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The feud between coconut hair oil leader Marico and Dabur started after Marico’s aggressive pricing strategy in the value-added hair oil segment, where Dabur is the dominant player.
The feud between coconut hair oil leader Marico and Dabur started after Marico’s aggressive pricing strategy in the value-added hair oil segment, where Dabur is the dominant player.

Dabur takes on Marico in coconut hair oil segment

Dabur releases ads asking consumers to shift to its Anmol Gold hair oil from Marico's Parachute, offers the brand at 7-10% price discount

Mumbai: If you are one of those who apply hair oil to keep yourself cool in the searing summer heat, there is good news. Dabur India Ltd has declared a price war on Marico Ltd.

In a series of advertisements released last week in Maharashtra, Delhi-based Dabur asked consumers to switch to its Anmol Gold hair oil from Marico’s popular Parachute Coconut oil brand. Dabur is offering the product at Rs26 for 100ml and Rs45 for 175ml, which is at about 7% and 10% discount, respectively, to Marico’s Parachute comparable stock units.

“This sort of comparative advertising is something that we have not seen from Dabur in the recent times; this shows aggressiveness. This is likely aimed towards gaining some market share," Abneesh Roy, an analyst with Edelweiss Securities Ltd, said in a 18 May report.

A Dabur spokesperson declined to comment on the matter. A Marico spokesperson was unavailable for a comment.

The feud between coconut hair oil leader Marico and Dabur started after Marico’s aggressive pricing strategy in the value-added hair oil segment, where Dabur is the dominant player. Marico’s Nihar Shanti Amla has gained market share by value to 26.3% in fiscal 2016 from 23.7% at end of the previous fiscal. Meanwhile, Dabur’s Amla hair oil and Dabur Amla Sarso hair oil has lost five percentage points in the amla hair oil category from 65.1% in fiscal 2015 to 60.1% in fiscal 2016, according to Nielsen data provided by an industry expert who did not wish to be identified.

Marico has also increased its overall value market share in the Rs7,900 crore hair oil market to 37.1% at the end of fiscal 2016 from 35.8% in the previous year, according to Nielsen data provided by the same executive who also pointed out that in the same period Dabur lost 0.9 percentage point value market share in the hair oil category to 13% from 13.9% a year ago.

Marico is the market leader in the coconut hair oil category with Parachute and Nihar having close to 59% share in the Rs4,900 crore branded coconut hair oil market; the market share of Dabur’s Anmol is expected to be in low single digit, the Edelweiss report said.

Fiscal 2016 was Dabur’s worst in a decade as the company got affected by weak rural demand and supply issues in its Nepal operations, said Anand Rathi Share and Stock Brokers Ltd in a 29 April report.

Dabur is taking the cheaper positioning platform aided by the fall in the raw material prices. Major inputs, such as copra and liquid paraffin, are down 41% and 25% in the March quarter from a year ago.

To be sure, even Marico has been passing on the benefits of the lower input costs to its consumers. In the March quarter, Marico had taken a 6% price cut and even last month in April it reduced prices by a further 6%. “This takes the cumulative price decrease to 12% so far in 2016 and 18% since October 2015," said analysts Percy Panthaki, Avi Mehta and Sameer Gupta of India Infoline Group (IIFL) in a 2 May report.

Dabur and Marico are also facing increasing competition from newer entrants, such as yoga guru Ramdev’s Patanjali Ayurved Ltd, leading to some market share loss of incumbents.

Fiscal 2017 will see personal product companies step up on new launches in the natural and ayurvedic space and focus on volume growth even as commodity prices start firming. Prices of crude oil and vegetable oil have already started inching upwards and Marico has indicated that the prices have bottomed out, and the company would be looking to take price increases in the second half of fiscal 2017, said the IIFL report.

Given the rising competition, it may be difficult for consumer companies to effect price increases.

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