FMCG COMPREHENSIVE PACK

 Overall Industry Trends

:3

Growth Drivers

:8

Detailed Analysis of Select Categories

: 14

Company Analysis Template

: 58

Company Analysis (HUL)

: 60

OVERALL INDUSTRY TRENDS

Size of the FMCG industry is about Rs. 220,000 crores in FY 2014.

About 40% of the FMCG sales are in Rural areas.
FMCG INDUSTRY : SIZE AND GROWTH RATE

FMCG Industry Size

Figures in Rs. bn

2500

16%

2000

6%
1500
1000

710
585
490500540

2200
2000
1831
1671

1300
1160
1020
860

500
0
FY02

FY04

FY
06

FY
08

FY
10

FY12

FY
14

FMCG : MAJOR SEGMENTS

FMCG INDUSTRY : CHARACTERISTICS

One of the extremely competitive industry. Very difficult for new players
to enter and make a big impact. (ITC is yet to become profitable in their
FMCG business even after 10 years)
There are strong MNCs and also strong Indian players.
In the last 5 years the growth rates has been 16%. It has picked up
compared to the previous 10 years.
This sector is relatively immune to recession.
The growth in FMCG depends on several factors - Penetration levels,
Per capita consumption, Per capita income increase, Urban and Rural
proportion

Opportunities in Low Penetration and Low-per Capita Consumption Categories

There is immense opportunities in several categories on account of low
penetration level and low per capita consumption.
Despite having high penetration level, categories like detergent soap,
personal soap and washing powder have low per capita consumption therefore
change in the consumption pattern will drive these categories.
Apart from this, categories like oral care, shampoo, skin cream, deodorant
and packaged juice etc where penetration level and per capita consumption
both is low.
Therefore, these categories have enormous opportunity to grow through
addition in consumer base as well as change in the consumption pattern.
7

Growth Drivers

FAST AND SLOW GROWTH SEGMENTS

LONG-TERM GROWTH DRIVERS

10

PAST GROWTH TRENDS

11

RECENT GROWTH TRENDS

12

EXPECTED GROWTH TRENDS

13

DETAILED ANALYSIS:
SELECT CATEGORIES

14

KEY POINTERS FOR FMCG INDUSTRY

Parameters for Category Analysis

Category break-up in terms of different products
Company Market shares and changes over the years
Brand shares and changes over the years

Growth of different product categories

New launches and other key category trends

15

Bath and Shower

16

88% of the products in bath and shower are bar soap. The
contribution of shower gel and liquid soap are around 4%.
BATH AND SHOWER : CATEGORY BREAK-UP

% of
Total
Category
Value

Products

Value (in
Rs. Mn)

Bar soap

164376

89%

Body wash and

Shower Gel

1713

1%

Liquid Soap

4750

3%

Talcum Powder

13456

7%

Total

184385

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
2010-15

2015-20

Bar Soap

14%

3%

Body Wash &

Shower Gel

18%

16%

Liquid Soap

36%

27%%

Talcum Powder 6%

-3%

Overall Bath
and Shower

3.6%

18

13.6%

HUL, GCPL, Reckitts and Wipro holds more than 75% share
BATH AND SHOWER : COMPANY MARKET SHARES

Market Shares
Company

2008

2015

Though HUL is the market leader with

47% share, it has lost close 7% share along
with other major loser Nirma which also

Losers
HUL

54.3%

47%

Nirma

6.60%

1.5%

Gainers

lost 5% share since 2008.

Reckitts and ITC are the major gainers.
Reckitts share increase is due to launch

of new dettol soap variants, dettol body

Reckitts
Benckiser

5.5%

9%

wash, liquid wash and awareness

Wipro

7.4%

7.5%

campaign Proper Handwashing

0%

6.7%

campaigns.

KSDL

0.8%

2.3%

GCPL

9.3%

9%

ITC

19

Top 6 brands constitute 50% of the bath and shower category.

BATH AND SHOWER : BRAND SHARES

Brand

Company

Market Shares
2011

2015

Lux

HUL

11.2%

12.5%

Lifebuoy

HUL

12.6%

11.7%

Dettol

Reckitt Benckiser

8.5%

9%

Santoor

Wipro

7.4%

8.3%

Godrej
No.1

GCPL

5.8%

5%

Dove

HUL

2.6%

5.4%

20

Health and hygiene concerns driving the demand on liquid soap

BATH AND SHOWER : KEY TRENDS IN THE LAST 2-3 YEARS

Health and Hygiene concerns driving growth

Increasing Realizations

New launches
Brand Trends
Importance of social media

21

Health and hygiene concerns driving the demand on liquid soap

BATH AND SHOWER : KEY TRENDS
Health and Hygiene concerns driving growth

Liquid soap is the fastest growing segment because of health and hygiene
concerns.
Leading companies, including Reckitt Benckiser, HUL, Dabur (Fem Safe
Handz) continued to cash-in on this growing trend by running campaigns to
promote the germicidal properties of liquid soap.

