With growth coming back to the Rs 48,000-crore fast moving consumer goods (FMCG) sector after almost three years, thoughts of many a marketer are turning to exploring new product categories. Everyone from big-daddy HLL to Dabur, CavinKare, Pidilite, Agro Tech Foods, Marico, and Emami et al, have in the past six months or so launched new products in categories traditionally not part of their products portfolios.
HLL recently extended its glycerine soap brand to kids in Pears Junior. Dabur is test marketing a herbal malted beverage, Fit 'N' Active, in West Bengal to take on the biggies Cadbury (Bournvita) and GlaxoSmithkline (Horlicks and Boost) in the Rs 1,000-crore category. CavinKare is just rolling out its toilet-cleaner, Tex, in southern markets to take on Domex and Harpic in this fast growing Rs 150-crore category.
Kolkata-based Emami launched a completely new to India product in a fairness cream from men, Fair & Handsome. Even an adhesive-only company in Pidilite has forayed into packaged foods with the launch of Chikkers, a packaged version of a local sweatmeat, in Mumbai. And Agro Tech Foods recently extended is Act II brand to whole range of potato and corn-based ready-to-eat snacks.
“The timing of our snack launch may be dictated by a favourable external environment, but it is in line with the company's strategic direction,” says Utpal Sengupta, President, Agro Tech Foods. He is right, for many FMCG brands, such as Act II and Pears, extending to newer categories is a logical extension of their brand franchisees. So for HLL's Pears, which already has a strong brand recall as gentle adult soap, Pears Junior is just an extension into a still nascent sub category of kids soap, largely dominated by smaller players such as VVF Limited's Doy Care.
“We are broadening our product portfolio from just personal products to a complete FMCG basket,” says CK Ranganathan, CMD, CavinKare. Essentially, a buoyant market is making marketers across the board the time and resources to look ahead and not merely worry about saving their bottomlines as was the case in the last three years when the FMCG market went through a growth crisis. “ Growth is clear goal here. But what is also tells us is that marketers have got their existing businesses under control to start looking at seeding businesses for the future, once again,” says Nikhil Vora, Vice President (Research), SSKI, a Mumbai-based brokerage house.
For players such as the adhesive major Pidilite Industries, it's a fresh brush with FMCGs, in completely new area like food, with Chikkers, a brand of chikkis. The company is testing waters to get into a totally new category to decrease its dependence on Fevicol, its glue brand, that's almost generic to its category.
No doubt the FMCG companies are witnessing a pickup in demand, and also slowly return of the pricing power, but rising input and advertising costs are a matter of concern and margins are likely to remain under pressure. A more diverse product portfolio will help the FMCG companies in derisking their businesses.