18 Media 20 March 2008
INDIA’S FMCG BRANDS READY
TO MOVE INTO THE FAST LANE
FMCG companies are fighting to stand out amid the clutter of a massively reinvigorated consumer market, reports Ashley Coutinho
he US recession may have
T put the breaks on India’s eco-
nomic engine,but there is an-
other growth story in the
country that is beginning to
pick up steam. After a long
lull, the FMCG sector is making a
comeback. Changing spending habits
and rising rural incomes are driving
the sector forward, opening new op-
portunities for both local and multi-
national companies.
In the first 10 months of 2007, there
were 251 product launches, including
28 new brands, compared with 191 for
the same period of 2006. And while
snacks and foodstuffs remain the cate-
gory leaders, the recent upturn in the
FMCG sector can in part be account-
ed for by the increased outlay on
health and beauty products, particu-
larly in urban markets.
“Indian consumers are getting more
demanding and hybrid in their con-
sumption patterns,” says Kai Boris
Bendix, managing director of Nivea
India. “They may want the cheapest
atta and rice, but don’t mind splurging
on muesli and cosmetics.”
This marks a distinct shift from pre-
vious spending. The growth of health
products in India was particularly flat
in the first half of this decade as people
busied themselves purchasing big-
ticket items such as mobiles and mo-
torbikes. But now that many con-
sumers have already upgraded, their
income is being directed towards
pampering themselves.
Entering new FMCG territory: how India’s brands are diversifying well-loved favourites to keep consumers interested
Horlicks
Horlicks has been positioned for many years in India as a
‘nourishing family drink’. In an effort to stimulate growth
and strengthen leadership in the health food drink category,
GSK Consumer Healthcare launched new flavours that
included Chocolate and Toffee, in
addition to the more traditional
Classic.The drink’s new
variants were demonstrated
through the ‘Apang opang
jhapang’ campaign, which talked
directly to children rather than to
their mothers.The company has
most recently introduced
Women’s Horlicks, with the
tag-line ‘Your Body Needs
You Too’, urging women in
India to take care of their
nutritional needs.
20 March 2008 Media 19
“Those FMCG categories that en- IMRB. Total FMCG spend in rural This strategy focuses on educating Emami, argues that the urban market
“Those FMCG
able achievement and lifestyle look
set to thrive in 2008, while those that
offer traditional, basic needs of hy-
giene and protection will face pres-
sure,”says Shripad Nadkarni,director
of consultancy MarketGate. India’s
FMCG market is under-penetrated in
these categories,Nadkarni argues,giv-
ing ample scope for the introduction
categories that
enable
achievement
and lifestyle look
areas grew at 25 per cent last year com-
pared with 2003, as opposed to 16 per
cent for urban markets in the same pe-
riod, although the average spends are
still lower than the urban figures.“The
per capita income growth in India is
driving up consumer spends in rural
areas as well as urban,”says Shah.
Poor infrastructure and limited
retailers who serve as the mouthpiece
for the brand, which works well in an
environment where the majority of
consumers purchase according to
price rather than brand. Reckitt
Benckiser has been following a similar
line, educating retailers on how its
long-duration Mortein mosquito coils
can help prevent and save on costs to
will continue to dominate over the
next eight to 10 years. However, if
growth continues at current levels, it
may only be a matter of time until the
rural consumer gains parity with its
urban equivalent.
New Players
But even as the rural and urban con-
sumer markets expand, competition
of new products.
Anand Shah,an FMCG research an-
set to thrive media reach have in the past been
major impediments in rural India, but
treat malaria.
Others companies are using social
remains fierce, with MNCs like
Unilever and Procter & Gamble fac-
alyst at Angel Broking, says most in 2008 ” as these improve, companies will get initiatives to make inroads. ITC’s ing the heat from local challengers.
