In an attempt to widen its reach to a larger consumer base, Godrej Consumer Products Ltd is entering the Rs1,500 crore annual shampoo market.
Until the early 1990s, Godrej used to distribute a brand called Velvette, manufactured by a Tamil Nadu-based company. The product, however, was discontinuted in 1992 and Godrej has not had a shampoo in its portfolio since then.
Now, the company says that having a shampoo brand will bolster its personal care product portfolio and will give it a better clout among retail distributors.
“We see a huge opportunity in the shampoo market and we can leverage our existing distribution to extend our presence in the personal care segment. Our product will be positioned in the value-for-money segment,” said Hoshedar K. Press, executive director and president, Godrej, suggesting that the new product may not be in a premium category.
The shampoo, currently being branded as Godrej No.1, is currently being introduced in Maharashtra and Andhra Pradesh on a pilot basis before it is launched across the country.
Godrej, however, says it might rebrand it after its popular bathing soap Cinthol later.
“If it makes sense, we might extend the brand under Godrej’s flagship brand Cinthol,” Press said.
The company also intends to market the product through its acquired companies in the UK (Keyline Brands Ltd) and South Africa (Rapidol Pty).
“We have sent samples to our companies in the UK and South Africa. We are testing the products there and have yet to see the results,” said Press, adding that the shampoo might be renamed after some of the existing brands of these companies as well. “Introducing a new brand requires a lot of investment in terms of advertising, promotions and market activation, whereas an existing brand is easier to push,” he said.
Godrej is setting up a dedicated plant to manufacture the shampoo in its Baddi unit in Himachal Pradesh.
According to marketing research firm AC Nielsen, in 2006-07, the mainstream shampoo market was dominated by Clinic Plus, a Hindustan Unilever Ltd brand, which had almost one-third of the total market, while HUL’s Sunsilk brand accounted for a 12% share.
CavinKare Ltd’s Chik shampoo had a 20% market share while Procter and Gamble Co.’s Pantene trailed with a 5.6% share.
Press, however, clarified that the Godrej’s foray will be in the natural shampoo segment since “consumers are showing a preference for natural and herbal products rather than chemicals-based shampoos”.
Analysts say that Godrej’s foray into the shampoo market stems from the fact that its existing personal care segments, such as soaps, are getting quite competitive and margins are falling due to increase in the costs of inputs, whereas shampoo is a growing category.