Comprehensive Pack

FMCG

1
•Industry Overview :3
•Category Analysis
• Bath and Shower : 16
• Haircare : 24
• Deodrants : 33
• Breakfast Cereals : 43
• Softdrinks : 54
•Company Analysis
•HUL : 63
•Patanjali : 78
• ID : 102
 Industry Overview

3
 FMCG industry is bouncing back after facing 3 shocks in the last 3
years.

GROWTH

Impact of Rural
distress due to
poor monsoons
Note: The above growth data is based on the growth of the major listed FMCG companies.
4
 Rural markets contribute to 40% of the industry revenues and has
been growing faster than the urban market in the last few years.

IMPORTANCE OF RURAL MARKET

URBAN – RURAL BREAK-UP (2017) RURAL FMCG MARKET GROWTH

5
FMCG PER -CAPITA CONSUMPTION

Indian FMCG per capita consumption is

• half of Indonesia,

• one‐fourth of China and

• one‐twelfth of Thailand.

6
 Modern trade constitute 9% of the overall FMCG sales.

SHARE OF MODERN RETAIL IN FMCG (2016)

7
CHANGING CONSUMER BEHAVIOR ( Excerpts from Interview of Mr.
SanjivMehta, MD&CEO, HUL to Edelweiss Securities)
• Living the moment is more important (FOMO and YOLO)
• Self Identity: Packaging and showcasing oneself loudly is the new mantra. There is
tabloidization of self with every aspect of one’s life being curated and performed.
• More personalisation: Designed for me and not designed for masses. Manifestations
are seen in:
(1) Products that fit me – Bespoke is all about me;
(2) Learn about me – the product needs to know what I need; and
(3) I am the curator – so I decide what I will have, how I will have.
• Breaking stereotypes of gender and professional to script its own success:
Manifestations are: (i) Reject labels by challenging social prejudices and taboos; (ii)
Incorporate the unconventional by embracing unconventional roles and ways of
doing; (iii) I do it ‘My’ way trend and rejecting scripted paths in order to leapfrog
towards success.
• Allure of authenticity: India is seeing renewed connect with traditions, nature and
authentic values. Manifestations of this are seen in:
(i) Search for one’s roots – revival of tradition, history and mythology;
(ii) Being proud of local – Celebrating both the style and substance in the local; and
(iii) Return to Nature – A quest for a more natural and authentic way of living.
8
SOME COMMON STRATEGIES ADOPTED BY FMCG COMPANIES

• Product Innovations

• High spend on advertising

• Promotions and Offers

• Premiumization

• Smaller Package sizes

• Focus on rural market

• Third Party Manufacturing

• Green initiatives
9
WEIGHTED AND NUMERIC DISTRIBUTION

Consider 2 brands – Lifebuoy soap and Dove shampoo. Lifebuoy soap

is sold from 10,000 out of the total 20,000 outlets in Hyderabad. These

10,000 outlets sell 80% of the bar soaps sold in Hyderabad. Dove

shampoo is also sold from 10,000 out of the total 20,000 outlets but these

10,000 outlets sell 20% of the premium shampoos sold in Hyderabad.

For which brand, HUL should increase the number of outlets and for

which brand they should increase the sales from the existing outlets?
10
WEIGHTED AND NUMERIC DISTRIBUTION

Brand Numeric Distribution Weighted Distribution

Lifebuoy =(10,000/20,000)*100 80%

=50%
Dove =(10,000/20,000)*100 20%
=50%

11
SOME COMMON STRATEGIES ADOPTED BY FMCG COMPANIES
•FMCG companies influence consumers with
Promotion and intelligent deals
Offers • For example, in the case of soaps &
cosmetics; 4 soap cases are offered at the price of 3,
selling the range of deodorants for men &
women at a discounted price
Product innovation seen as the major enabler for growth.
For Example,
• Colgate-Palmolive has launched a toothpaste for the
inflammatory gum problem of pyorrhea
Product Innovation
• ITC is coming up with new multigrain Bingo
and Customization
• Dabur has launched its sugar free variant for
Chyawanprash in India
• ITC has ventured in coffee & chocolates segment
under the Fabelle and Sunbean brands.

12
SOME COMMON STRATEGIES ADOPTED BY FMCG COMPANIES
•Despite the slowdown, consumers are willing to buy
premium goods at higher prices especially in categories
Premiumization
like convenience, health, and wellness
• Companies are launching premium versions in the
categories in which they operate

•Companies are increasingly introducing smaller stock

Rising Importance of keeping unit.
Small Size Packs
•This helps them to maintain volumes from price-
conscious customers and expand their consumer base..

13
SOME COMMON STRATEGIES ADOPTED BY FMCG COMPANIES

Companies are now focusing on the rural market

Focus on Rural segment which is growing at a rapid pace and
Market
focused on improving their distribution networks to
expand their reach in rural India.

•This approach has helped FMCG companies focus

on front-end marketing
Third-party
• Reservation of several items for SSI as well as
manufacturing
additional tax incentives have made 3rd party
manufacturing a popular route for many big
players
14
 Category Analysis

15
 Bath and Shower

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 96% of the products in bath and shower are bar soap and
Talcum Powder. The contribution of shower gel and liquid
soap are around 4%.

