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From the Roots Out

Priyanka Bhattacharya
Back to the May issue.

It is a billion dollar market out there. Literally, the Indian hair care market is hovering at the $1 billion mark. While it is a far smaller prospect than the developed markets in the West and comes in behind the other BRIC markets of Brazil, Russia and China, it still remains one of the fast-emerging economies in which consumers have more ready cash to spend on looking good.

With a GDP growth of approximately 7% annually over the last few years and with a consumer base highly interested in hair care, India is a market well worth investing in, and international hair care marketers are looking into available opportunities. Companies already marketing in India are experiencing a steady growth—even as more niche hair care brands and high-end brands enter the market to tap into the growth potential.

Industry estimates show that the Indian hair care market is growing at the rate of 125% year-on-year as consumers get more choosy about products. Consumers are also asked to make more choices as newer brands enter the market. With a growth rate of about 35% per annum, the professional hair care segment, which is more high-end, is emerging as a separate market segment.

“The mass market for hair care in India is booming,” says Aditya Agnihotri, regional manager-North, Wella India Haircosmetics Pvt Ltd. “It is evident from the fact that most supermarkets here now dedicate a separate section to showcase hair care products. It is not just shampoos and oils that are put there, but also conditioners, leave-ins, after shower products and even some styling products.”

Tradition Sells
“While there is a growing consciousness about different types of hair care products and their usage, most Indian men and women still stick to their traditional hair care routine,” says Vikas Mittal, vice-president, marketing for personal care, Dabur India, one of India’s largest ayurveda-based hair care product brands. In fact, the Indian consumer is partial to anything labelled “herbal” or “natural.”

This means that domestic players have an edge in the Indian market, especially in the high concentration, tier two markets and rural areas. Seven of the top 10 players in India’s hair care market are homegrown and account for 42% of total value sales.

Herbal shampoo brands such as Chik and Nyle are strong competition for the big-name international labels—including Ultra Doux, L’Oréal brands, Dove, Sunsilk, Head & Shoulders and Pantene. “Since consumers still prefer natural-based products over chemical-based products, our premium-mass hair care brand Vatika is leading the hair care market in the country,” says Mittal.

Indian consumers have a unique pattern of consumption that affects demand of hair care products. Unlike in the West, hair oils make up the largest hair care segment. While shampoos are growing at a fast rate, hair oils are showing a 15–20% growth year-on-year. This segment currently has 90% market penetration, compared to other product segments, and the Indian hair oil market stands at $500 million. The reason: hair oils are still considered as the best conditioner, and it is hair oil sales that are responsible for the fact that the conditioners sector accounts for more than half of India’s total hair care market. The success of hair oil products such as Marico’s Parachute, Dabur’s Vatika and Amla brands has prompted Garnier to introduce special pre-wash hair oils under the Ultra Doux brand specifically for the Indian market.

Brand Presence
The Indian hair care market is split into three distinct price-determined tiers. The top-end includes Unilever’s Dove, P&G’s Pantene and Head & Shoulders, HLL’s Sunsilk, L’Oréal’s Garnier Fructis and Dabur’s Vatika. Average price points in this segment range from $2.80–8.75 for 250 mL bottles. While L’Oréal and Dove are at the top of the heap, Pantene and Head & Shoulders occupy the next rung of pricing, followed closely by Sunsilk, Vatika and Garnier Fructis constituting the bulk of the market. HLL’s Clinic Plus, Garnier Ultra Doux, and P&G’s Rejoice are at the mid-level ($1.50–2.00 price points for 200 mL), while low-tier brands include Ayur and Chik.

The shampoo market pegged at $550 million, growing at about 20% annually, has attracted newer players—especially with the prestige mass segment as players. Indian conglomerate ITC entered with its Fiama De Wills brand. Meanwhile, the shampoo sachet segment—at price points of just a few U.S. cents—has a stronghold in semi-urban and rural markets. “The reason is that this lets the lower income group use high end products at a price that they are comfortable with,” says Dabur’s Mittal.

Fast-moving consumer goods company Hindustan Unilever (HUL) has increased its share in the shampoo market, even as rivals P&G and CavinKare have suffered erosion. According to retail measurement figures released by AC Nielsen, market leader HUL’s share grew from 46.9% (January–March 2007) to 47.8% in the October–December 2007 quarter. In the same period, P&G’s market share fell from 25% to 23.7%, and third-placed CavinKare fell from 12.6% to 12%.

