compared to the lesser established skincare brands.

At the same time making money at the premium end of the market will take time. “While HUL has taken the onus to grow the premium market, getting returns from the business is going to be a long haul. Profitability will be an issue with its premium skincare range,” say analysts. But the FMCG behemoth believes that making profits will be linked to the rate at which it is able to grow the premium end of the market. “It all depends on the intensity of competition and if you grow the market fast enough, you will start getting returns early,” observes Rajan. Knowing that competition will only increase in the future, HUL is thinking ahead. “We believe the competitive intensity of the market will only increase and that we have to be ready for the next-generation market,” says Rajan. Stepping up media spends and celebrating romance through its new show for Pond’s are attempts to stay ahead of the competition.

Appologies for Break

Dear Readers.

I am Saurabh Doshi. Owner of this blog. I would like to appologise to all the readers as i could not edit new matters on IndiaFMCG as was really busy with some tasks since long. I would definitly try and make it a point that i keep it updated.

Inconvenience regretted.

Regards

Saurabh Doshi