22

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 mens shower from Fiama Di Wills

Nivea for men
Focus on Additional Benefits or New Attributes:

Manufacturers focused on combination products to position their

products as better-value offerings.
Wipro launched its flagship bath soap brand variant Santoor

Glycerine with Vitamins. The brand consists of vitamin E and

glycerine, which are claimed to enhance natural healing properties
due to the retention of skin moisture.
Exfoliators and scrubs (Exfoliators, which are known for their property
23of removing dead skin cells, picked up well)

Focus of new launches has been on male targeted products,

combination products and products with new attributes.
BATH AND SHOWER : KEY TRENDS

NEW LAUNCHES

Nature based Products:

Companies are focussed on products with natural ingredients like rose
petals, saffron, sandalwood, mint and other herbs.
Karnataka Soaps & Detergent launched a brand based on natural
ingredients, Mysore Sandal Millennium, priced at Rs730 per unit of
150g. The brand is positioned in the premium segment, focusing on
affluent households. It consists of special conditioners, moisturisers,
vitamin E, jojoba-mimosa and natural sandalwood oil.
Organic and natural soaps from brands such as Fab India and

Khadi also started to become quite popular.

24

RECENT BRAND TRENDS

Reckitt extended its Dettol brand into body wash and liquid wash which
helped the company to grow fastest in Bath and Shower in the last few years.

Hindustan Unilever expanded its bath and shower portfolio by launching

the bar soap Axe, primarily targeted towards male consumers aged between
21 and 35.
ITC launched three signature limited editions called Fiama Di Wills
Shower Jewels focused on associating shower gel with the fashion industry.

Godrej consumer products launched Cinthol Confidence + as a health soap

with deodorising properties.
25

 BRAND TRENDS
Premium brands such as Este Lauder, on the other hand, gradually gained
popularity amongst some urban consumers.

Talcum powder for children witnessed new product developments, such as

Mothercare Liquid Talc, Johnson's Bed Time Powder and Johnsons Baby
Prickly Heat Powder.
Lower middle-class households and households close to the poverty line,
with monthly income of less than US$100, are the leading consumers,

accounting for 75% of total regional volume sales of talcum powder.

26

There is a growing importance of social media in brand

promotions.
BATH AND SHOWER : KEY TRENDS

IMPORTANCE OF SOCIAL MEDIA

Many companies also moved to social media websites such as
Facebook to promote their brands.
For instance, The Himalaya Drug Co rolled out an innovative
marketing campaign on Facebook to promote its brand
PureHands.

The company invited young and creative minds to make a video

highlighting the product benefits.

27

Hair-Care

28

Hair Oils/ Conditioners and Shampoos constitute more than

75%of the Hair-Care category.
HAIR-CARE : CATEGORY BREAK-UP

Value in
Rs.mn

%of Total Category

Value

Hair Oils/Gels

63940

41%

Shampoos and
Conditioners

52,206

34%

Colourants

29,733

19%

5526

4%

154682

100%

Products

Saloon Hair Care

Total
29

Colourants, Saloon Hair care, Styling products will

drive the growth in the Hair-Care category.
HAIR-CARE : GROWTH

Growth (CAGR)
Category

2010-15

2013-18

16.3%

15.2%

11.7%

8.7%

Colourants

25.1%

21.8%

Saloon Hair Care

21.2%

20.4%

Total

14.3%

12.1%

Hair Oils/Gels

Shampoos and
Conditioners

30

Hair care category is quite fragmented. Top 7 companies put

together account for only 65% of the share.
HAIR-CARE : COMPANY MARKET SHARES
Company

Market Shares

2010

2015

HUL

18.8%

16.1%

Dabur

11.2%

10.4%

Marico

9.2%

10.1%

L'Oral India Pvt Ltd

7.5%

8.8%

Procter & Gamble

8%

7.8%

GCPL

5.5%

6.3%

Cavinkare

3.6%

3.9%

LOreals increase is due to its strong presence in Saloon Hair Care and
Colourants
GCPLs increase is due to growth of Godrej Hair Dye brand.
31

