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A Report on Hair Care Industry in India
STUDENTS: INDIAN INSTITUTE OF MANAGEMENT KOZHIKODE September 4, 2010
Jatin Bhagat, K Sudharshna and Vardhan Singh
85. The increasing disposable income and improved standard of living in most tier II and tire III cities are spearheading the FMCG growth across the nation.Hair Care Sector Analysis A Report on Hair Care Industry in India Hair Care Product Sector in India Evolution of the Hair care market in the country “The Rs.” The Indian hair care market is part of the burgeoning personal care sector under FMCG in the country. Personal Care products include the following sectors Hair Care Sector Analysis | 9/4/2010 • • • • • Hair care Oral care Skin care Cosmetics Female hygiene 1 .Since then.000 crore FMCG market in India is growing at a fast pace despite of the economic downtrend. The changing profile and mind set of the consumers has shifted the thought to 'Value for Money' from 'Money for Value'. however gradual taxation relaxations has brought down the excise duty level as low as 30%.This fact coupled with the paradigm shift of changing lifestyles of the Indian middle class and growing income levels have made these products more affordable. Till 1991 personal care products in the country were treated as luxury goods and had a huge excise duty of 120% attached to them (except oral care). A growing population with higher disposable incomes and greater consciousness about appearance has made a strong case for the Indian personal care sector.
It is one of the highly marketed sectors in the FMCG category and accounts for an astounding 20% share of the total television advertising in 2009 Out of which the split up of sub divisions was as follows Market Analysis It’s one of the fastest growing segments within the personal care sector along with baby care and feminine hygiene. the Japanese and Chinese markets grew with Hair Care Sector Analysis | 9/4/2010 Hair care 2 . the growth in hair care industry is specifically robust in the hair colorants category.4% for the period spanning 2005-2009. In comparison. As of 2009 the sector as a whole generated total revenues of $1.6 billion as of 2010 end.representing a compound annual growth rate (CAGR) of 15.The annual personal care segment in the country is expected to be $54.4 billion .
over the same period.4 billion in 2009. respectively. Year $ million INR million € % million Growth 2005 817 39911 587.9 billion and $2.9 14.2% and 6.6 2006 938.90% 2007 1077. to reach respective values of $4.4 897.80% 2008 1248 60965.6% of the total market share. This trend is expected to continue till the projected period of 2014 albeit a slower growth rate in the latter years.CAGRs of 1. Sales of conditioners proved the most lucrative in the previous year with a total sales of $703 million and around 48.80% T ABLE I INDIA HAIR CARE MARKET VALUE 2005-08 Hair Care Sector Analysis | 9/4/2010 3 .6 674.8 14.5 15.4 52632.4 445842.2%.7 774.
The latter is a growing trend with clinics such as Dr. Hair care products consists of the following major sub sectors • • • • Hair oils Hair shampoos Hair colorants & conditioners Hair gels Hair Care Sector Analysis | 9/4/2010 4 . We shall however examine the former in this report.F IGURE 1I NDIAN HAIR CARE P ERCENTAGE G ROWTH Market volume The hair care sector can be subdivided into hair care products and hair care services.Batra’s. Kaya’s skin clinic etc across the nation.
Hair Care Sector Analysis | 9/4/2010 5 .HLL.Source: data monitor Major players Hair colorants -Godrej. Marico. and Dabur India Hair oils -HLL. and Procter & Gamble. L'Oreal. Hair oils . and Lakme. Garnier.
