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Gillette India to beat market’s growth rate

Gillette India to beat market’s growth rate
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First Published: Mon, Mar 22 2010. 01 15 AM IST

Updated: Mon, Mar 22 2010. 01 17 PM IST
Procter and Gamble Home Products Ltd (P&G) is
attempting to capture a bigger share of the Indian home and personal care products market and not just in detergents. In recent calls with analysts, it has been mentioning the Indian male grooming market in which its unit Gillette India Ltd operates, and its efforts to increase its share.
Gillette, which followed a strategy of targeting first-time shavers, introduced the Vector for the lower end segment; Mach3 Turbo was aimed at the premium end. Gillette is the market leader in the Rs1,000 crore and five billion units razors and blades market. Its market share was 40% while that of its nearest competitor, the House of Malhotras, was 14%, according to a report by Motilal Oswal Securities Ltd. Gillette is the market leader, but its growth rate was tepid in fiscal 2009 (year ended June), as volume sales grew by just 2.8%.
In a bid to increase share and growth, Gillette introduced the Mach3 in November, priced at Rs125 or 60% lower than the Mach3 Turbo. This product is targeted at greater conversions from the doubled-edged segment, which accounts for 62% and 86% of the razors and blades market, in value and volume terms, respectively. And nearly half of this market comprises users who get their shaves done in a salon. Gillette is attempting to convert this segment by giving
Graphic: Yogesh Kumar/Mint
them a salon-quality shave at an affordable price, said P&G’s top management.
In the December quarter, blades and razor shipments were up by 25%, while grooming segment value sales grew by 21%. Lower value growth could be partly explained by lower per-unit realizations on the new range. It has also dropped prices on its refills by 12-15%.
Gillette also appears to have reconfigured Mach3 to ensure its margins do not suffer. Its segment margin actually improved to 31.6% in the December quarter, compared with 24.8% in the year-ago period. Initially, its value growth may suffer, especially if the product cannibalizes sales of Mach3 Turbo. But the refill costs nearly 70% of the razor cost, higher than even Mach3 Turbo’s 60%. Thus, what it may lose on the razor it will recover from the refill. With a proprietary design, users have no option but to buy Gillette’s cartridges. Gillette’s strategy, backed by P&G’s focus on higher growth from developing markets, will see it grow at higher rates in the coming years.
Write to us at marktomarket@livemint.com
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First Published: Mon, Mar 22 2010. 01 15 AM IST