HLL to get hair oil brand off its head

HLL to get hair oil brand off its head

Author | Source: The Economic Times | Wednesday, Dec 07,2005 7:49 AM

HLL to get hair oil brand off its head

HLL's on a sticky wicket. The largest consumer goods company in the country has put its coconut hair oil brand Nihar on the block. The brand came to HLL when it acquired TOMCO from the Tatas in 1993.

When contacted, HLL said it wouldn't comment on speculation, but industry sources said Nihar is low priority for the company as it doesn't fit in its power brand strategy. Besides, HLL is making a conscious move away from branded commodities as they are essentially low margin businesses.

HLL sold the popular vanaspati brand, Dalda, to Bungee for around Rs 75 crore last year. If the Nihar sale happens, it will be HLL's second brand sell-out in recent years. The brand's annual sales are expected to be in the region of Rs 100 crore. Sales in the first six months of the year were around Rs 55 crore.

Being fast moving in nature and at times driven by impulse, hair oil sales are largely dependent on their visibility. The more the brand is advertised, the more it's impact on consumers' mind. Since hair oil is a core business for both Marico and Dabur, they don't mind investing in their brands Parachute and Vatika, even when the going is not so good.

Against this background, HLL would always find it a tad difficult to compete with these two companies.When HLL first bought Nihar, hair oil was a new area for the company.

Between 1999 and '01, the company invested heavily in gaining market share. The idea was to upgrade users of loose oil to small packs and HLL succeeded in converting consumers to some extent. But gradually, Marico also starting making inroads into the rural market, making things difficult for Lever.

Nihar's value market share has been on a downswing since the past few years. From a 9.2% share in April-October '04, Nihar's share fell to 7% in April-October '05. In October '05, the brand's share stood at 6%. Even the value-added variant (Nihar Jasmin and Rose) slid during the same period.

However, the coconut hair oil market has grown 10% in April-October '05 and is now a Rs 532-crore market. Marico's flagship brand Parachute is by far the leader in this segment.with a market share of 40%. Dabur's Vatika has seen a marginal dip from 7.7% to 7% during this period.

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