BATH AND SHOWER : CATEGORY BREAK-UP

% of
Total
Value (in Category
Products Rs. Mn) Value
Bar soap 185499 89%
Body wash and
Shower Gel 2267 1%
Liquid Soap 6409 3%
Talcum Powder 14096 7%
Total 208271

17
 Though the overall growth is expected to slow down, body
wash, shower gel and liquid soap will still grow at impressive
rate.
BATH AND SHOWER : GROWTH

Category CAGR
2012-17 2017-21
Bar Soap 11.5% 5%
Body Wash & 17.9% 16%
Shower Gel
Liquid Soap 18%% 24%
Talcum Powder 4.5% -2%
Overall Bath 11.4% 4.5%
and Shower

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 HUL, GCPL, Reckitts and Wipro holds around 70% share

BATH AND SHOWER : COMPANY MARKET SHARES

•Though HUL is the market leader with
Market Shares
43% share, it has lost around 8% share along
Company 2010 2017
with other major loser Nirma which also
Losers
lost 5.5% share since 2008.
HUL 54.3% 43.3%
•Reckitts and ITC are the major gainers.
Nirma 6.60% 1%
Gainers •Reckitts share increase is due to it’s

GCPL 9.8% 10.1% leadership position in liquid handwash

Reckitts through “Proper Handwash Campaigns”
Benckiser 5.5% 7.6% launch of new dettol soap variants and
Wipro 8.2% 8.5% dettol body wash
ITC 3% 4.2% •ITC has improved it’s share through
KSDL 0.8% 1.5% Fiama Di Wills, Vivel brands
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 Top 6 brands constitute 50% of the bath and shower category.

BATH AND SHOWER : BRAND SHARES

Brand Company Market Shares

2012 2017
Lifebuoy HUL 15% 15.2%
Lux HUL 13% 13%
Santoor Wipro 8.1% 8.3%
Dettol Reckitt Benckiser 6.5% 7.6%

Godrej GCPL 7.1% 6.6%

No.1
Dove HUL 3.9% 4.6%
20
 Focus of new launches has been on male targeted
products, combination products and products with new
attributes.
BATH AND SHOWER : KEY TRENDS
• NEW LAUNCHES
• Gender specific products:
•Ex: Acqua pulse men’s shower from Fiama Di Wills
•Nivea for men vitality Fresh Shower Gel
• Focus on Multi purpose products or products with New Attributes:
• Examples:
•Wipro’s soap brand variant Santoor Glycerine with Vitamins.
•Godrej consumer products launched Cinthol Confidence + as a health
soap with deodorising properties.
• Lifebuoy Lemon Fresh Body Wash, Dove Gentle Exfoliating Body Wash
and Fiama Di Wills Peach & Avocado Deep Moisturize Shower Gel
21
 Nature based products are making a huge impact and yield
high margin.

Nature based Products:

• The trends towards natural, herbal and Ayurvedic continued to be strong in the
Indian market
•Companies are focussed on products with natural ingredients like rose
petals, saffron, sandalwood, mint and other herbs.
•Karnataka Soaps & Detergent has a brand based on natural
ingredients, Mysore Sandal Millennium, priced at Rs750 per unit of
150g.
•Organic and natural soaps from brands such as Fab India and
Khadi also started to become quite popular.
•Patanjali has launched a wide range of naturally-positioned bar
soaps in the market, including Kanti Almond Kesar, Kanto Aloe
Vera, Kanti Haldi Chandan, Kanti Lemon Honey and Patanjali Rose
body cleanser
22
RECENT BRAND TRENDS
• There has been a high level of innovation within body wash and shower gels
recently, with brands focussing on aroma, functionality, extra moisturising and
exfoliating properties. For example,
 Godrej launched a new variant of it’s popular soap brand Godrej No 1
(Germ Protection Soap )and positioned it as a natural-based bar soap fit
for germ protection.
Palmolive Thermal Spa Mineral Massage Shower gel
• Hindustan Unilever launched a new advertisement for its bar soap brand Lux.
Traditionally, the Lux brand has been endorsed by the leading stars of
Bollywood. For the recent television advertisement for Lux, Kareena Kapoor
Khan was the brand ambassador.
23
 Hair Care

24
 Hair Oils/ Gels constitute almost half of the Hair-Care
category.

HAIR-CARE : CATEGORY BREAK-UP

Value in %of Total Category

Products Rs.mn Value

Hair Oils/Gels 94,834 49%

Shampoos and
Conditioners 53,517 28%
Colourants 36,965 19%

Saloon Hair Care 7397 4%

Total 1,92,713

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 Colourants, Saloon Hair care, Styling products will
drive the growth in the Hair-Care category.

HAIR-CARE : GROWTH

Growth (CAGR)
Category 2012-17 2017-21
11.5% 9.2%
Hair Oils/Gels
6% 5.8%
Shampoos and
Conditioners
Colourants 14.4% 11.3%
Saloon Hair Care 18.1% 15.2%

Total 14.2% 12.4%

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 Hair care category is quite fragmented. Top 7 companies put
together account for only 60% of the share.

HAIR-CARE : COMPANY MARKET SHARES

Company Market Shares
2012 2017
HUL 15.2% 15.9%
Marico 7.6% 10%
Dabur 11.5% 8.8%
L'Oréal India Pvt Ltd 7% 8.2%
Procter & Gamble 9.5% 7%
Emami 3.9% 4.8%
GCPL 3.5% 4.2%
Patanjali 1% 2.1%
• L’Oreal’s increase is due to it’s strong presence in Saloon Hair Care and Colourants
Marico’s growth was due to it’s increasing strength in hair oil variants - Parachute Advanced
Ayurvedic Oil, Parachute Advanced Jasmine and Nihar Shanti Amla, and by its largest brand
Parachute
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Coconut Oil .
 Clinic Plus, Dabur and Parachute are the 3 biggest Hair-care
brands.

HAIR-CARE : BRAND SHARES

Brand Company Market Shares

2012 2017
Clinic Plus HUL 8.7% 8.4%
Dabur Dabur India 7.2% 5.8%
Parachute Marico 4.7% 5.8%
Coconut Oil
Head & P&G 5.0% 3.9%
Shoulders
Himani Emami 3.1% 3.3%
Navarathna
Pantene P&G 3.9% 3.1%
Dove HUL 2.4% 2.5%
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HAIR-CARE : KEY TRENDS
•Colourants and Saloon Hair care will be fastest growing sub-categories in
Hair care
•Faster growth of DIY products with smaller packages
• Product with anti-dandruff functionality are the biggest selling among
Shampoos and Conditioners
• Companies trying to improve the sale of conditioners as it’s penetration and
frequency of usage is very low compared to Shampoos

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BRANDS ADDRESSING NEW CONCERNS
 Consumer have many serious concerns about their hair which did not exist
earlier - such as volumising, dryness, heat, moisturising, shine, colouring,
regrowth etc.