FMCG companies are responding to more aggressive, says Saugata Gupta, e-Choupal initiative,for example,is an The clutter in the crowded FMCG
the new demand by concentrating on CEO of consumer products at cosmet- online service that primarily tells space has further intensified with
developing a big theme and building a ics company Marico. farmers the price at which ITC will companies such as ITC, Beiersdorf
portfolio around it. FMCG marketers are already busy buy soya or wheat that day. However, and L’Oréal upping the ante. L’Oréal
Nestlé, for example, has identified devising new ways to reach the rural it also doubles up as a distribution net- recorded 40 per cent sales growth in
‘health and wellness’ as its focus area, markets.According to Raj Kumar Jha, work through which the company can 2007, while Beiersdorf, which entered
while local FMCG company Dabur is national director of knowledge at sell its products to the farmers. ITC India only two years ago,has spread its
positioning itself around ayurvedic (a Xpanse Asia,the rural division of Star- anticipates the network will cover reach to 150 cities and increased its
traditional Indian system of health- com MediaVest Group, companies over 100,000 villages by 2012, repre- product list to 44.
care), natural and herbal products.At are relying less on outdoor advertising senting over 15 per cent of rural India. According to ACNielsen, Beiers-
the higher price end, companies are and have turned to either radio or TV Likewise, Hindustan Unilever’s Pro- dorf’s Nivea brand has already be-
leveraging health and wellness trends and one-to-one contact programmes ject Shakti, under which the ‘Fair & come number one in the men’s
by focusing on providing ‘experien- in rural areas. Lovely Vani’ programme is run,offers whitening category and number two
tial’ and ‘higher order’ benefits rather For instance, ‘Fair & Lovely Vani’, a range of mass-market products to in deodorants.“It will be easier for us
than purely functional ones. the rural marketing programme for self-help groups — local women to adapt to the evolving consumer and
Hindustan Unilever’s whitening trained in the basics of enterprise new market realities,since we carry no
Rural demand brand Fair & Lovely,aims to empower management. Armed with micro- traditional baggage or mindset,” says
Changing urban purchasing prefer- rural women to earn a livelihood, credit, these women become direct- Bendix.
ences, however, only partly account while at the same time improve the to-home distributors in rural markets. Meanwhile, domestic conglomerate
for the rise in FMCG sales.Potentially distribution and reach of its product. According to Hindustan Unilever,the ITC, which until five years ago prima-
more significant is the growing rural After identifying villages for activa- Shakti model creates a win-win part- rily focused on selling cigarettes, has going overboard in spending market-
market. The estimated number of tion,the programme informs villagers nership between the product and the diversified into shampoos and soaps, ing money to buy market share and is
households using FMCG products in about the company’s product through consumer, building a self-sustaining targeting both the premium and mass using its distribution clout, thanks to
rural India has grown from 131 million contests, paper chart presentations, cycle of growth for all. markets. It is also slated to enter the the surplus cash it generates through
in 2004 to 140 million in 2007, accord- live product demonstrations and Despite the increase in rural spend- hand wash and deodorants categories. its cigarette business.
ing to market research company usage basics. ing,N Venkat,CEO of cosmetic group Shah says ITC has not been afraid of “While other companies have to
focus on margins and profitability,
ITC is ready to bleed,” says Shah.
Even so, industry players believe ITC
is spending disproportionately and a
Tata Tea Parachute Advansed Fiama Di Wills key issue for it will be sustainability.
