FMCG personal Care industry analysis

Topics: Fast moving consumer goods, Cosmetics, Hygiene Pages: 25 (4881 words) Published: December 15, 2013

Submitted by: Group2
Section A

Table of Contents

1. EXECUTIVE SUMMARY
1.1. Beauty and personal care shows no signs of slowdown This category continued to show consistent growth in terms of value in 2012 Main drivers of growth :
Acceptance of higher-priced products with new claims by urban consumers New consumers in second and third-tier cities continued to show greater interest in self-grooming. The leading companies introduced products in smaller pack-sizes and innovative pack formats to leverage consumer base in second-tier cities and stimulate their interest and desire to try out such products. 1.2. Beauty and personal care becomes more gender-specific Main drivers of growth: Urban men becoming increasingly appearance-conscious, and looking for male-specific products. Leading companies such as ITC and HUL introduced range of male-specific bath and shower products, apart from the already growing range of men’s skin care products which were available so as to capitalize on the growing opportunities in this category. 1.3. New launches and promotions intensify the competition

International manufacturers maintained their lead in 2012 even though this category remained fragmented. New launches in shower gel, facial cleansers, anti-agers and moisturizers encouraged consumers to try out different brands. Many manufacturers started to offer promotional offers such as conditioners free with shampoos, so as to push their products at points of sale. 1.4. Independent small grocers maintains its lead, whilst direct selling increases further As the majority of consumers still reside in second and third-tier cities, independent small grocers remained the largest channel for sales in this category The contribution of direct selling to the overall sales (value) recorded a significant rise Direct sellers like Avon continued to strengthen their presence in southern states and in second-tier cities like Meerut and Kanpur. 1.5. Beauty and personal care is expected to show consistent growth Consumers are expected to continue to spend more on personal grooming, so this category is expected to maintain consistent growth over the forecast period. Manufacturers expected to continue to launch new products at different price-points, so as to help them to gain volume sales as well as margins. The majority of growth expected to come from new consumers, as they will increasingly try out different products. 2. KEY TRENDS AND DEVELOPMENTS

2.1. Celebrity advertisements/endorsements show no signs of slowdown Manufacturers are increasingly moving towards endorsements that emerged as a common tool used to promote products- existing as well as new launches. Leading Bollywood actors were continued to be used by both International and domestic manufacturers to promote their brands as they have huge fan following and serve as inspirational icons. Current impact

This trend extended into products like colorants, depilatories and men’s grooming, a relatively new category. For instance, L'Oréal India used John Abraham to promote Garnier face-wash. Celebrity endorsements are believed to help manufacturers attract consumers’ attention and build brand recall, especially if it is a new launch. For example, HUL used Kareena Kapoor as the face of Lakmé Absolute, its newly launched range of color cosmetics. In order to make region-specific advertisements manufacturers used regional actors to promote their products. For example, Dabur India used famous South Indian actress Kajal Agarwal for the promotion of its Dabur Amla hair oil there. Future impact

More manufacturers including those of Premium Brands will use celebrity endorsements to compete against competition and build brand image.  Manufacturers, especially of skin care and sun care products, might use celebrity images on the products’ packaging. 2.2. Consumers’ love for skin whitening intensifies

Skin whitening continued to increase, and also...

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3. “Government allows up to 51% FDI in multi-brand retail, 100% in single brand”, The Economic Times, Jul 2013; http://articles.economictimes.indiatimes.com/2012-09-14/news/33844347_1_multi-brand-single-brand-fdi (as on Sep 11, 2013)
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5. Krishna Pophale, “Bajaj Corp acquires NOMARKS brand”, Business Standard, August 2013; http://www.business-standard.com/article/companies/bajaj-corp-acquires-nomarks-brand-113082200385_1.html (as on Sep 11, 2013)
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7. Pranali Shah, “Update: Sequoia Acquires Minority Stake In Vini Cosmetics”, Business Standard, August 2013; http://www.dealcurry.com/20130816-Update-Sequoia-Acquires-Minority-Stake-In-Vini-Cosmetics.htm (as on Sep 11, 2013)
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11. Dave Jordan, “FMCG Mergers & Acquisitions (M&A):Why acquired brands fail to deliver”, Enchange, August 2010; http://supplychain.enchange.com/bid/63395/FMCG-Mergers-Acquisitions-M-A-Why-acquired-brands-fail-to-deliver (as on Sep 11, 2013)
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