Big consumer brands losing market share to smaller rivals
Increasing internet penetration, growth of private label brands from retailers among reasons for shift
Mumbai: The last five years have been telling on India’s consumer market. Increasing broadband penetration, growth of private label brands from retailers like Big Bazaar, BigBasket, Reliance Fresh and More along with the growing economic might of a younger demographic have challenged the top brands across categories from home care to packaged foods and beverages.
Between the years 2012 and 2017, eight of India’s top 12 brands have ceded nearly 40 basis points to two percentage points of either volume or value market share to newer entrants in home care, packaged foods and beverages categories, according to research firm Euromonitor. A basis point is 0.01%. Market share is calculated based on volumes and value. While volume refers to the number of units sold, value is the price component.
These brands are Thums Up, Horlicks, Tata Tea, Amul, Britannia, Mother Dairy, Brooke Bond and Surf, Euromonitor said.
In carbonated beverages, PepsiCo India Holdings Pvt. Ltd and Coca-Cola India Pvt. Ltd have lost share to regional cola brands like Bovonto and Vibro from Kali Aerated Water Works (P) Ltd, a century-old company. Even newer entrants like Rakyan Beverages Pvt. Ltd, the maker of organic cold-pressed juices and other beverages sold under the brand RAW Pressery, Hector Beverages Pvt. Ltd of Paper Boat brand and Patanjali Ayurved Ltd have increased their presence, eating into the market shares of incumbents.
In home care, category leaders in segments like laundry are facing growing competition from regional and small unorganized players. “Leading laundry care players are facing growing competition from regional and local brands in 2017, where small unorganised players still account for almost one third of sales,” said Euromonitor’s research team in an email.
Also since 2014, the number of new launches in the consumer packaged goods space has been trending upwards every year with the exception of 2017, according to research firm Kantar Worldpanel. This has led to both growth as well as fragmentation nationally and regionally due to new entrants.
Increased competition has led to the loss of pricing power for the incumbents.
Moreover, the market itself has changed, with the internet and e-commerce lowering entry barriers for start-ups. “We have seen this happen globally. It must be happening here as well. One of the reasons is the digital phenomena. Many platforms are offering an opportunity to smaller brands to build a brand and for distribution. These are no longer entry barriers,” says Abheek Singhi, senior partner and managing director leading The Boston Consulting Group’s consumer practice in Asia-Pacific.
Also, smaller firms are better placed to cater to new emerging niches than established large firms due to their quick turnaround times and ability to take risks. “Consumers are innovating and even manufacturers are innovating,” said Abraham Koshy, professor of marketing, Indian Institute of Management, Ahmedabad. According to Koshy, start-ups and local brands are good at finding market gaps and filling those up.
On their part, incumbents are fighting back with brand extension, expansion, consolidation and brand acquisition.
“There is also no denying that the consumer preference and the overall market for non-alcohol ready-to-drink (NARTD) has evolved over the last couple of years and thus, the need for brands to invest in their innovation pipeline,” said a spokesperson at Coca-Cola India. The launch of Thums Up Charged late last year was a step in combating the loss, he added.
Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) and Mother Dairy Fruit & Vegetable Pvt. Ltd (MDFVPL), two cooperatives, have been expanding nationally and launching products in new categories. “Local, regional brands and start-ups are getting good response as consumers are leaning towards fresh and they have better visibility,” said R.S. Sodhi, managing director of GCMMF Ltd. The marketer of Amul is strengthening its local supply chain and launching products in new categories like dark chocolates in response.
Tata Global Beverages too has renewed focus on economy end, and is building a innovation pipeline and driving premium end of the market through new launches such as Teaveda, a company spokesperson said. However, the company disputed Euromonitor’s numbers and said that according to market research firm Nielsen, it has increased both volume and value market share between 2012 and 2017.
For Procter and Gamble India, it was a focus on the bottom line that impacted the top line. As a strategic decision, the company discontinued Tide bars about four years ago, which had an impact on the top line. “In the last few years, we made strategic portfolio choices on our fabric care business which impacted the top line in short term but will lead to profitable balanced growth in the long term. Testimonial to our strategy, is the fact that Ariel has been growing share consistently for the last 3 years,” said a P&G Spokesperson.
Hindustan Unilever Ltd, the maker of Surf and Rin did not comment.
“As a policy, we do not comment on market shares or on individual brand growth numbers. Furthermore, the information shared by you is factually incorrect,” said an HUL spokesperson.
GSK Consumer and Britannia industries Ltd also did not respond to Mint’s email queries.
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