 Customers are also willing to spend more for hair care.

 Brands are addressing specific needs with new products - TRESemmé

Botanique Detox & Restore Shampoo, The Body Shop Rainforest Volumising
Shampoo, BBLUNT Intense Moisture Shampoo For Seriously Dry Hair, Dove
Elixir Nourished Shine Hair Oil - Hibiscus & Argan Oil, Toni&Guy Heat
Protection Mist: High Temperature Protection and BBLUNT Salon Secret High
Shine Creme Hair Colour.

30
Weather-Specific Products
Marico launched a new television advertisement for its Parachute Advansed Hot
Oil, targeting the winter season.

The company carried out the campaign #MagicofWarmth and targeted mainly
the north Indian consumer base.

The new campaign aimed to build an emotional bond with consumers and had a
subtle message that “be it relationships gone dry or hair, all one needs is a little
bit of warmth”.

The campaign was initially run on the digital platform to create curiosity among
consumers, and was well received and later aired on television.

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SOCIAL MESSAGING IN ADVERTISING

•Vatika’s new Brave & Beautiful campaign, based on a story of someone coming
out stronger after losing all her hair to cancer, delivers this message aptly.
•Similarly, the ‘700 Se 7 Kadam’ campaign talks about protecting the dignity of
women in India by bringing toilets closer to their homes.
•These new campaigns, both of which were first released in the digital space,
have been very well received.
•The Brave and Beautiful campaign, for instance, received over three million
views within just a month of its online launch and has become one of the most
talked about campaigns in recent times.

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 Deodrants

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 Indian Deodrant market is about Rs. 3800 crs and 70% of the
market is for Men’s Deodrants.

DEODRANTS : CATEGORY BREAK-UP (GENDER WISE)

Value in %of Total Category

Products Rs.mn Value

Men’s Deodrant 26,301 69%

Women’s Deodrant 11,816 31%

Total 38,118 100%

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 Deodrant pumps which was no existent till 2011
constituted 21% of the market in 2016.

CATEGORY BREAK-UP : DEODRANT TYPE

2011 2017
Value in Rs. % Value %
Mn in Rs.
Product Type Mn
Pumps 0 0% 6945 22%

Roll ons 108.6 1% 240 1%

Sprays 7821 99% 24135.5 77%
Wipes 0 0% 8.8 0%
Total 7929.6 100% 31330 100%

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 Deodrant Pumps is expected to grow the fastest in
this category

DEODRANTS : GROWTH

Growth (CAGR)
Category 2012-17 2017-21
Pumps 39% 28%

Roll ons 13% 11%

Sprays 17% 14%

Wipes 12% 11%

Total 22.7% 16%

36
 Vini, Nivea, Helen and ITC has been the biggest
gainers while HUL lost heavily.

DEODRANT : COMPANY MARKET SHARES

Company Market Shares
2011 2017
Vini Cosmetics Pvt Ltd 0% 20.4%
McNroe Chemicals Pvt 10.7% 10.5%
Ltd
Nivea India Pvt Ltd 5.9 10
Hindustan Unilever Ltd 29.3% 9.5%
Helen Curtis India 1.7% 7.9%
ITC 0% 7.8%

37
 Fogg, Wild Stone and Park Avenue are the 3 biggest brands.

DEODRANT : BRAND SHARES

Brand Company Market Shares

2011 2017
Fogg Vini Cosmetics 0% 20.4%
Pvt Ltd
Wild Stone McNroe 10.7% 10.5%
Chemicals Pvt
Ltd
Park Avenue Helene Curtis 1.7% 7.9%
India
Engage ITC 0% 7.8%
Axe HUL 17.8% 6.7%

38
 HUL

•HUL has been the biggest loser in this segment because of the late entry into
Pumps and jaded advertising campaigns.
•Though the Deodrant market has grown from Rs. 793 crs to Rs. 3133 crs (4
times) between 2011 to 2017, HUL’s Deodrant revenue grew from Rs. 232
crs to only Rs. 305 crs despite company having multiple brands like Axe,
Dove, Denim, Rexona.
Vini Cosmetics

•Deodorant pumps is fairly new and barely three years old and was
developed by Vini Cosmetics through its Fogg brand.
•Vini Cosmetics has launched successful advertisement campaigns and also
been focussing on launching new variants and scents such as Xpressio,
Xtremo, Impressio and Make My Day.
•They have also smartly brought Deodrants as a gift product (typically shirts,
watches, ties, wallets were used for gifting)
 Park Avenue and ITC

•Raymond’s Park Avenue brand has made up a lot of ground over the past
two years as a result of the company’s emphasis on increasing distribution.
• The company also launched the New Park Avenue Acti-Cool deodorant
range, which claims to be a 2-in-1 product which gives the benefit of both
cooling and fragrances
•ITC entered the deodrant market only in 2013 but have gained more than
7% market share in just 3 years.
• The brand expanded its portfolio with the introduction of ‘Engage Perfume
Sprays’ in four variants: W1 and W2 for women and M1 and M2 for men.
New Launches
Long-Lasting Fragrances
• Players within deodorants are focusing on launching products with claims of
longer-lasting fragrances to tap into the consumer need for such benefits.
• Some prime examples of this trend are Nivea Fresh Active Original
Deodorant, which is claimed to last for 48 hours,
• the Spinz Perfumed Deodorant Spray collection of five fragrances, which are
positioned as lasting for a day and target office-going consumers with a
claim of five fragrances for each office day from Monday to Friday, and
• Nike Extreme Long Lasting Deodorant for Woman.
Anti-perspirants
• India has a tropical climate and a long coastal line with hot summers,
perspiration is a major issue for consumers.
• Hence most brands focusing on their antiperspirant properties during
marketing campaigns.
 Breakfast Cereals