Traditional tea producer Tata Tea entered the wellness Marico’s Parachute Advansed brand launched the Tobacco and FMCG giant ITC entered the premium personal care category in With a market that up until now has
platform last year with the launch of Tata Tea Life.The ‘Gorgeous Hamesha’ campaign to establish itself as a the second half of last year with the launch of the Fiama Di Wills shampoo relied heavily on product extensions,
product contains herbal variants like Brahmi, beauty brand in 2007.The company went on to brand.The new product is in effect an extension of ITC’s super premium future success could depend on the
Tulsi, Cardamom and Mint, and is push its health and wellness credentials even personal care brand Essenza Di Wills, launched in 2005 but available only in ability to build new brands. “Once
aimed at health-conscious youth. further with the launch of the ‘One-Hour Champi’ ITC hotels and Wills Lifestyle stores. Fiama Di Wills was the first ITC personal you saturate the market or leverage
The brand has also introduced the campaign, which plays on the art of care brand to target the mass retail market.The shampoo the potential of extension, then what
do you do?” asks Shah, adding that
Tetley Green Tea range with the aim
of widening its consumer base.Tata
ayurvedic head massage (champi)
to drive the use of hot oil as a
was positioned as a ‘gentle care shampoo’
under the tagline ‘Beautiful You.Today. “While other overusing extensions can impact the
has further targeted a new youth
market with its 360-degree ‘social
critical part of the hair care
regimen.The company has
Tomorrow’.The company has
since released a range of companies have brand perception and dilute brand
equity.
awakening’ campaign ‘Jaago re’,
which provides a platform for
backed the champi platform
through a number of product
shower gels and soaps
under the Fiama Di Wills
to focus on With consumer wallets under pres-
sure from various other sectors,
discussion of social issues.The
company has also announced a
and marketing innovations, most
notably by introducing its branded
brand, as well as a lower price-
bracket shampoo and soap
margins and FMCG companies will need to create
compelling roles for their brands, be-
sponsorship tie-up with UK football
team Arsenal to start a football
massager device.The latest offering
from the Parachute Advansed brand —
brand, Superia. Last month, ITC
expanded its personal care portfolio
profitability, yond just functionality of product and
memorable advertising campaigns.“If
tournament and coaching programme Hot Champi — is a hair oil warmer that delivers an even further by launching the Vivel Di ITC is ready to you don’t command rich mind-space,
brands will be pushed into the com-
for children aged 10 to 15 years. instant hot oil massage. Wills brand in the India market.
bleed” modity space,”says Nadkarni.
18 Media 20 March 2008
INDIA’S FMCG BRANDS READY
TO MOVE INTO THE FAST LANE
FMCG companies are fighting to stand out amid the clutter of a massively reinvigorated consumer market, reports Ashley Coutinho
he US recession may have
T put the breaks on India’s eco-
nomic engine,but there is an-
other growth story in the
country that is beginning to
pick up steam. After a long
lull, the FMCG sector is making a
comeback. Changing spending habits
and rising rural incomes are driving
the sector forward, opening new op-
portunities for both local and multi-
national companies.
In the first 10 months of 2007, there
were 251 product launches, including
28 new brands, compared with 191 for
the same period of 2006. And while
snacks and foodstuffs remain the cate-
gory leaders, the recent upturn in the
FMCG sector can in part be account-
ed for by the increased outlay on
health and beauty products, particu-
larly in urban markets.
“Indian consumers are getting more
demanding and hybrid in their con-
sumption patterns,” says Kai Boris
Bendix, managing director of Nivea
India. “They may want the cheapest
atta and rice, but don’t mind splurging
on muesli and cosmetics.”
This marks a distinct shift from pre-
vious spending. The growth of health
products in India was particularly flat
in the first half of this decade as people
busied themselves purchasing big-
ticket items such as mobiles and mo-
torbikes. But now that many con-
sumers have already upgraded, their
income is being directed towards
pampering themselves.
Entering new FMCG territory: how India’s brands are diversifying well-loved favourites to keep consumers interested
Horlicks
Horlicks has been positioned for many years in India as a
‘nourishing family drink’. In an effort to stimulate growth
and strengthen leadership in the health food drink category,
GSK Consumer Healthcare launched new flavours that
included Chocolate and Toffee, in
addition to the more traditional
Classic.The drink’s new
variants were demonstrated
through the ‘Apang opang
jhapang’ campaign, which talked
directly to children rather than to
their mothers.The company has
most recently introduced
Women’s Horlicks, with the
tag-line ‘Your Body Needs
You Too’, urging women in
India to take care of their
nutritional needs.
