Hand washes, another minor category last year, have added millions of new household customers, according to data by researcher Kantar, which defines household penetration as the usage of a particular product or category by a household over a period of time—a year in this case.
In a country with a large population, household penetration is a key metric used by fast-moving consumer goods brands to measure consumer engagement.
As the pandemic fuelled consumer demand for hygiene products, penetration of hand washes went up to 32.9% of households in January to September of this year from 11.9% in 2019. A significant growth for the category was led by the villages, which accounted for 25.7% of hand wash sales by volume. Floor cleaners across India jumped from 13.9% in January to September 2019 to 19.7% in the same period this year.
Several large fast-moving consumer goods (FMCG) companies such as Dabur India, Reckitt Benckiser and Nestle India reported increased usage of their sanitation and cleaning products, barring the first few weeks of the lockdown that disrupted supplies.
In October, Reckitt Benckiser reported that an additional 20 million households used its Harpic toilet cleaners. “In the first nine months, we have made good progress; for example, in the US, our hygiene products are now used in over 50% of households compared to less than 45% a year ago; in India, we have seen a continued increase in the penetration of Harpic following behaviour change campaigns, with over 20 million more households using the brand compared to last year," the company said in October.
Companies take years to build category penetration in India where, despite growing consumer aspiration, households tend to stick to products they use regularly. The pandemic, however, has nudged people to adopt better hygiene habits. “Typically, penetration is a sticky change," said K. Ramakrishnan, managing director at Kantar Worldpanel.
For several categories such as soaps, cooking oil, dishwashing bars, etc., penetration levels are significantly high. Soaps are at nearly 100% in terms of penetration with some of the country’s top FMCG firms present in the category. But deodorants, face washes and several packaged foods, like condiments, still have room to grow as their household reach is low.
Immunity boosters have also found new users. Dabur India Ltd’s healthcare portfolio grew significantly in the second quarter, driven by packaged honey and Chyawanprash.
“This was marked by a doubling of Chyawanprash revenues, double-digit growth in honey, and 56% growth in over the counter products. Growth was driven by higher household penetration, as covid concerns drove immunity-boosting supplements," analysts at Jefferies said in a 3 November report.
However, for foods, the story is slightly different. Categories such as spices, pasta and ready-to-cook mixes saw a slight uptick in penetration but the same wasn’t true for instant noodles and macaroni. Kantar’s Ramakrishnan said foods have grown more by consumption increase rather than penetration increase. “That is, those who consumed more and not by the addition of new users. Whereas in the case of hygiene products, it was by addition of new users," he said.
Ramakrishnan said an increase in penetration is seen in the hygiene category.
“This change could stick around after the pandemic is over though at slightly moderate levels," he said.
“If a household is suddenly buying more, they are likely to drop out of the purchase habit. But if more people buy, the stickiness is higher. That said, it’s not that if penetration has gone up, it will stay at that level because once the vaccine comes..the habit of using these products, whether it will be in the same frequency is something that we need to ask."