Parachute, Dabur and Clinic Plus are the 3 biggest Hair-care

brands.
HAIR-CARE : BRAND SHARES

Brand

Company

Market Shares

2011

2015

Parachute

Marico

5.3%

5.2%

Dabur

Dabur India

5.7%

5.1%

Clinic Plus

HUL

7.3%

5.1%

Godrej Hair Dye GCPL

3.8%

4.8%

Dove

3.7%

4.4%

32

HUL

HAIR-CARE : KEY TRENDS

COLOURANTS AND SALOON HAIR CARE

Colourants and Saloon Hair care will be fastest growing subcategories in Hair care
GROWTH IN DO-IT-YOURSELF (DIY) PRODUCTS

Young consumers continued to pick up do it yourself (DIY) styling

gels and colourants to style their hair themselves.
The growing desire to look good encouraged budget-conscios
consumers to accept DIY products, which are considerably cheaper
than salon products.

33

HAIR-CARE : KEY TRENDS

SMALLER PACKAGES

Companies are launching most of the hair products in smaller

package sizes.
This allow budget conscious consumers to use these products
occassionally.
ANTI-DANDRUFF PRODUCTS

Anti-dandruff formulae continued to grow, as the climatic

conditions led to a high occurrence of dandruff amongst consumers.
Furthermore, media campaigns pushed the uptake of antidandruff shampoos amongst consumers.

34

HAIR-CARE : KEY TRENDS

COMPANIES FOCUS ON CONDITIONERS

Most shampoo brands launched conditioners, and gave it for free with their
shampoos to introduce consumers to conditioners.
The distribution of free conditioners was successful in generating awareness
about the benefits of conditioners, and promoted sales of conditioners.
Rinse-out conditioners continue to generate higher sales than leave-in
conditioners. Indian consumers prefer not to put chemicals in their hair, and
the tradition of oiling hair before shampooing is still very common.
Leave-in conditioners are used primarily by urban consumers, who are aware
of them and also have higher disposable incomes to purchase them.
35

HAIR-CARE : KEY TRENDS

KEY NEW LAUNCHES

Most players focused on launching premium products:

HUL launched its premium hair care range Sunsilk
Keratinology, which claimed to prolong the beauty of salon
treated hair.
HUL also introduced the TRESemm hair care range,
which claimed to offer salon-like hair.
JK Helene Curtis India introduced beer shampoo under its
Park Avenue brand, which also enjoyed popularity for its
deodorants amongst male consumers.
Miniscule use of medicinal shampoos
The use of medicated shampoos and hair loss treatments remained very
limited. They are used only when a physician recommend the usage.
Nizoral and Selsun continued to be the only two significant brands
available in medicated shampoos
36

Breakfast Cereals

Break-fast cereals market is about Rs. 1445 crores and

about 50% of the category is non-flakes.
BREAKFAST CEREALS : CATEGORY BREAK-UP

Products

Value in Rs.mn

%of Total Category Value

Hot Cereals (Oats)

5134

36%

Children Breakfast
Cereals

420

3%

Flakes

6748

47%

Muesli

2145

15%

14447.5

100%

Total Breakfast
Cereals

38

Break-fast cereals has been one of the fastest growing

category. Within this category, Hot Cereals and Muesli
show higher growth.
BREAKFAST CEREALS : CATEGORY WISE GROWTH

Growth (CAGR)

Products

2010-15

2015-20

Hot Cereals (Oats)

36.1%

32.3%

Children Breakfast
Cereals

17.3%

18.8%

Flakes

18.8%

15.6%

Muesli

28.9%

24.8%

Total Breakfast
Cereals

20.4%

22.5%%

39

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
2008

2015

Kellog

57.2%

36.8%

Baggrys

12.5%

17.9%

Pepsico

7.5%

13.3%

Marico

0%

6.7%

7.2%

6.7%

0%

5.6%

Mohan Meakin

GSK

40

BREAK-FAST CEREALS : BRAND SHARES

Brand

Company

Market Shares
2008

2015

Kelloggs Corn
flakes

Kellogg India
Limited

36.8%

25.9%

Bagrrys

Bagrrys India
Limited

13.4%

17.4%

Quaker

Pepsi co

9.5%

13.3%

Mohuns

Mohan Meakin

7.3%

6.7%

Saffola

Marico

0%

6.7%

Horlicks Oats

GSK

0%

5.6%

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.

