Hygiene categories see penetration surge as covid shifts consumption
3 min read 16 Nov 2020, 06:10 PM ISTFor 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 companies present in the category
PremiumNEW DELHI: Hand washes, sanitisers, floor and toilet cleaners have seen a surge in household penetration since January as the pandemic altered consumption pattern helping brands garner new consumers.
Sanitiser penetration in India moved from a mere 1% in January-September 2019 to 45.6% in the same period this year. Hand washes, another small category, added newer households, according to data by researcher Kantar. Kantar defines household penetration as usage of a particular product or category by a household over a period of time—say one year.
In a country with a large population, household penetration is a key metric used by FMCG brands to study consumer engagement.
As covid fuelled consumer demand for hygiene products, penetration of hand washes went up to 32.9% during January-September this year from 11.9% a year ago. A significant growth for the category was led by rural markets where volume contribution from India’s villages stood at 25.7%. Floor cleaners jumped from 13.9% in January to September 2019 to 19.7% in the same period this year.
Several large FMCG companies such as Dabur India, Reckitt Benckiser and Nestle India reported increased usage of their 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 brand of toilet cleaners compared to a year ago period.“...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 20m more households using the brand compared to last year," the company said in its third-quarter earnings statement released in October.
Companies take years to build category penetration in a market like India where, despite growing consumer aspirations, households stick to products they use heavily. The pandemic, however, has nudged people to take up more evolved 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 companies present in the category. But deodorants, face washes and several packaged foods like condiments still have room to grow as their household reach is limited.
During the pandemic, even immunity building products have found new users. Dabur India Ltd's healthcare portfolio grew significantly in the second quarter driven by its packaged honey and Chyawanprash brands. This was helped by higher household penetration. “This was marked by a doubling of Chyawanprash revenues, double-digit growth in honey, and 56% growth in OTC. Growth was driven by higher household penetration, as covid concerns drove immunity-boosting supplements," analysts at Jefferies said in a 03 November report.
However, for foods, the story is slightly different. Categories such as spices, pasta, 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 addition of new users. Whereas in the case of hygiene products, it was by addition of new users," he said.
In an investor presentation earlier this month, local arm of Swiss packaged foods company Nestle India said its Maggi portfolio showed “robust performance backed by increase in penetration". For instance, Maggi noodles added 9.3 million households in the September quarter, while its Maggi cooking aids segment added 1.6 million households.
Ramakrishnan said that visible increase in penetration has been seen in the hygiene category. “This change could stick around after the pandemic is over though at slightly moderate levels. 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 it (penetration) has gone up, it will stay at that level because once the vaccine comes—while we will have a habit of using these products—but will it be in the same frequency is something that we need to question," he said.
Earlier in the year, the company reported market share gains for its soap brand Dettol.
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