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Bottles to sachets to microsachets. Just what's the shampoo industry up to?
Kavincare fired the first salvo last July with a 4-ml sachet of Chic (0.50 paise), and its marketshare has since jumped from five to 13 per cent. Not to be left behind HLL has also launched 4-ml sachet versions of both Lux (0.50 paise) and Clinic (Re 1). "We want to bring shampoo to the masses at a price that is affordable," explains D. Shivakumar, General Manager (Personal Products), HLL. In a market that's been growing at an abysmal 11 per cent, volumes are hard to create and maintain. Add to that the problem of low penetration (18 per cent) and a very low per capita usage (five washes per user per year), and it's not difficult to see why Indian consumers are going in for small sachets in ever increasing numbers. Says K.R. Ranganath, MD, Kavincare: "Why should the consumer pay for larger packs? There is no incentive for him to graduate to larger packs." In other segments people buy large packs to get value, but the trend is the exact opposite when it comes to the microsachet category. Just what makes for such warped economics? Try this. Shampoo is a high-margin product, but given the costs of raw material, packaging, advertising, etc., huge volumes are required to make it profitable. So, to cut costs, HLL first dropped the fill levels from eight ml to seven ml in. Other players were quick to follow suit. The formulations too underwent change. The downward push has by no means ended with companies groping for ways to prime the market for that extra mile in volumes. Sure, the shampoo business is certainly only a small part of the packaging mania that has gripped the FMCG market. But things are hotting up in this segment. And there's no saying what innovative ideas the shampoo players will spring up next on the bemused customer. So there. |
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Size seems
to be an obsession with the Indian shampoo market. In their race to pump
the market for volumes the big players in this segment--Hindustan Lever
Ltd (HLL) and Kavincare---have taken their fight from bottles to sachets
to microsachets. Sachets have come to account for nearly 70 per cent of
the total shampoo market, making up 70 per cent of the HLL's sales, and 65
per cent of Kavincare's. While P&G is the other major player, its
premium pricing restricts growth in the price-sensitive Indian market.