Kellogs has been the front runner in this category, especially corn
flakes.
BREAK-FAST CEREALS : KEY TRENDS

KELLOGS 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 introduced cornflakes in different flavors like Mango,
strawberry etc.

To take on kellogs, competitors are launching non-flakes new

products.
BREAK-FAST CEREALS : KEY TRENDS

HOT CEREALS AND MUESLI SHOW HIGHER GROWTH:

Due to Kellogs very strong position in flakes,

competitors are launching products in non-flakes

products like hot cereals .and mueslis.
Thats 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 kellogs, competitors are launching non-flakes new

products.
BREAK-FAST CEREALS : KEY TRENDS

GROWTH OF INDIAN FLAVORS:

Companies are increasingly launching products with Indian

flavors:
Bagrrys launched a new range of oats products under the name
Oats for India which included 4 variants - Oats for Poha, Oats for
Suji, Oats for Rice and Oats for Atta.
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, oats are even available in smaller sachets of 26g for Rs15, and this
is one of the reasons why oats has been registering faster growth.

Soft Drinks

47

Bottled water, Carbonates, Fruits and Vegetable juices

constitute about 95% of the soft drinks market.
SOFT DRINKS : CATEGORY BREAK-UP

Products

Value in Rs.crs

%of Total Category

Value

Bottled Water

12130

23%

Carbonates

25110

48%

Fruits and vegetable

Juices

13150

25%

Sports and Energy

Drinks

1060

2%

Concentrates

850

2%

Total

48

52300

Almost half of Soft drinks sales by value are to on-trade

channel.
SOFT DRINKS : OFF-TRADE VS ON-TRADE

Products

Off-trade

On-trade

Bottled Water

69.7%

30.3%

Carbonates

60.5%

39.5%

Fruits and vegetable

Juices

86.9%

13.1%

Concentrates

100%

Sports and Energy

Drinks

89.1%

10.9%

Overall Soft-drinks

69%

31%

Note:
1. On-trade is selling to hotels , restaurants, pubs.
2. Off-trade is sales to the end customers through retail outlets.
49

SOFT DRINKS : CATEGORY WISE GROWTH

Products

2010-15

2015-20

Bottled Water

30.7%

23.8%

Carbonates

12.8%

10.4

Fruits and vegetable

Juices

27.3%

24.8%

Concentrates

9.3%

7%

Sports and Energy

Drinks

17.3%

16.4%

Overall Soft-drinks

20.2%

17.8%

50

Super Premium Category

Beauty and Personal Care

51

Fragrances and Haircare constitute about 85% of the

Super premium Beauty and Personal Care category.
SUPER PREMIUM: CATEGORY BREAK-UP
Products

Value in Rs.mn

%of Total Category

Value

Super Premium Mens Fragrance

2507

20%

Super Premium Womens Fragrance

3361

27%

Super Premium Haircare

4604

37%

Supre Premium Skincare

1604

13%

Supre Premium Color Cosmetics

316

3%

100.5

1%

Super Premium Deodrants

Total

52

12495.8

Super premium Beauty and Personal Care category

will maintain its growth momentum.
SUPER PREMIUM: CATEGORY WISE GROWTH

Products

2010-15

2015-20

Super Premium Mens Fragrance

30.1%

27.3%

Super Premium Womens Fragrance

32.3%

34.8%

Super Premium Haircare

33.4%

36.8%

Supre Premium Skincare

25.8%

29.4%

Supre Premium Color Cosmetics

35.2%

37.3%

Super Premium Deodrants

31.7%

33.4%

Overall

32.3%

34.6%

53

Henkel India and Hugo Boss leads the fragmented

Super Premium category.
SUPER PREMIUM : COMPANY MARKET SHARES
Company

Market Share

Henkel India

8.2%

Hugo Boss

6.1%

Antonio Puig SA

4.6%

Calvin Klein

4.5%

Bulgari Parfums SA

4.2%

Others

72.4%

54

SUPER PREMIUM : COMPANY MARKET SHARES

Brand

Company

Market Share

Schwarzkopf
Professional

Henkel India

8.2%

Deci Dela

Antonio Puig SA

3.4%

Hugo Boss Bottled

Hugo Boss AG

3.3%

Burberry for Women

Inter Parfums SA

3.2%

Obsession for men

Calvin Klein

3.1%

SUPER PREMIUM : KEY TRENDS

Urban youth push demand of super premium beauty and personal care

products
Fragrances and Hair-care products constitute the biggest share in the super
premium category.

