National players consolidate portfolio, focus on power brands.
Even as large FMCG companies consolidate their portfolio by focusing on a handful of “power” brands, small regional companies are flooding retail shelves across the country with their brands.
According to a “new introduction analysis” done by market research agency AC Nielsen ORG-MARG, the number of FMCG brands under the retail audit scanner have gone up significantly in 2005.
While FMCG majors like HLL, Procter & Gamble, Marico, Godrej, Dabur kept a low profile on new launches this year, the regional companies stepped on the gas.
In skin creams, a segment worth Rs 1,500 crore, there have been as many as 131 new launches so far this year, against just 36 in 2004.
Similarly, in Rs 5,000-crore toilet soaps category, the retail audit has captured 81 introductions this year, up from 31 in 2004. And it is not just personal care – vanaspati has seen 27 introductions this year, as compared to just four in 2004.
“Where are the new brands? The only new offerings that have reached the shelves this year are the variants,” says a Mumbai-based retailer. He finds support in R K Sinha, executive vice-president (soaps group), Godrej Consumer Products.
“There hasn't been too much activity at the national level. The only national brand launch in 2005 has been Dabur Vatika (a brand extension of toilet soaps),” says Sinha.
An executive from AC Nielsen has an explanation: “Most of the new launches are regional. Their market shares are negligible.”
The AC Nielsen audit covers 13,000 (0.21 per cent) of the six million retail outlets across India. This means that the new introductions have managed a fair distribution reach. Otherwise, they would not have come under the audit scanner.
However, these new brands are still not a cause for concern for the companies if the analysts are to be believed.
“In terms of market share, these brands do not come into the picture and are not worth worrying about,” says Nikhil Vora, vice-president (research), SSKI Securities, adding that there isn't too much space in the current market scenario for new players either.
Will these players go ahead and become national giants and repeat the success story of Nirma detergent or Chik shampoo?
“We don't see too many regional players moving across territories because of issues related to VAT,” says Sinha. But like the AC Nielsen retail audit, even the large companies cannot afford to ignore the rise of the regional players.