43
 Break-fast cereals market is about Rs. 1735 crores and
about 48% of the category is non-flakes.

BREAKFAST CEREALS : CATEGORY BREAK-UP

%of Total Category

Products Value in Rs.mn Value
Hot Cereals (Oats) 8263 34%
Children Breakfast
Cereals 1348 6%
Flakes 11447 47%
Muesli and Granola 3420 14%
Total Breakfast
Cereals 24478 100%

44
 Hot Cereals and Muesli show much higher growth than
Flakes.

BREAKFAST CEREALS : CATEGORY WISE GROWTH

Growth (CAGR)
Products 2012-17 2017-21
Hot Cereals (Oats) 24.2% 22.1%
Children Breakfast
Cereals 13.2% 11.4%
Flakes 12.4% 11.2%
Muesli and Granola 24.8% 20.3%
Total Breakfast
Cereals 18.3 16.8%

45
 Though Kellog is the market leader, it has lost significant
market share in the last 5 years.

BREAK-FAST CEREALS : COMPANY MARKET SHARES

Company Market Shares
2013 2017
Kellog 65.5% 55.5%
Baggry’s 6.1% 5.2%
Pepsico 9.1% 9%

Marico 4.8% 6.9%

Mohan Meakin 2.3% 1.3%

GSK 3.1% 4.3%

• Kellogg lost it’s market share due to the growth of Oats segment where it’s not
very strong as in Flakes.
• Marico increased it’s share due to successful launches of Indian flavors under
Saffola brand.
46
BREAK-FAST CEREALS : BRAND SHARES
Brand Company Market Shares
2013 2017
Kellogg’s Corn Kellogg India 39.6% 34.8%
flakes Limited
Bagrry’s Bagrry’s India 6.7% 5.2%
Limited
Quaker Pepsi co 9.1% 9%

Saffola Marico 5.7% 6.9%

Kellogg’s Oats Kellogg India 5% 4.9%

Limited
Horlicks Oats GSK 4.5% 4.3%
BREAK-FAST CEREALS : KEY TRENDS

RISING HEALTH AND AWARENESS DRIVING GROWTH:

• Along with growing income levels, there has also
been a rise in health and wellness awareness.
• Indian consumers are gradually realising the
importance and benefits of functional breakfast cereals,
such as high-fibre products aiding weight maintenance,
and products high in wholegrain content being
beneficial to the heart.
Kellog’s has been the front runner in this category, especially corn
flakes.

BREAK-FAST CEREALS : KEY TRENDS

KELLOG’S THE FRONT-RUNNER:

• Kellogg's invested in changing the food habits of Indian consumers
by educating them about the health benefits associated with breakfast
cereals.
• The company expanded its distribution footprint by 50% over the
last three years.
•The company regularly introduces new flavors focussing on taste and
health.
To take on kellog’s, competitors are launching non-flakes new
products.

BREAK-FAST CEREALS : KEY TRENDS

HOT CEREALS AND MUESLI SHOW HIGHER GROWTH:

• Due to Kellog’s very strong position in flakes,
competitors are launching products in non-flakes
products like hot cereals .and mueslis.
• That’s one of the main reasons these two segments are
growing much faster than flakes.
• Five years back, mueslis and hot-cereals were very
small segments within breakfast cereals but today they
are almost the size of flakes.
To take on kellog’s, competitors are launching non-flakes new
products.

BREAK-FAST CEREALS : KEY TRENDS

GROWTH OF INDIAN FLAVORS:

• Companies are increasingly launching products with Indian
flavors:
•Marico launched Saffola Masala Oats in various flavours, such as
Veggie Twist, Peppy Tomato and Classic Masala (for the north, west,
east India markets) and in Masala and Coriander, Curry and Pepper,
Pepper and Spice and Veggie Twist (for the south Indian market).
 Breakfast cereals are being launched in very small
packet sizes.

BREAK-FAST CEREALS : KEY TRENDS

SMALL PACKET SIZES:

• As manufacturers are trying to increase their consumer base, they have come

up with various pack sizes to influence the first-time customer to try the

products and then eventually become a regular customer.

•For instance, small pack sizes even starts at Rs. 5.

 Companies are looking at women and children specific
products for further growth.

BREAK-FAST CEREALS : KEY TRENDS

Focus on Women and Children:

• For women, Kellogg recently launched Special K Protein & Fibre which is

Cranberry-flavoured and made with added protein, fibre, vitamins and iron. It is

also endorsed by Deepika Padukone.

• For Children, many new flavors like Choclate, Strawberry, honey are launched.

Break-fast cereals are also promoted as evening snack in small pack-sizes.

 Soft Drinks

54
 Bottled water, Carbonates, Fruits and Vegetable juices
constitute about 95% of the soft drinks market.

SOFT DRINKS : CATEGORY BREAK-UP

% of Total Category
Products Value in Rs.crs Value
Bottled Water 14270 24%
Carbonates 27670 46%
Fruits and vegetable
Juices 16210 27%
Sports and Energy
Drinks 1110 2%
Concentrates 940 2%
Total 60200 100%

55
 Almost 46% of Soft drinks sales by value are to on-trade
channel.
SOFT DRINKS : OFF-TRADE VS ON-TRADE BY VALUE
Products Off-trade On-trade
Bottled Water 49% 51%
Carbonates 41% 59%
Fruits and vegetable
Juices 77% 23%
Concentrates 100%
Sports and Energy
Drinks 71% 29%

Overall Soft drinks 54% 46%

Note:
1. On-trade is selling to hotels , restaurants, pubs.
2. Off-trade is sales to the end customers through retail outlets.
56
SOFT DRINKS : CATEGORY WISE GROWTH

Products 2012-17 2017-21

Bottled Water 21.8% 18.7%
Carbonates 9.6% 8.4%
Fruits and vegetable
Juices 20.7% 17.8%
Concentrates 5.3% 4.9%
Sports and Energy
Drinks 17.6% 16.4%
Overall Soft-drinks 16.4% 14.5%

57
SOFT DRINKS: COMPANY MARKET SHARES
Company Market Shares
2013 2017
Coca-Cola 39.3 34.2
Pepsico 25.8 24.0
Holdings
Parle Agro 6.5 7.2

Parle Bisleri 3.9 5.2

Dabur India 4.5 5

Manpasand 0 1.4
Beverages Ltd

58
BREAK-FAST CEREALS : BRAND SHARES
Brand Company Market Shares
2013 2017
Maza Coca-Cola 7.2 8.3

Sprite Coca-Cola 8.2 7.2

Slice Pepsico 5 5.9

Frooti Parle Agro 4.5 5.6

Thums-up Coca Cola 7.2 5.4

Bisleri Parle Bisleri 4.5 5.2

Real Dabur 5.1 5

 KEY TRENDS

• Continued high spend on advertising and brand ambassadors.

