A 50-gm pack of Fair & Lovely Ayurvedic Care, a herbal fairness cream, is priced at Rs.120. A similar pack of Fair & Lovely Advanced Multi-vitamin Cream, available in nine different variants, costs Rs.89. The price difference: 35%.
The sharply higher price for the herbal variant indicates why Hindustan Unilever Ltd (HUL), the country’s largest fast moving consumer goods company, is ready to introduce a bunch of new personal care products with the ayurveda tag.
These products are just being launched and will initially be available online, an HUL spokesperson said, declining to share more details.
HUL is not the only company ramping up its ayurvedic portfolio. Several companies in the personal care segment are enhancing their range in the category, variously tagged as natural, ayurvedic or herbal.
According to a research report by UBS Securities India Pvt. Ltd, herbal products comprise 6-7% of the personal care products market, but the volume is growing at about “twice the segment average”. “We estimate herbal could grow to about 10% of the segment by FY20 as the trend accelerates,” analyst Sunita Sachdev wrote in the report released on 14 September.
“There is a growing consumer trend for natural and ayurvedic products and an emerging need in this space. In the modern times, stress and lifestyle-related problems…are here to stay. More and more people are seeking fundamental solutions from holistic natural sciences like ayurveda, to fix and solve their short-term and long term-beauty and wellness needs,” the HUL spokesperson added.
Which explains the company’s recent re-launch of its brand Lever Ayush exclusively for selling online. Lever Ayush, HUL claims, has tapped into the ancient medical science to find solutions for modern-day problems such as premature greying of hair, ageing skin caused by pollution and backaches caused by a sedentary lifestyle.
According to Sachdev, home and personal care companies, both multinational and Indian, are using the herbal angle to premiumize their portfolios. Dabur India Ltd and Emami Ltd are two Indian companies which have scaled up their herbal range, she added. HUL managing director Sanjiv Mehta, in the earnings call for quarter ended June 2015, said that premiumization would be one of the three key focus areas that would drive future growth for the company.
Colgate-Palmolive India, too, recently launched neem and charcoal variants extending the Colgate toothpaste into the herbal category. Colgate Total Charcoal Deep Clean is priced 10% above Colgate Total Advanced Health toothpaste, while Colgate Active Salt Neem variant is priced 4% above Colgate Active Salt toothpaste. According to the UBS report, Colgate-Palmolive India has plans to launch a multi-function ayurvedic toothpaste.
“Consumers around the world are ‘going organic’, and, in many ways, the movement to herbal and ayurvedic products in India is a manifestation of the same trend… Consumer companies are using this trend as a premiumisation tool to upgrade their revenue mix. HUL and Colgate (while aligning with their respective parents) have launched premium ayurvedic offerings in their key brands,” said Sachdev.
Companies such as Dabur and Emami, however, already have strong ayurvedic or herbal portfolios. One of the reasons why Emami acquired hair oil brand Kesh King from SBS Biotech for Rs.1,651 crore is because Kesh King is a premium product. “It is amazing how Kesh King commands a premium. Emami, which has one of the highest margins in the industry, is nowhere close to Kesh King,” said Harsha Vardhan Agarwal, director, Emami.
Ayurvedic hair oil and shampoo brand Indulekha, which was acquired by HUL from Mosons Extractions Ltd in June this year, is also a premium brand.
“Dabur, Emami and Himalaya have deep roots in Indian medicine and have gained from their traditional herbal positioning. These companies are extending brands into new and emerging segments to improve profitability. Most of their brands are already on the herbal platform and should gain materially from this trend,” Sachdev said.
Indian consumers are increasingly embracing natural products, said K.K. Chutani, executive director (consumer care business), Dabur India. “The bulk of our offerings are natural or herbal or ayurvedic, and we operate both in the mass-market and the premium segments. Going forward, we will continue to introduce products based on this platform in existing and new categories, depending upon consumer needs,” Chutani said.
At a recent analyst meet, Dabur chief executive officer Sunil Duggal said the company was betting big on the health and wellness platform and also looking to scale up the baby care category.
“Dabur is set to benefit from the benign raw material scenario, which will expand gross margins. The focus on urban-centric over-the-counter products and ethicals, health supplements will also play a key role in driving premiumisation for the company,” Abneesh Roy, associate director (institutional equity research), Edelweiss Securities Ltd, said in a report released on 16 September.
Source : http://www.livemint.com/
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