faster and better growth.” These have considerable negotiating power over the FMCG majors because hair care constitutes only a small segment of the retail 6 . hair strengthening. and reduce the problem of falling hair. Over the years a combination of increased awareness. Industry Analysis by Porter’s five forces Buyer power “The major retailers in the Indian hair care market are supermarkets/hypermarkets. pharmacies and drugstores. Preferences of hair care products is still dominated by personal lifestyle biases as seen by the urban vs rural divide Urban Indian: most do not prefer oiling their hair and hence hair colorants. Hence hair care products were viewed as a luxury and often with mistrust an attitude shown both by the consumers and reciprocated by the government. Usage of hair oil is a typical Indian traditional habit now being increasingly restricted to the rural side. Hair Care Sector Analysis | 9/4/2010 This divide is also reflected in the major hair care players with HUL increasingly concentrating on after wash and colorant segment and Marico leveraging its hair oil leader position with the take over of HUL’s Nihar by Marico. It is perceived to offer benefits of nourishment.Indians were traditionally used to oiling their hair with coconut oil and using either bath soap or conventional powders such as shikkakai for washing their hair. shampoos and conditioners are more favorable to them Rural Indians: they still predominantly oil their hair and are increasingly switching from local players to established ones due to fear of adulteration and aggressive selling by the FMCGs.Consumer demarcation in Indian Hair Care Industry Traditional Problems associated with the hair care sector When the FMCG companies embarked upon hair care products they faced a seemingly uphill task in changing the life style of the people . growing income and aggressive marketing has ensured a steady change in the consumer psyche and has resulted in greater penetration of hair care products.
conditioning agents. The main active ingredients of hair care products are surfactants. Supplier power “Suppliers in the hair care market include manufacturers of chemical ingredients. Rivalry This is dominated by few big players who often. customer loyalty and product diversification has helped to ease the rivalry. thickeners. such as foam boosters. which are typically derived from petrochemicals.stores’ product range. modifiers. Backward integration is more of a common sight with the use of private labels rather than forward integration. preservatives. and packaging materials. However new entrants have increasingly adopted a strategy of micro segmentation concentrating on a few niche markets. New entrants Presence of existing multi national brands with high degree of economies of scale acts as a huge deterant. and special additives. offer a wide range of products. Robust market growth.” The increased regulations by the government requires that the ingredients be environment friendly which drives up the R&D cost and hence reduces the suppliers’ power. Substitutes Includes soap and its old nemesis of traditional Indian hair care products. The major hair care players have increasingly started niche targeting of customers aiming at a greater loyalty and hence forcing the decrease in buyer power. However with changing attitudes as previously elaborated threat of substitutes is increasingly looking dumb. Hair Care Sector Analysis | 9/4/2010 7 .
Major players in the marketplace include Alberto-Culver. shine enhancers and products fortified with vitamins and UV protection. demand for hairdresser-related products is greatly influenced by growth in disposable income and changes in consumer spending and habits. Ingredients gaining popularity include aromatherapy oils. Lion Corporation.5 billion by the year 2010. Ltd. Demand is also on the rise for natural and salon-based products. Hair Care Sector Analysis | 9/4/2010 8 . and Unilever Plc. Inc. Henkel KGaA. Beiersdorf AG. a growth of 19.64 million by the year 2012. imparted a new dimension to the hair care industry.GLOBAL HAIR CARE MARKET The hair care product market is expanding like never before! According to a report issued by Global Industry Analysts. Shampoo Market worldwide is forecasted to grow at a CAGR of 3. Conditioner Market in Asia-Pacific is projected to reach $405. exotic botanicals. proteins. Shiseido Co. Within the hair care products market. among others. L'Oreal.. as stated in a recent report published by Global Industry Analysts.6% over five years. Upscale professional products are increasingly finding takers for home use. Procter & Gamble.35% over the years 2011 through 2015. Neutrogena Corp. Men becoming more conscious of their appearance and devoting a larger portion of their resources towards adorning their locks and looks. Aveda Corporation. Kao Corporation. John Paul Mitchell Systems. Revlon Inc. World market for hair care products is projected to reach $42. Hair care is witnessing tremendous growth primarily due to the increasing consumer emphasis on healthy hair. Hair care is one of the most competitive segments in the toiletry industry. the catchword being ‘Personal care begins with hair’. natural plant extracts.
