Showing posts with label ITC. Show all posts
Showing posts with label ITC. Show all posts

Tuesday, April 02, 2013

Getting Back, Getting Even

From a Time when they were Playing for Survival Against MNCS, a select few Indian FMCG firms are Quickly Turning The Tables. Still, The Head-to-Head Score goes in Favour of MNCs

Even though some Indian FMCG players like Godrej and Dabur have a legacy of more than 100 years, yet they have traditionally been players with modest ambitions till the 1980s. But like other industries, the big churn came in post-liberalisation era. Over time, and especially post liberalisation, foreign players like Nestle, HUL, P&G and Reckitt Benckiser significantly grew in size and stature in the Indian market, and left the Indian firms behind by miles.

The domestic FMCG majors had to desperately play the survival game. Local companies like Dabur, Marico, Emami, Himalaya, Amul, understood that the market was changing and that they had to change with it. They shed their regional ambitions and started investing into distribution, packaging, product innovation & marketing. Players like Godrej went for a complete brand repositioning, and brought in a more professional management structure that emphasised on youth and looked to go global. But to what extent has their radical transformation helped Indian companies move up the steep learning curve that they largely stayed away from earlier? Are Indian firms taking the score back from the MNCs?

A Booz & Company and Confederation of Indian Industry (CII) report pegs the Indian FMCG industry at around Rs.1.3 trillion. The sector witnessed a CAGR of about 11% from 2001 to 2010. The last five years have shown a CAGR of approximately 17%. If the industry could continue to grow with a CAGR of 12-17%, it will become a Rs.4-6 trillion industry by 2020.

The real inflexion point for Indian players was 2001. According to the report, large Indian players grew sales by 12% from 2001-2005 and by 19% from 2006-2010. MNCs, in turn, saw sales growth of just around 2% in 2001-2005 before recovering to see growth of around 16% from 2006-2010. This has reflected in key market share gains as well. Godrej No. 1 is the leading soap brand in Northern India and third largest overall. Wipro’s Santoor holds sway in South India; ahead of the likes of Lux, Lifebuoy or Dove. ITC (well, if you were to consider it an ‘Indian’ company) is giving sleepless nights to HUL with innovations in personal care and food categories. The USP of Indian FMCGs – natural and herbal-based products – is attracting Indian customers, for whom ‘foreign’ ostensibly doesn’t carry the same attraction as before. In fact, differentiated products like Chyawanprash, Navaratna oil and Parachute have been immensely beneficial, as MNCs have consciously not invested in these products.

Consider the situation in personal care and home categories. According to Euromonitor International, Indian companies have been either holding steady or steadily gaining market share since 2005 in these segments. Even as Hindustan Unilever’s market share dropped marginally from 36.6% in 2005 to 33.3% in 2010 in the personal care segment, Dabur marginally upped its market share from 4.7% to 4.9%; while Godrej raising its share to 4.5% from 3.9%. ITC has doubled its market share to 1.4% in 2010 from 0.7% in 2008. But other international players have been gaining ground as well. Colgate-Palmolive’s market share rose from 6.4% in 2005 to 6.8% in 2010. P&G India’s share has also risen from 4.2% to around 5.4%. In these rapidly growing segments, MNCs have a clear edge over Indian players.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist). For More IIPM Info, Visit below mentioned IIPM articles
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Monday, July 16, 2012

Health is wealth, beauty is wealthier!

As Reckitt Benckiser’s India business heads towards contributing more than 5% to global revenues, B&E highlights the possible opportunities and imperatives for the company.

Winters are generally dull for FMCG companies in India. But such was not the case with Reckitt Benckiser last year. Even as the December 2010 winter fog hovered over the Indian plains, Reckitt Benckiser, the British health & hygiene FMCG giant sharpened its growth ambitions in India by acquiring OTC-drug maker Paras Pharma for $726 million. Experts said it was a high price, but Reckitt rebutted them by countering that it’s an apt price for a healthy future. In the warmer sunny days of April this year, the man behind the action, Rakesh Kapoor, then EVP of Category Development, was awarded the CEO baton and his role in acquisitions was key to his case. He led the acquisition of Boots Healthcare in 2006 and SSL International and Paras Pharmaceuticals in 2010, which added brands like Strepsils and Clearasil (Boots), Dr Scholl’s and Durex condoms (SSL) and D’Cold, Dermicool, Livon and Setwet (Paras), to Reckitt’s kitty. Reckitt Benckiser’s acquisitive strategy has brought it to a position of reckoning. Instead of the P&Gs and the Unilevers, its major global competitor was a much smaller SC Johnson (over $8 billion in annual sales, also in the health & hygiene space).

Last month, Rakesh Kapoor was in India accompanied by his board members. India is among the top two developing markets in the company’s agenda, and the company is eager to make its Indian arm count. The Indian FMCG industry with a worth of over $13 billion is dominated by the personal care/beauty segment, which comprises of more than 50% of the market, and is dominated by players like P&G, HUL, ITC, Colgate Palmolive, Marico and Dabur. Health (& hygiene) comprises about 25% of the FMCG space. It’s widely fragmented in terms of players (local & international), as well as product offerings. But it’s rapidly growing, and central to Reckitt’s grand plans.


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