New Business Focus
As urban consumers become more product aware and ready to try different hair care products other than hair oils, large hair care players like HUL, P&G and L’Oréal have started introducing product categories and looking closer at premium hair care.
For instance, HUL has consciously reduced its focus on saturated hair care categories such as hair oils, and has sold off its Nihar brand. In fact, it entered the hair care and styling category under Lakme’s HairNext range of products. With six products—including shampoos, conditioners and sprays—HairNext is a premium brand in HUL’s hair care portfolio.

“Hair styling is a new category that is growing rapidly,” says Anil Chopra, vice-president, Lakme Lever. “Consumers are not only looking for healthy hair but also well-styled hair. We want to create awareness and educate our consumers without confusing them.”
Similarly, Marico India has launched a range of hair care products such as antidandruff and moisturizing creams, wet-look gels and extra-hold gels for men under the Parachute After Shower brand. Explains Saugata Gupta, marketing manager, Marico, “The post-wash category has been growing [yet] penetration has been low. It is all a question of evolution of the consumer, and as long as it brings significant value, consumers will pay for such products.”

Conditioners and after wash products like leave-ins and hair detanglers are emerging as new focus areas for brands. L’Oréal has introduced its shine product L’Oréal Elvive Nutri Gloss, for example, as well as color revive shampoo through the Elvive range. Similarly, P&G’s Pantene has started bundling conditioners with its shampoo variants in the market.

The shampoo market itself is seeing maturity as consumers realize the need for specific shampoos that answer specific hair problems. Both HUL and P&G have introduced products that handle specific problems such as dry hair, thin hair, breakable hair, etc. “There is an emerging segment that consumes premium products; the Dove range recognizes this trend and addresses specific needs of consumers,” says N Rajaram, general manager and category head, hair care, HUL.

“We have launched specific products that handle problems like hair fall [hair fallout due to breakage], because there is a need in the market for that,” adds Alison Roughley, senior scientist, scientific communications manager, R&D, P&G Beauty. “Women have realized that their regular shampoos will not give them a solution to their hair care problem; so they need specific treatments.”

To this end, Pantene added Hair Fall Control shampoo and conditioner to its offerings. “We also need to show the women here the need for conditioning their hair. Since most Indian women love long hair, using a good conditioner becomes even more important,” adds Roughley.

High-end Hair Care
Indian consumers have begun to understand the importance of maintaining a good head of hair, and are now spending money on professional services as well as mass-market products. During the last two years, hair care services and products available through exclusive hair spas have become a rage.

Leading the pack, the L’Oréal-owned premium hair care brand Kerastase opened its first hair spas in Mumbai and Delhi in 2006. In addition to premium hair care services, the brand also retailed its premium hair care solution through these salons. “Women today are ready to spend that little extra to get good hair. They have realized that hair spas offer them solutions to their hair problems,” says Vidya Punjabi, assistant marketing manager, Kerastase, L’Oréal India. Following suit have been brands like Wella, Schwarzkopf and Keune. Each has introduced its range of specific hair spa services as well as at-home care for great hair.
“With professional products, consumers can be assured of the right care and treatment that will ensure that they can maintain the results of a good hair care service,” adds Wella’s Agnihotri. “The professional products are gentler. The young working crowd of India now has enough money and mind-set to invest a little bit more on buying higher-end products.”

Recognizing the growth opportunity in the professional hair care market, Toni&Guy has entered the market with its mass-premium Toni&Guy brand as well as high end professional styling and care products from its Label.m range. “I think Indian men and women are ready for great hair and need products that can give them that,” says G. Toni Mascolo, chairman, Toni&Guy. “Label.m, our premium range, offers the consumers here a chance to get that. We are confident of picking up the market very fast.”

Sustaining Strategies
The Indian hair care market is forecast to expand by nearly 40% by 2011. According to a report by Euromonitor International, the competition between local and international players will increase during this period, and some industry watchers believe that multinational brands, however, will drive the growth and lead the market.

Before this happens, brands will need to increase their education efforts and look to transform usage habits. The good news for many of these brands is that India is being influenced by Western beauty trends. India’s large youth population is more receptive to international brands and hair care norms. More than half of the population of 1.1 billion is under 25. This group is also more drawn to urban life, and, as a result, is generally wealthier and more able to spend on imported brands.

Success depends, in large part, on a brand’s ability to connect with this technologically savvy and trend-conscious market segment.

Back to the May issue.

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