The industry is out against not only against each other but also against natural oils like mustard oil and coconut oil which people have been using traditionally over the years. Major competitors like Hindustan Unilever. has been a key factor determining the fortunes of the major players in this segment. Marico (with Parachute) and Dabur are the leading players. The branded oil players or the Value added oil players are severely dependent on the availability and price of their inputs.F IGURE 2 G LOBAL M ARKET TREND OF HAIR CARE I NDUSTRY HAIR OILS The hair oil industry in India is different as in the case against shampoos or any other hair care product. However that does not imply that the competition is any easier in 1800 crore Indian Hair Oil Industry. For example. the price of copra. Hair Care Sector Analysis | 9/4/2010 9 . the key input in coconut based hair oils. In the branded coconut hair oil market. Dabur India and Cavin Care have been out with a slew of products to vociferate their presence in the industry. The use of hair oils have been ingrained into the habits of Indian people so the need of building a market for it is not required. The coconut oil market accounts for 72 per cent share in the hair oil market. The fact is manifested when we say that branded players collectively account for only one-third of the total hair oil market up against loose oils. Marico Industries.
Volume growth for the hair oil category is currently pegged at 12. However.1 per cent in 2009.930 crore) and coconut oil (Rs 2. Hair oils have primarily been the forte of Indian companies such as Dabur.Conversion from unbranded to branded products and growth in the light hair oil category is what is driving the Rs 5. Emami and Bajaj Corp (previously Bajaj Sevashram).8 per cent and a volume growth of 14. it is Dabur Amla which dominates the segment with a volume share of 69.840 crore). according to The Nielsen Company. conditioners (Rs 80 crore) and dyes (Rs 1. it is the light hair oil segment within perfumed oil that is the fastest growing segment recording a value growth of 23. The various types of Hair oils in the market are: Coconut oil Marico started branding in the coconut oil category with its Parachute brand in the early 1990s.8 per cent and value growth at 17. players such as Bajaj Corp are making a steady effort to move coconut hair oil users to light oils. Parachute currently dominates the branded coconut oil segment which continues to grow at 10 per cent. cooling oils and light hair oils) and coconut oil accounts for more than 55 per cent of the larger hair care industry (Rs 9. 150 crore) which includes shampoos (Rs 2. where growth has been flat. Light hair oils The light hair oil category is dominated by Bajaj Almond Drops with a share of 46.110 crore) comprise the two main segments of the hair oil market. Hair Care Sector Analysis | 9/4/2010 Today.5 per cent followed 10 .2 per cent. In other categories such as heavy amla oil.7 per cent.8 per cent volume share followed by Dey Chemical's Keo Karpin at 21.190 crore).5 per cent and Marico's Hair & Care at 15. The hair oil segment with perfumed oil (includes heavy amla oils. This led to the growth in the overall category that had been stagnating earlier. Perfumed oil (Rs 2.770-crore hair oil market.
Today Emami's Navratna leads in the cooling hair oil category with a 44 per cent volume share followed by brands such as Him Gange (from GK Burman Labs) with a 29 per cent share. HAIR GELS Hair gel market segment is at a primary stage and not many local brands are available in India. Brylcreem was a well-known brand in India. the brand lost ground as it did not come up with new offerings. Hair gels/creams are mainly used for hair grooming by men and is used as a fashion accessory. Works all day and prevents breakage. Parachute After shower anti-dandruff hair cream was launched in March-06. After Sara Lee acquired the brand from Smithkline Beecham in 1993. cool and upwardly mobile one which helped in garnering more share.8 per cent and Bajaj Brahmi Amla with a 3. Cooling oils The cooling oils segment also recorded robust growth at 21 per cent last year due to Emami's Navratna hair oil brand spending heavily on advertising the brand. Brylcreem had a market share of 42 per cent in 1996 that has grown to 72 per cent in 2002. The product was positioned as an all natural product not only for styling but also boasted of 4 in 1 benefit i.e. In the hair cream market. The gel’s natural ingredients not only helped in styling but also made them softer by providing nourishment unlike any other gel.3 per cent and Dabur Sarson Amla at 5. Hair Care Sector Analysis | 9/4/2010 11 .The increase in market shares also coincides with the growth of the men's toiletries market in India. The market penetration of hair gels/creams is very low. Parachute Hair Styling Gel was launched in November ’06 meant for a younger audience looking for a product that would help them look the part every day.4 per cent share. Anti Dandruff. which is estimated to be in the region of Rs 250 crore. and is limited to a small section of the urban market.by Marico's Shanti Amla Badam at 8. In the hair gel market. the brand was repositioned as a young. the brand in 1998 had a market share of five per cent while now the share is 70 per cent. Nonsticky. The major brands in Hair Gels for men are Brylcreem by Sara Lee and Parachute After Shower Anti-Dandruff hair cream and Styling Gel by Marico.
