Patanjali sparks herbal wave in India’s personal care market
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New Delhi: In August, personal care products company Colgate-Palmolive (India) Ltd launched Cibaca Vedshakti, a toothpaste made of natural ingredients. The move was part of its strategy to counter Dant Kanti, a herbal toothpaste from yoga guru Baba Ramdev’s Patanjali Ayurved Ltd, which has made a dent in Colgate’s market leadership in the past few quarters.
Cibaca Vedshakti is not the only product that Colgate has launched in the past one year. It also introduced Colgate Sensitive Clove, Colgate Active Salt Neem and Colgate Total Charcol Deep Clean during this period. All of these are marketed as herbal products.
To be sure, a number of personal care firms in India have launched multiple products with the herbal or natural tag in the past few quarters and will continue to bolster their portfolios with more herbal products to counter Patanjali Ayurved that has been giving multinational companies a run for their money over the past year.
During the current fiscal year, Colgate will continue to launch more products to build its natural portfolio, Issam Bachaalani, managing director, Colgate-Palmolive (India) had said in an investor call earlier this year.
Dabur India Ltd, which has been hit by Patanjali’s honey and chyawanprash, said in an investor call last month that it will launch more Ayurvedic products across hair oil, shampoo and healthcare. According to Dabur India’s management projections, Ayurvedic products will constitute more than 75% of its sales in India by 2020, from around 60% at present.
“The future will be driven by Ayurvedic products,” Sunil Duggal, chief executive officer, Dabur India, said in 24 October interview.
Unilever, the parent of India’s largest packaged goods company Hindustan Unilever Ltd (HUL), last month, for the first time, acknowledged Patanjali’s impact and that the company has been launching herbal products to fight competition. “Patanjali, which everybody is looking forward to with a lot of interest,” Andrew Stephen, head of investor relations at Unilever, said in a conference call with investors last month.
HUL has already started launching herbal products. Last year, it relaunched Lever Ayush for its Ayurvedic range and acquired Kerala-based Ayurvedic hair oil brand Indulekha for Rs330 crore earlier this year.
The trend of going back to herbal products is accelerating among consumers as more people shift to “herbal only” products across several categories of personal care products, said Sunita Sachdev, analyst with UBS Securities Pvt Ltd.
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“Herbal personal care companies are using the herbal angle to premiumize their products. Consumers are gravitating towards herbal products primarily in results-driven segments such as toothpaste (gum health), hair oil (hair nourishment and loss prevention) and skin (acne and whitening). This is being further aided by the inclusion of millennials who are most likely to continue using these products,” Sachdev said in a special report on 20 October. According to a study by UBS, propensity to buy more or buy only herbal products is on the rise —from around 29% in 2015 to 35% in 2016.
To be sure, herbal or Ayurveda is not entirely a new concept.
Companies such as HUL and Colgate, local units of the MNCs, built their portfolios in the last decade. But they started ramping up their portfolios rapidly in the past one year after the sudden emergence of Patanjali.
Home-grown Emami Ltd and The Himalaya Drug Co., which have been selling herbal or Ayurvedic products for long, have gained from their traditional herbal positioning and have been expanding. While HUL bought Indulekha, home-grown Emami acquired Ayurvedic hair oil and shampoo brand Kesh King from SBS Biotech Ltd in June 2015 for Rs 1,651 crore to boost its presence in the ayurvedic space.
“Competition in the natural, herbal and ayurvedic market within beauty and personal care in India is expected to remain intense. Mass brands like Dabur, Emami and Patanjali are expected to continue to educate consumers about the benefits of using natural products through product promotions and in-store displays,” according to a 27 May report by Euromonitor International.
According to UBS, herbal products comprise 6-7% of the personal care products market, but the volume is growing at about “twice the segment average”. The report estimated herbal products to account for about 10% of the segment by FY20 as the trend accelerates.