20 March 2008 Media 19
“Those FMCG categories that en- IMRB. Total FMCG spend in rural This strategy focuses on educating Emami, argues that the urban market
“Those FMCG
able achievement and lifestyle look
set to thrive in 2008, while those that
offer traditional, basic needs of hy-
giene and protection will face pres-
sure,”says Shripad Nadkarni,director
of consultancy MarketGate. India’s
FMCG market is under-penetrated in
these categories,Nadkarni argues,giv-
ing ample scope for the introduction
categories that
enable
achievement
and lifestyle look
areas grew at 25 per cent last year com-
pared with 2003, as opposed to 16 per
cent for urban markets in the same pe-
riod, although the average spends are
still lower than the urban figures.“The
per capita income growth in India is
driving up consumer spends in rural
areas as well as urban,”says Shah.
Poor infrastructure and limited
retailers who serve as the mouthpiece
for the brand, which works well in an
environment where the majority of
consumers purchase according to
price rather than brand. Reckitt
Benckiser has been following a similar
line, educating retailers on how its
long-duration Mortein mosquito coils
can help prevent and save on costs to
will continue to dominate over the
next eight to 10 years. However, if
growth continues at current levels, it
may only be a matter of time until the
rural consumer gains parity with its
urban equivalent.
New Players
But even as the rural and urban con-
sumer markets expand, competition
of new products.
Anand Shah,an FMCG research an-
set to thrive media reach have in the past been
major impediments in rural India, but
treat malaria.
Others companies are using social
remains fierce, with MNCs like
Unilever and Procter & Gamble fac-
alyst at Angel Broking, says most in 2008 ” as these improve, companies will get initiatives to make inroads. ITC’s ing the heat from local challengers.
FMCG companies are responding to more aggressive, says Saugata Gupta, e-Choupal initiative,for example,is an The clutter in the crowded FMCG
the new demand by concentrating on CEO of consumer products at cosmet- online service that primarily tells space has further intensified with
developing a big theme and building a ics company Marico. farmers the price at which ITC will companies such as ITC, Beiersdorf
portfolio around it. FMCG marketers are already busy buy soya or wheat that day. However, and L’Oréal upping the ante. L’Oréal
Nestlé, for example, has identified devising new ways to reach the rural it also doubles up as a distribution net- recorded 40 per cent sales growth in
‘health and wellness’ as its focus area, markets.According to Raj Kumar Jha, work through which the company can 2007, while Beiersdorf, which entered
while local FMCG company Dabur is national director of knowledge at sell its products to the farmers. ITC India only two years ago,has spread its
positioning itself around ayurvedic (a Xpanse Asia,the rural division of Star- anticipates the network will cover reach to 150 cities and increased its
traditional Indian system of health- com MediaVest Group, companies over 100,000 villages by 2012, repre- product list to 44.
care), natural and herbal products.At are relying less on outdoor advertising senting over 15 per cent of rural India. According to ACNielsen, Beiers-
the higher price end, companies are and have turned to either radio or TV Likewise, Hindustan Unilever’s Pro- dorf’s Nivea brand has already be-
leveraging health and wellness trends and one-to-one contact programmes ject Shakti, under which the ‘Fair & come number one in the men’s
by focusing on providing ‘experien- in rural areas. Lovely Vani’ programme is run,offers whitening category and number two
tial’ and ‘higher order’ benefits rather For instance, ‘Fair & Lovely Vani’, a range of mass-market products to in deodorants.“It will be easier for us
than purely functional ones. the rural marketing programme for self-help groups — local women to adapt to the evolving consumer and
Hindustan Unilever’s whitening trained in the basics of enterprise new market realities,since we carry no
Rural demand brand Fair & Lovely,aims to empower management. Armed with micro- traditional baggage or mindset,” says
Changing urban purchasing prefer- rural women to earn a livelihood, credit, these women become direct- Bendix.