6% over 2008. Further. In 2009. an increase of 19. Fiancee. UNILEVER Hindustan Unilever Limited (HUL) is India’s largest Fast Moving Consumer Goods Company having product ranges across 20 distinct categories in Home and Personal Care products. In addition. Caivil. Marico’s largest geographical market.7% over 2008 India. The group has two parent companies: Unilever NV and Unilever plc. Revenues from India reached $388. Mediker. During the FY2009. The company has 11 manufacturing facilities including six in India and five outside India. Unilever operates under a dual structure. it markets two hair care brands under Hair & Care. the company offers perfumed oils to consumers in Bangladesh and hair creams and hair oils (with lower coconut oil content) in the Gulf countries. Unilever NV is a Hair Care Sector Analysis | 9/4/2010 12 . a perfumed non-sticky hair oil and Silk N Shine. sales and distribution of consumer products and services such as hair care. Parachute Advanced revitalizing hot oil and Parachute Advansed cooling oil in the hair care product category. skin care and health foods. Its products include Camelia. an increase of 11. the Asian sub-continent. The company's products and services are marketed in more than 20 countries in the Middle East.4 million in 2009.4% over 2008.6 million in FY2009. The company's net income totalled $38. a hair conditioner.The market for Hair Gel for men is growing at a rate of 12 per cent to 15 per cent. Shanti Badam Amla. an increase of 23. the consumer products division recorded revenues of $454. Aromatic.4% over 2008. Starz. Hercules and Sundari. Australia and the US. Hair Code. accounted for 79% of the total revenues in FY2009. personal and homecare segments. Marico Limited generated revenues of $491.4 million in the financial year (FY) ended March 2009. Black Chic. Unilever is a global manufacturer and marketer of consumer goods in the food. Nihar. Oil of Malabar. MAJOR PLAYERS MARICO LIMITED Marico Limited (formerly Marico Industries) is engaged in the manufacture. the company launched Almond Gold non sticky hair oil with almond proteins) under the brand Hair & Care.5 million. an increase of 25. The company sells various hair care products under brand names such as Parachute.
Unilever acquired TIGI’s professional hair product business and its associated advanced education academies for a cash consideration of $411. Marico's focus on sustainable profitable growth is manifest through its consistent financial performance -a CAGR of 21% in Turnover and 27% in Profits over the past 5 years. Norway and Sweden. The Western Europe region includes operations in France. The Americas and Asia-Africa Central and Eastern Europe (CEE). operate as a single economic entity: Unilever. the personal care division recorded revenues of $16.3%. The group's primary operating segment comprises three geographic regions: Western Europe. advertising and promotional activities. while Unilever plc is a public limited company registered in the UK and Wales. and China and has operations in over 170 countries. The increase in revenues was attributable to underlying volume growth of 2.while setting a record of several consecutive quarters of year on year growth. Germany. Switzerland.7 billion in FY2009.43 for Profits and 39 for Sales. Revenues from Asia-Africa CEE. Denmark. Spain. The Marico scrip is listed on the Bombay Stock Exchange (BSE) (Code 531642) & on the National Stock Exchange (NSE) (Code "MARICO") Hair Care Sector Analysis | 9/4/2010 DABUR 13 .4% of the total revenues in FY2009. France. a decrease of 33. Netherlands. The Americas region includes operations in North America and Latin America. Catwalk and S-Factor.4 billion in the financial year (FY) ended December 2009. The two parent companies. reached $20. Australasia and Central and Eastern Europe. It operates through subsidiaries in Germany. The Asia-Africa CEE region includes operations in the Middle East. Unilever generated revenues of $55.0% over 2008. the UK. Africa. along with the group companies. TIGI's major brands include Bed Head.5 billion. North-East Asia. Italy. driven by stronger innovation.7% over 2008. A total of 70 Million consumer packs from Marico reach approximately 130 Million consumers in about 23 Million households.1% over 2008. a decrease of 1. In April 2009. the US.9% over 2008. The UK. an increase of 2.public limited company registered in the Netherlands. During the FY2009. South Asia. The company's net income totalled $4. through a widespread distribution network of more than 33 lakh retail outlets in India and overseas. an increase of 4. South-East Asia.7 billion in FY2009. Asia-Africa CEE accounted for 37. Belgium.5 million. Unilever NV and Unilever plc.