• Small Pack sizes serves the purposes
• Consumers consume less calories without giving up carbonates
• Companies can cater to price sensitive segments
• Entry route for new entrants (For example, Manpasand Beverages launched Mango
Sip in juice drinks at INR5.00. This new product is popularly known as the ‘samosa
pack’ and is available in various packs, including 200ml liquid brick cartons and
160ml and 250ml PET bottles)
• Launch of juice-based carbonates
• For example, Coca-Cola India launched Fanta Green Mango in 2016, which was
quite popular among consumers. This product was launched after Prime Minister
Narendra Modi asked the country’s major soft drinks companies to add at least 5%
fruit-based content to their products and it became popular primarily because of its
refreshing taste.
 Company Analysis

61
PARAMETERS FOR COMPANY ANALYSIS

• Business Mix

• Brand Portfolio and Brand performance

• Level of dependence on power brands

• Strategic Overview

•New Product Launches in the last 2-3 years

•Recent Marketing Campaigns

•Advertising Spend
 HUL

63
 Personal Care products contribute 48% of HUL ‘s Sales
but 65% of it’s profits.

BUSINESS MIX: REVENUE AND PROFIT CONTRIBUTION

Note
1. In Personal Care, Soaps contribute to 30% ,Cosmetics and Toileteries contribute 18% of the total revenues
2. In Home Care, Detergents contribute to 19% of the revenues and the remaining come from products like Dish-
wash, Water Purifier etc.
 Margins of Home Care and Refreshments are much
higher than that of other segments.

BUSINESS MIX : SEGMENT WISE MARGINS

REASON FOR DIFFERENCE IN MARGINS

• Involvement
• Value Weightage
Value weightage is an important factor in making the customer
trade up.

VALUE WEIGHTAGE ILLUSTRATION

Product Monthly expenditure % of total monthly

Category (Rs.) expenditure
Rice 2000 40%
Fruits and 1000 20%
Vegetables
Personal-care 100 2%
products
Others 1900 38%
Total 5000 100%
STRATEGIC OVERVIEW

Source: Way2Wealth Brokers Ltd.

68
SELECTIVE BRAND PORTFOLIO:

69
 HUL had 12 brands with revenues of over INR1000 crs in 2017 (vs. seven in
2011). Of this, the company has 6 brands with revenues in excess of INR
2000 crs.
REVENUES FROM DIFFERENT BRANDS

2017 2017

70
 Some companies are over dependent on their power brands
which could impact their growth and profitability

Company Dependence on Power Brand

Player Brand Market Sales Last 3 year’s

Share Dependence CAGR

HUL Wheel 15% 9% 15%

HUL Lux 15% 7% 10%
HUL Lifebuoy 14% 6% 10%

Marico Parachute 45% 28% 9%

Jyothy labs Ujjala 72% 22% 16%

Supreme
Emami Navaratna 49% 27% 15%
Oil
71
 Future categories have been delivering 2.5x time the average
company growth over the last few years.

FUTURE CATEGORIES

Source: Company, Edelweiss research

72
 New Products Launches /Brand Extensions in the last 2-3 years

• Acquired Indulekha, a premium brand with strong credentials around

ayurveda. The brand has strong equity among consumers and gives us an
opportunity to leverage its ‘natural’ and ‘therapeutic’ positioning.
• Launched a new and expanded range of authentic Ayurvedic Personal Care
products under the LEVER Ayush brand name. Co-created with Arya Vaidya
Pharmacy, the world’s leading ayurveda institute.
• Entered the Baby segment with the launch of Baby Dove. Developed for babies
with normal to dry skin, the range includes the Baby Dove Rich Moisture Baby
Bar, Baby Lotion, Diaper Rash Cream, Baby Wipes and a Sensitive Moisture
Baby Bar to take special care of babies with sensitive skin.

73
 New Products Launches /Brand Extensions in the last 2-3 years

• Introduced Surf excel Matic liquid to tap into the fast growing liquid detergent
market.
• Extended appeal to ‘young adults’, Kissan launched a new range of ‘khatta
meetha’ jams in Berry, Strawberry and Orange flavours.
• Knorr launched three new flavours—Italian Mushroom, Hong Kong
Manchow Noodles and Shanghai Hot & Sour Chicken in the international
range of soups.
• Pureit expanded its play in the growing branded Reverse Osmosis (RO)
segment through its value offering of Classic RO range of water purifiers.

74
 Marketing Campaigns

DOING WELL BY GOING GOOD

• Sunlight Banglar Guner Rang
Sunlight carried out a brand campaign in West Bengal - ‘Sunlight Banglar Guner
Rang’ - a search and mentorship programme in the realm of performing arts. With
Anand Bazaar Patrika as a strategic partner,
Sunlight delivered this message to millions of people in Bengal. The campaign
received close to 2400 entries on Sunlight’s website.
• RCRA
The Rin Career Ready Academy (RCRA) was launched in 2015 with an aim to inspire,
educate and equip youth from modest backgrounds with skills in English speaking,
office dressing and interview training.