ences, however, only partly account while at the same time improve the to-home distributors in rural markets. Meanwhile, domestic conglomerate
for the rise in FMCG sales.Potentially distribution and reach of its product. According to Hindustan Unilever,the ITC, which until five years ago prima-
more significant is the growing rural After identifying villages for activa- Shakti model creates a win-win part- rily focused on selling cigarettes, has going overboard in spending market-
market. The estimated number of tion,the programme informs villagers nership between the product and the diversified into shampoos and soaps, ing money to buy market share and is
households using FMCG products in about the company’s product through consumer, building a self-sustaining targeting both the premium and mass using its distribution clout, thanks to
rural India has grown from 131 million contests, paper chart presentations, cycle of growth for all. markets. It is also slated to enter the the surplus cash it generates through
in 2004 to 140 million in 2007, accord- live product demonstrations and Despite the increase in rural spend- hand wash and deodorants categories. its cigarette business.
ing to market research company usage basics. ing,N Venkat,CEO of cosmetic group Shah says ITC has not been afraid of “While other companies have to
focus on margins and profitability,
ITC is ready to bleed,” says Shah.
Even so, industry players believe ITC
is spending disproportionately and a
Tata Tea Parachute Advansed Fiama Di Wills key issue for it will be sustainability.
Traditional tea producer Tata Tea entered the wellness Marico’s Parachute Advansed brand launched the Tobacco and FMCG giant ITC entered the premium personal care category in With a market that up until now has
platform last year with the launch of Tata Tea Life.The ‘Gorgeous Hamesha’ campaign to establish itself as a the second half of last year with the launch of the Fiama Di Wills shampoo relied heavily on product extensions,
product contains herbal variants like Brahmi, beauty brand in 2007.The company went on to brand.The new product is in effect an extension of ITC’s super premium future success could depend on the
Tulsi, Cardamom and Mint, and is push its health and wellness credentials even personal care brand Essenza Di Wills, launched in 2005 but available only in ability to build new brands. “Once
aimed at health-conscious youth. further with the launch of the ‘One-Hour Champi’ ITC hotels and Wills Lifestyle stores. Fiama Di Wills was the first ITC personal you saturate the market or leverage
The brand has also introduced the campaign, which plays on the art of care brand to target the mass retail market.The shampoo the potential of extension, then what
do you do?” asks Shah, adding that
Tetley Green Tea range with the aim
of widening its consumer base.Tata
ayurvedic head massage (champi)
to drive the use of hot oil as a
was positioned as a ‘gentle care shampoo’
under the tagline ‘Beautiful You.Today. “While other overusing extensions can impact the
has further targeted a new youth
market with its 360-degree ‘social
critical part of the hair care
regimen.The company has
Tomorrow’.The company has
since released a range of companies have brand perception and dilute brand
equity.
awakening’ campaign ‘Jaago re’,
which provides a platform for
backed the champi platform
through a number of product
shower gels and soaps
under the Fiama Di Wills
to focus on With consumer wallets under pres-
sure from various other sectors,
discussion of social issues.The
company has also announced a
and marketing innovations, most
notably by introducing its branded
brand, as well as a lower price-
bracket shampoo and soap
margins and FMCG companies will need to create
compelling roles for their brands, be-
sponsorship tie-up with UK football
team Arsenal to start a football
massager device.The latest offering
from the Parachute Advansed brand —
brand, Superia. Last month, ITC
expanded its personal care portfolio
profitability, yond just functionality of product and
memorable advertising campaigns.“If
tournament and coaching programme Hot Champi — is a hair oil warmer that delivers an even further by launching the Vivel Di ITC is ready to you don’t command rich mind-space,
brands will be pushed into the com-
for children aged 10 to 15 years. instant hot oil massage. Wills brand in the India market.
bleed” modity space,”says Nadkarni.