Growth of premium salons in India has led to consumers becoming more

aware of super premium hair care brands.
The availability of super premium hair care products is on the rise in India as
luxury players continued expanding their presence in the Indian market.
Store-based retailing continued to be the main channel for sales of super
premium beauty and personal care goods. Share of Store based retailing is 96%
and Internet Retailing is 4%.

SUPER PREMIUM : GROWTH POTENTIAL

A growing number of super premium beauty and personal care players are
expected to launch smaller-sized products priced lower in order to drive sales .
The luxury players are expected to increase their product portfolios to cater to

the needs of the rising affluent population.

Store based retailing will continue to be the dominant channel as store
experience is an integral part of the super premium products sale.

COMPANY ANALYSIS TEMPLATE

PARAMETERS FOR COMPANY ANALYSIS

Business Mix and the change

Brand Portfolio and Brand performance
Level of dependence on power brands
New Product Launches in the last 2-3 years
Advertising Spend
Distribution footprint (Concept of Numeric and Weighted
distribution)

COMPANY ANALYSIS - HUL

Soaps and Detergents is the key driver of HULs sales

while Personal Products are the driver of the profits.
HULS SEGMENTAL REVENUES AND MARGINS
Revenues (Qtr ended March 16)

EBITDA (Qtr ended March 16)

HULs business mix has changed significantly over the

last few years.
HULS BUSINESS MIX AND THE CHANGE
Product
Category

2006

2016

%
% contribution
%
%
contribution to Total profits contribution Contribution
to Total
to Total
to Total
Sales
Sales
profits

Soaps and 40%

Detergents

51%

45%

38%

Personal
Care
products

34%

29%

47%

21%

For HUL, though soaps and detergents continue to drive sales, it is

the personal care segment which drive profits

REASON FOR DIFFERENCE IN MARGINS

Soaps and Detergents (S&D) is a more mature business where penetration
levels are higher than 90% and growth is driven by more market share gains

or distribution enhancements, both of which are more spend intensive.

Detergents margins have come down in the recent years due to strong local
competition (like ghadi) and commodotization
Personal Products (PP), on the other hand, comprises of businesses such as
skin & hair care, which are much less mature and driven more by
innovation.
Personal care command higher margins because of high involvement and
less value weightage

Value weightage is an important factor in making the customer

trade up.
VALUE WEIGHTAGE ILLUSTRATION
Product
Category

Monthly expenditure
(Rs.)

% of total monthly
expenditure

Rice

2000

40%

Fruits and
Vegetables

1000

20%

Personal-care
products

100

2%

Others

1900

38%

Total

5000

100%

BRAND PORTFOLIO:

65

PRESENCE ACROSS PACK SIZES (ILLUSTRATION: SHAMPOOS)

66

HUL had 12 brands with revenues of over INR10bn in 2015 (vs. seven in
2011). Of this, the company has six brands with revenues in excess of
INR 20 bn
REVENUES FROM DIFFERENT BRANDS

67

Premium brands are driving growth for HUL.

WHICH BRANDS ARE DRIVING GROWTH

Premium brands are growing faster than the economy brands:
in laundry growth has been driven by Surf ahead of Rin,
in hair care Dove is a leading category growth and Tresemme has now
become a INR1bn brand within its first year of launch, and
in soaps growth is being driven by Liril and Pears, all of which are at the
top end of the brand construct.
Growth in premium brands will help the company because:
it will help establish footprint in some more nascent business, e.g., skin
care, male grooming & post wash hair care
given the superior margin profile, this will help boost companys
profitability and
Make the company less dependent on rural demand as premium brands are
predominantly sold in urban areas.

Some companies are over dependent on their power brands

which could impact their growth and profitability
Company Dependence on Power Brand

Player

Brand

Market
Share

Sales
Dependence

Last 3 years
CAGR

HUL

Wheel

15%

9%

15%

HUL

Lux

15%

7%

10%

HUL

Lifebuoy

14%

6%

10%

Marico

Parachute

45%

28%

9%

Jyothy labs

Ujjala
Supreme

72%

22%

16%

Emami

Navaratna
Oil

49%

27%

15%

69

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

Source: Company Data, Nomura Research

70

Advertising spend has been picking up which is a positive

sign.
ADVERTISING SPEND

71

Distribution footprint has increased more than 3 times

between 2009 and 2013.
DISTRIBUTION FOOTPRINT

72