• Brook Bond Kudumbam

The 3-Roses team kicked off ‘Brooke Bond Kudumbam’ programme to strengthen our
relationship with the ‘tea- masters’ of the Hot Tea Shops (HTS) in Tamil Nadu. Under
this programme, they provided benefits such as children’s scholarship, health check-ups,
and insurance to the teamasters. This enabled to enroll an additional 4000 HTS outlets
across 15 cities in Tamil Nadu.
75
 Marketing Campaigns

MASS CONTACT

• Knorr reached out to 12 million consumers through the ‘World on a Plate’

contest. During the event, world-renowned Chef Gary of Masterchef

Australia fame, conducted a masterclass on cooking using Knorr Chef

Masalas.

• HUL’s ‘Adda’, a unique touchpoint created at corporate houses. Through

our 100+ ‘Adda’ properties, we now serve more than 60,000 people a day.

76
 Advertising and Promotion spend has been in the range of 12
to 14 % of Sales

ADVERTISING SPEND AS % OF SALES

 PATANJALI

78
 While Patanjali has grown 1100% between FY 13 and FY 17, FMCG
market has been growing at a CAGR of 12% in the last decade.

GROWTH: PATANJALI VS FMCG INDUSTRY FMCG INDUSTRY

PATANJALI NA

NA

309

155
Net Profit in
76
Rs. Cr

Source: ROC, ET
Note: Revenue of Patanjali do not include their Pharmacy revenues which was about Rs. 870
crs in792016
 Patanjali has become the third largest FMCG company in India
after HUL and ITC

NEW PECKING ORDER IN FMCG INDUSTRY

Company Revenue in Rs.
Cr 2017
HUL 30,783
ITC (FMCG) 10,337
Patanjali (excluding pharmacy) 9,346
Nestle India 9,159
Godrej Consumer Products 9,134
Britannia 8,844
Dabur 7,691
Marico 5,918
Colgate-Palmolive 4,010
Emami 2,480
Source: Capitaline, Business Standard
80
 Ghee, Toothpaste and Hair Oil are the top 3 categories of
Patanjali.

PATANJALI’S KEY PRODUCTS

Product Revenue in 2017 (Rs.
Cr)
Ghee 1467
Toothpaste 940
(Dantkanti)
Hair Oil 825
(Keshkanti)
Soap 574
Mustard Oil 522
Flour 407
Honey 335
Washing 325
Powder
Source: Business Standard
81
 Within a short time, the company has expanded into wide
categories.

SAMPLE PRODUCT PORTFOLIO

The company is

continuously

expanding the

product portfolio and

aims to be in all the

FMCG segments

82
 FLANKER STRATEGY

•Patanjali has adopted a “flanker” strategy to bypass competition, entrench their

position and then launch a frontal attack in mainstream channels.

•Patanjali has been following a two-stage distribution strategy:

•Stage 1: Create a strong alternative distribution system for demand creation

and building word-of-mouth advocates

•Stage 2: Pivot to general trade once a sizeable consumer base is generated

from Stage 1

83
 FLANKER STRATEGY

Alternative distribution system

•In a new market, Patanjali first drives trials and consumption using dedicated
stores. These stores are essentially Ayurveda clinics, run by entrepreneurs entirely
with their own investment. They are of three types – Arogya Kendra, Chikitsalaya
and Swadeshi Kendras.
• Patanjali extends support in two ways: It trains and certifies medical practitioners
nominated by these stores in Ayurveda, and provides usage of the Patanjali brand
name.
•In return, these stores provide various services. One is free consultation by
certified medical practitioners. This assures high footfalls and likelihood of building
a large scale of early adopters. It serves as a retail store. The entire range of SKUs is
stocked across both OTC, pharmaceutical and FMCG products and there is
typically a weekly replenishment cycle. There is skillful cross-selling across
pharmaceutical and FMCG products.
84
 FLANKER STRATEGY

Alternative distribution system

•A powerful network effect is seen at these stores. Early adopters bring in
additional footfalls through strong word of mouth. The fact that a trustworthy
consultation is free in an important area such as healthcare provides a strong hook
for passing on recommendations to friends and relatives.
•These stores also serve another function – product introductions are done
extremely efficiently and decisions to continue tweaking or scaling up the product
and communication mix can happen in a short time frame.
•In October 2016, there were 10,000 dedicated stores (Chikitsalaya, Arogya
Kendra, and Swadeshi Kendras) contribute to 60 per cent of the company’s
revenues. In Delhi NCR, one of the older markets for Patanjali, there are over 400
of these stores whereas in a newer market such as Mumbai, there are
approximately
85 270 stores.
 FLANKER STRATEGY

PIVOT TO GENERAL TRADE

• Once a sizeable consumer base is built through these dedicated stores, these
consumers would expect Patanjali’s products to be available at general stores,
grocers and chemists in the vicinity of the dedicated store. These retailers are then
forced to stock up on Patanjali’s products for fear of losing out on a customer’s
goodwill. This builds a platform for the next stage of growth.
• Various towns are at different stages of evolution. For instance, the company’s
biggest market, Delhi NCR, is in Stage 2 and is responsible for revenue of ₹1,500
crore.
•In 2013, dedicated stores contributed to 80 per cent of total FMCG sales As
consumer awareness and pull were created, retailers (GT) started stocking
Patanjali’s top products (oral care and honey) despite uncompetitive margins.
This pivot to GT continued resulting in dedicated stores’ contribution falling to
around 45 per cent today.
86
 FLANKER STRATEGY

PIVOT TO GENERAL TRADE

• Mumbai is still a Stage 1 market; dedicated stores contribute to around 70 per cent
of FMCG sales.
•As consumer trials and consumer pull is created, it is increasingly evident that
availability in general trade would increase.
•Higher incidences of placards outside several outlets stating ‘Patanjali products are
available here’ bear testimony to the same.