feminine hygiene. home care.9 million in the financial year (FY) ended March 2009. health supplements. The consumer care division (CCD) caters to seven distinct segments: hair care. digestives & candies. Hair colorants indicate strong growth trends with a YoY (year over year) growth of 8 per cent.1% over 2008. oral care. the total hair color industry in India is around Rs 650 crore. Today. baby oils & skin care and foods. and baby care have accelerated growth in personal care market. Godrej and Revlon and Henkel-Schwarzkopf are some of the major brands in this country Today. Hair colorants Hair color market has seen a boom in recent years. Egypt.1% over 2008. This is further divided into the retail and the salon segment. as they are cheaper for consumers and lack the chemicals of conditioners.8 million retail outlets all over India. and international business. The company operates through three business units: consumer care business. These products are marketed under brands Dabur Amla. Hair colorants & Conditioners According to A C Nielsen (the world's leading marketing information company). The company's net income totalled $80. The former is growing at over 20% Hair Care Sector Analysis | 9/4/2010 14 . they have become the way of life. hair conditioners in India still face a difficult market due to long established habit of using hair oil and ayurvedic treatments.Dabur India Limited (DIL) is a fast moving consumer goods (FMCG) company that manufactures and distributes products in health care. the UAE and the UK. mustard oil and shampoos. an increase of 17.1 million in FY2009. consumer health business. Nigeria. hair colorants. L’Oreal.000 distributors and over 2. personal care and food products sectors. Dabur India Limited generated revenues of $583. Gone are the days when hair conditioners and hair colorants were used occasionally to look beautiful. about 5. Vatika and Anmol. an increase of 19. Bangladesh. However. It operates in India. Hair colorants are substitutes for hair dye to counter graying hair. Nepal. The company’s distribution network includes 50 carrying and forwarding (C&F) agents. The hair care segment products include hair oils.
Johnny-come-lately brands from ITC such as Fiama di Wills.annually. But with the increasing number of youth in the country. it was largely to cover grey hair. Dabur. with brands such as Chik and Meera. According to market research Godrej’s market share at 40 per cent. it’s largely due to demand. it has become a fashion statement. however. the share of hair conditioners is about one-third. But market research shows that there was a growing population of 15-45 males which patronized the category in a big way. the share of hair conditioners is merely one-fifteenth of the shampoo market.200-crore but it has fragmented where the smaller players in the market such as Dabur India and CavinKare have registered sizzling growth rates recently. Conditioners The hair conditioner market is estimated at around Rs 200 crore and is growing at about 40 to 50 per cent a year. In India. with a growth rate of 10. When hair colors first came to India. In fact. According to industry data. especially with the young and trendy. while value growth achieved by the industry in the first nine months of the financial year 2009-10 slowed down to 9. Rest of the brands make up the remaining 37 per cent. Vivel and Superia. Hair Care Sector Analysis | 9/4/2010 15 . followed by L’Oreal at 15 per cent and Revlon at 8 per cent. too registered a 11 per cent growth. ITC's brands also carved out a two per cent share of the market. if there are more brands in the Indian market. In most mature markets. while CavinKare.5 per cent have outpaced category growth in the first nine months of this fiscal. slower than the market at 7. Market leader Hindustan Unilever's growth in shampoos this fiscal was. with a growth of 19.2 per cent growth recorded in the comparable period of the last year.3 per cent compared with the 15. more than a decade ago. Hair shampoos Hair shampoo market in India is pegged at Rs 2.4 per cent in the nine months of 2009-10 outpaced market growth. Today.8 per cent. Hair colors were traditionally aimed at the 15-45 age female segments.
