TIMES OF INDIA
SATURDAY, FEBRUARY 21, 2004 04:35:19 PM
by
SUJIT JOHN & DARLINGTON JOSE HECTOR

New FMCG players may ignite the sector

BANGALORE : Walk into a city supermarket and you would see brands from Hindustan Lever (HLL), P&G, Colgate and Godrej still dominate the soaps, detergents and personal products shelves. But if you think these traditional brands are perched comfortably there, you could be wrong.

Pressure is building on them, from a range of upstarts, and one indication of this came earlier this week, when HLL announced a none too impressive financial performance for 2003.

Several marginal players are today thinking big. The Rs 500-crore Anchor group, better known for its exploits in the electrical devices business, is now anchoring itself as a FMCG player. The company, which has built a fairly successful toothpaste brand, launched a talcum powder a few months ago, and will shortly be getting into the highly competitive soaps and shampoo businesses.

Ajanta India , one of the world's largest manufacturers of clocks, recently announced in Bangalore the launch of a range of products including soaps, shampoos, talcum powder, toothpaste, toothbrush, hair oil and shaving cream. The company already has a production facility in Morbi in Gujarat and is now planning another in Himachal Pradesh.

LG (India) Household & Healthcare, part of the South Korean LG group, appears to be preparing to replicate the group's extraordinary success in the consumer durables business in India with its recent launch of as many as 30 products in the oral care, hair care, skin & body care and kids care segments.

Marico has just extended its Parachute hair oil brand to shampoos. The Sahara group is reported to have big plans in FMCG. Bangalore-based nutraceuticals company Sami Labs is preparing to introduce a range of skin care and hair care products.

The list is long, and getting longer. And that despite markets like soaps, detergents, talcum powder and shaving cream stagnating for some time.

Established players are inclined to dismiss the upstarts. "Many have come into the sector in the past and have been forced to leave. People think margins are good in this business and it's easy to build brands. But that isn't so at all," says Hoshedar K. Press, executive director & president of Godrej Consumer Products.

The newer players see it differently. Anchor group CEO Sashi Nair says there is room for players in such seemingly intense markets if one adopted smart strategies. "If you look at the shampoo segment, the competition is very divided. One can pick certain price points, and then compete hard. Same is the case in soaps. There could be 30 different soap brands in the market, but there would still be room for manoeuvring," he says.

Indeed, that's exactly what explains Nirma's and CavinKare's amazing exploits in areas like detergents, shampoos and fairness creams. Both of them came with products with unique value propositions. Anchor's toothpaste success amidst degrowth in the segment owed a great deal to its `vegetarian' toothpaste proposition. Ajanta is looking at a low-price strategy.

Sami Labs' plan is to bring science into cosmetics by providing for clinical documentation and biostandardisation, which would enable exact measurement of impact in biological terms of things like skin lightening and skin/wrinkle conditioning.

Several of the new players also have the advantage of deep pockets and/or established distribution networks.

In sum, the big guns of FMCG have quite a challenge before them. And the consumer looks set to have lots more choice.