87
 DISTRIBUTION STRATEGY

OTHER EXAMPLES OF “FLANKER STRATEGY”

•Starbucks’ Consumer Packaged Goods (CPG) Business
• Starbucks leveraged its retail store footprint to build a flourishing CPG
business.
• The intent was to capture a larger share of coffee consumption – reaching
consumers whenever they want great coffee.
• The stores provided a perfect platform to drive effective sampling and build
partnerships with retail consumers.
• Starbucks then enhanced availability through a tie-up with the FMCG giant
Kraft.
• Today, with its own network, these at-home consumption products are now
available in grocery stores, airports, hotels, and convenience stores as well.
88
 KITCHEN CONCEPT

• Patanjali is working on a kitchen concept, as part of which it will launch

products that will touch all categories of the SKUs used in an Indian kitchen.

•For instance, the company already has products that are used in the Indian

kitchen such as dishwash bar, ghee, rice (has 3 variants of rice), pulses, spices,

mustard oil, flour under the Patanjali brand name .

89
 PRICING STRATEGY

PRICING COMPARISON

•The company’s products are

priced at ~20‐30% discount to
competition, which makes it an
attractive proposition for
consumers.

90
 LOWER ADVERTISING COSTS

• The company is able to offer such discounts primarily because of having less

Advertisement and Promotion (A&P) of 5 to 6% spend versus other consumer

companies which have A&P spends ranging from 12‐18%, as a % of sales.

• Patanjali has adopted the unique information based advertising.

•For instance, the company highlights the positives of cow’s ghee, which

automatically helps sale of Patanjali Ghee.

• In the recent past, the company’s print advertising has seen a marked increase.

91
 GENRE WISE INSERTIONS OF ADS

• 84% OF Patanjali’s
Genre % of Total Insertions
electronic media
HUL Reckitt Patnjali
Benckiser
advertisements are in News
GEC 35% 38.7% 7%
Movies 25% 25.8% 5% Channel (predominantly
Music 21% 13.1% 2%
News 10% 12.2% 84% Hindi News channel), while
Kids 4% 7.3% 2%
only 10-12% of other FMCG
(Time Period: Week 1 to 52 (2016), TG: All India,
BARC India) companies’ ads are in news

channels
Source: Financial Express

92
 PERSONAL REACH OF BABA RAMDEV

• Baba Ramdev, during his yoga sessions, showcases the Patanjali products.

•After the session, he makes the attendees aware of the benefits of using Patanjali

products.

•Till 2016, close to 70mn people have come in contact with Baba Ramdev

through his yoga camps and it is believed that this can increase to 200mn going

ahead.

•This highlights the potential reach that the Patanjali brands can have without

much mainstream advertising.

93
 FOCUS ON THEMES AND CATEGORIES WHICH ARE NOT
THE PRIORITY OF OTHER FMCG COMPANIES

THEMES LESS FOCUSSED BY OTHER FMCG COMPANIES

•Ayurveda/Herbal
•Nature
•Health
•Nationalism
•Spirituality/Religion
CATEGORIES LESS FOCUSSED BY OTHER FMCG COMPANIES
•Honey
•Ghee
•Mustard Oil
• Spices etc

94
 DO NOT GET EMBARASSED ABOUT BEING BRANDED “UN-
SCIENTIFIC” OR “ANTI-MODERN” OR “UN FASHIONABLE”

EXAMPLE :
• Advertize that their product uses Cow urine
• In December 2015, the company said that they use Cow urine in 5 of their
products of which 3 are used for external application and 2 are for
consumption:
• Kayakalp Taila
• “Panchgavya” Soap
• “Shudhi” Phenyl
• “Gowdhan Ark”
• “Sanjivini Vati”

95
 DO NOT GET EMBARASSED ABOUT BEING BRANDED “UN-
SCIENTIFIC” OR “ANTI-MODERN” OR “UN FASHIONABLE”

EXAMPLE :

Godhan ark (Purified Cow Urine)

Brief Product Description (source:

www.naturalremedies.com)
Godhan ark is purified cow urine / Gomutra and
very successful in problems related to Liver,
Stomach, diabates, eczema, cancer and many
other critical diseases. It comes in liquid form. It
is produced by Divya pharmacy of Swami
Ramdev

96
 DO NOT GET EMBARASSED ABOUT BEING BRANDED “UN-
SCIENTIFIC” OR “ANTI-MODERN” OR “UN FASHIONABLE”

EXAMPLE :

97
 DO NOT GET EMBARASSED ABOUT BEING BRANDED “UN-
SCIENTIFIC” OR “ANTI-MODERN” OR “UN FASHIONABLE”

EXAMPLE : COMPANY BETTING ON BULLS TO CREATE ELECTRICITY

•The company is now working on a unique renewable source of energy — Bull

Power
• The experiment involves Patanjali, a leading MNC automobile manufacturer
and a Turkish partner.
• According to the Business Standard article,
•detailed research using turbine techlonogy , conducted over a period of
one and a half years, on the idea of generating electricity utilising a bull’s
pulling power has yielded initial success.
• The aim is to prevent the animals from being sent to slaughter.
• If the research succeeds, the company plans to provide the technology to
farmers so that the bulls become economically viable and can be prevented
from being sent to slaughter houses.

Source: Business Standard

98
 BRANDED HOUSE STRATEGY VS HOUSE OF BRANDS OF
OTHER FMCG COMPANIES
Branded House Strategy
•In this strategy, the company is the
brand.
•All the products produced will be
promoted under one brand.
•For example, Apple! Apple has
various products like Mac, iPod,
iPhone etc.
•Though all of them are different and
perform different functions but they
are all branded as ‘Apple products’.
• Generally they don’t promote
individual products (say a toothpaste).
• Instead, they promote the entire
brand which helps them save
marketing and advertising costs as
well
99
House of Brands Strategy
•In this strategy, the focus is on
development of sub-brands rather
than one parent brand.
• This is primarily done to remove
the dependency of the company on
one single brand.
• So, in case if one brand doesn’t do
well, the company can still earn
revenues from other brands and the
failure won’t hurt the company
badly.
• For example, P&G. Under P&G,
there are dozens of brands,
including Pampers, Duracell,
Gillette, and Tide to name a few.
 KEY CONCERN AREAS FOR PATANJALI