which makes it a complete hair care brand. Hit by food inflation In the case of CalvinKare. which impinged on disposable incomes. the slower growth in the shampoo market this fiscal was due to the spiralling food inflation. It has stuck to its strategy of offering shampoos which are natural products. Hair Care Sector Analysis | 9/4/2010 16 .Dabur's brands have seen 20-30 per cent growth rates for the fourth year in a row. Besides that it has added more variants to its Vatika range — earlier it had only two variants but added root strengthening and hair fall control shampoos.1 per value growth in the comparable period last year (see table).200-crore market for shampoos also includes Rs 600 crore of antidandruff shampoos. as well as the delayed monsoons last year. Vatika also had a packaging makeover and extended the brand to hair oil as well. The Rs 2. The company's brands still grew better than the last year – growth at 11 per cent the first three quarters of this fiscal bettered the 8.
The Dove hair-care range. continue their stronghold specially in semi-urban and rural markets. we will come up with the consumer surveys. Lux with a limited presence in the category and ayurvedic brand Ayush which is sold through the company’s direct selling arm. while lowtier brands include Ayur and Chik. Sachets at price points of Rs 1. Pantene and Head & Shoulders occupy the next rung of pricing. 2 and 3.4 per cent. Dabur increased share from 5. their growth patterns and the key industry players in each category.9%.2 per cent. positioned as `premium niche’ similar to its soap variant. Vatika and Garnier Ultra Doux constituting the bulk of the market. L’Oreal’s Garnier Ultra Doux and Dabur’s Vatika. While L’Oreal and now Dove are at the top of the heap. Other haircare brands from HUL’s basket include Lakme Hair Next at the mass-premium level. targeting and positioning framework for a new entrant to invest and thrive in this particular industry. We have analyzed the hair care industry as a whole under the framework of porter’s 5 forces analysis. HLL’s Clinic Plus and P&G’s Rejoice are at the mid level (price points: Rs 55-60 for 200 ml). L’Oreal. comprises shampoos.6 per cent to 6.1 per cent to 11. The top-end constitutes new entrant Dove. conditioners and leave-ons. market innovations and the segmentation. Future Research This report aimed at broadly reviewing the hair care industry in India and its growth pattern in the last few years. meanwhile. while CavinKare too saw a marginal increase in share from 11.4% share. followed by Sunsilk at 10. We also have covered different categories of products under hair care. its biggest brand. has approximately 34% share. Hair Care Sector Analysis | 9/4/2010 17 .Given the lion's share of the market HUL has. Clinic. The domestic shampoo market is majorly split into three distinct tiers by price. even though its growth was slower than the others. HLL’s Sunsilk. its value share of the market only dropped marginally from 46 per cent to 45. In the subsequent report. followed closely by Sunsilk. P&G’s Pantene and Head & Shoulders. Average price points in this segment range from Rs 115-240 for 250-ml bottles.2 per cent. Still HUL leads the overall shampoo market with a 45.
htm http://www.cosmeticsdesign.com/consumer_goods_retail/cosmetics_grooming/indian_f mcg_industry_outlook_2013.com/businessline/iw/2001/01/21/stories/0521e051.References F32ADB7B-0B84-44EF-9034-709BA74E7650-1-data monitor report on the hair care sector in india http://www.com/2010/04/22/stories/2010042251110500.reportbuyer.equitymaster.marico.co.com/india/fmcg/overview/hair-care/ Global Industry Analysts.naukrihub.superbrands-news.thehindubusinessline.html http://www.com http://www.com/Products-Markets/World-hair-care-marketvictim-of-its-own-success http://www.com/2005/05/27/hair-colour-market-boomsindia.hul..htm http://www.com/research-it/sector-info/consprds/consprdsproducts.htm http://www. Inc.hinduonnet.html http://www. (GIA) Hair Care Report http://www.in Hair Care Sector Analysis | 9/4/2010 18 .
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