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Consumer goods cos want to get up close & personal

Consumer goods cos want to get up close & personal

Author | Source: The Economic Times | Thursday, Jul 07,2005 7:28 AM

Consumer goods cos want to get up close & personal

Consumer goods makers like P&G, ITC and Colgate are reshaping their strategies to tap the huge consumption story unfolding in the home and personal care segment of India, on account of growing urbanisation. While ITC has already begun sampling on a trial basis in the south, some of its products in the HPC market, say leading dealers, P&G has stepped up focus on personal grooming and the beauty aspect in the Indian market.

Analysts say the strategy may be to tap the distribution network of Gillette, a leader in male grooming and market its global skincare and cosmetic brands in the country. While all is quiet at the moment on the home and personal care segment, analysts predict another price war in the near future with the entry of ITC. In a very recent development, P&G has coined a new term globally, 'P&G Beauty' for its beauty business which contributes almost 50% of the total sales, and is now over $10bn in sales.

Industry officials said aspiration and consumption levels of India's 'consuming middle class' has gone up sharply and is expected to accelerate in the next 4-5 years if the GDP growth maintains its 6-7% trajectory. The rapid demographic transition, burgeoning demand, rising affluence and more women in the workforce are key drivers for rapid growth.

While ITC will launch new brands, P&G is expected to market its global personal care brands through imports. Currently, HLL is the largest player in the HPC segment and the new entrants are likely to give the company a run for its money. Industry sources said companies like P&G and ITC are likely to have an entry-market strategy of lower-priced products to drive volumes.

Analysts say with the per capita cosmetics spend of $0.68, the Indian market offers a huge opportunity to international beauty cosmetics companies, for whom markets around the world are saturating.

The size of the personal care product market is about Rs 15,000 crore , with soaps and shampoos alone accounting for Rs 7,000 crore. In the last three years, the segment is estimated to have been growing at 8-9%, which is considered to be among the highest in the Rs 45,000 crore FMCG market.

ITC has the capability to source high-quality agri-products and raw material, access to in-house paperboard and packaging solutions, and a cost-competitive FMCG distribution infrastructure. All this will come in handy for its personal care product launch. ITC already sells a wide range of products in the FMCG segment but none in personal care. The company's FMCG range now has more than 45 food products, covering staples, ready-to-cook pastes, confectionery, snacks and biscuits and ready-to-eat meals.

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