• Strong association with one political party

• High dependence on Baba Ramdev

• Weak Distribution

• Risk of branded house strategy

• Doubt about the veracity of company’s quoted numbers (revenues, market

shares, growth etc)

100
 KEY CONCERN AREAS FOR PATANJALI

Doubt about the veracity of company’s quoted numbers (revenues, market

shares, growth etc)

• Detailed product wise revenues of the company is not available (Even the
widely quoted figures in media give the break up of only around 50% of
revenues)
• There has been marked mismatch of numbers in certain cases:
 For Example, as per a Business Standard News Article in May 2017,
Patanjali’s Dantkanti had a revenue of Rs. 940 crs.
 If this is true, then it’s market share in Tooth paste should be about 12-
13%
 But as per another Times of India article in May 2017, Patanjali’s market
share in Toothpaste is only 2.8%
101
102
ABOUT PC MUSTAFA – CEO OF ID

• Son of a daily wager who grew up in Chennalode, a remote village in Wayanad

district of Kerala.
• Failed in Class VI and repeated the year.
• Picked up in studies and went on to do B.Tech Computer Science from NIT
Calicut. Worked with Motorola, Citibank (Dubai) after Engineering.
• Did MBA from IIM-Bangalore.
• Started the company ID (Idly Dosa) in 2006 along with his cousins while doing
MBA

103
 INITIAL DISTRIBUTION: COMPANY TAPPED INTO MALAYALI
KIRANA NETWORK

• According to Mustafa, lesser-known secret of retail in South India is the sheer

number of kirana stores run by Malayalis. And, among sub-communities, the
high level of specialisation. So, one community could be running just vegetable
shops while another could be focused on bakery products. This helped Mustafa
when he started the business with his cousins.
•"Most of these people have little education and capital. What works for them is
hard work and community support. Rents are high, margins thin, but workers
usually enjoy the same status as owners. When these stores grow, they have a
ready supply of workers, usually friends and relatives. After a time, some
workers start their own stores," he says.

104
 CONCEPTION TO EXPANSION

• The cousins, started small.

•They brought 5,000 kg rice and made 15,000 kg batter, which they distributed as
samples to the 20 Malayali kirana outlets in the vicinity.
•"This is where feedback from our kirana customers was crucial. By the end of
the experiment, we knew how to make idea batter.“
•In 2008, the cousins rented a 50-square-feet kitchen and a grinder. The batter
was delivered on a scooter.
• By 2010, the brothers were selling 2,000 kg batter a day. The annual revenue
had touched Rs 4 crore. The company employed 40 people, though distribution
was limited to Bangalore.

105
 PRODUCT

•“What set them apart”, he says, “was quality”.

•They did not add preservatives or additives to the batter and used low-

sodium salt.

•"Our product is 100 per cent natural. We do not use chemicals or

preservatives. It is just like the home-made product."

106
 INITIAL HICCUPS

•FAILUE OF CHENNAI EXPANSION

• “We learnt several lessons. First, this is as much a logistics business due to the
product's short shelf life as it is a food business. One reason our attempt to crack the
Chennai market failed was the poor quality of refrigeration and air-conditioning
facilities.“
• FAILURE OF INITIAL DIVERSIFICATION
•Attempt to diversify by getting into snacks such as rose cookies and diamond cuts
didn't take off either due to lack of value proposition and product differentiation.
• Here, the company did not stick to its core strength - making products with a short
shelf life.
•HIGH WASTAGE
• As it is a daily distribution business, inventory means losses. In the early days,
wastage
107 was as high as 25 per cent.
 TURNAROUND INITIATIVES

IT INITIATIVES
"We had to get the ideal mean between ensuring availability and minimising
unsold inventory." Mustafa says that is where his IT experience helped.
They developed an application to capture data on a real-time basis, cutting wastage
to 1.6 per cent.
Successful Product Diversification
•The plan to sell Malabar parotas, which have a shelf life of three days, took off.
•Today, apart from 50,000 kg batter, the company sells 40,000 chapatis, two lakh
parotas and 2,000 packets (200 gm each) of tomato and coriander chutney in a day.
•Currently 50% of ID’s revenue come from Idly Dosa batter, 35% from Parotas and
the rest from Chapatis, Curd and Paneer.
•Overseas expansion: In 2013, the company started operations in Dubai, the
hometown
108 of all Malayalis.
 FUNDING , CURRENT OPERATIONS AND FUTURE
EXPANSION PLANS

FUNDING
• In 2014, the company raised Rs. 35 cr from Helion venture partners.
• In March 2017, the company raised $25 mn from Premji invest
CURRENT OPERATIONS
• ID has production units in six cities, including two plants in Bengaluru and
one each in Chennai, Mumbai, Hyderabad, Mangalore, and Dubai.
• iD products are also supplied to distribution centres in Cochin, Coimbatore,
Vijayawada, Guntur, Rajahmundry, Visakhapatnam, Mysore, Mangalore, and
Pune, in addition to the above-mentioned cities.
• With a current team size of 1,000, the company is present in over 21,000
stores.
FUTURE PLANS
• Revenue of Rs. 1000 cr by 2022
• Looking to set up five large manufacturing facilities in India (Bengaluru,
Mumbai, Delhi, and Kolkata) and the Middle East (Ajman).
• New products like Fresh Sambar, Coconut Chutney, Dhokla, Vadas etc.
• Overseas expansion to Singapore, Malaysia, US etc
109
 NO TO “READY-TO-EAT” CATEGORY

ID’S PHILOSOPHY – CREDIT SHOULD GO TO INDIAN WOMEN

“Indian Women wants to be seen as taking care of her family by serving

them fresh food. Our aim was to complement her efforts, not compete with

her, which is why we will never get into the ready-to-eat segment. Our

aim was if the idli was fluffy and tasted well, credit should go to her,"

-P C Mustafa

110