2010 saw fastest FMCG launches, relaunches

2010 could well figure in the fast moving consumer goods (FMCG) annals as the year of product launches and relaunches.

Indeed, the year saw almost every major player launching or relaunching as many as 10-30 products or their variants, either under existing brands or under altogether new brands and categories.

Several new categories, such as hand sanitisers, anti-ageing creams and flavoured yogurts, made it to retail shelves and
consumer baskets.

The furious pace of launches reflects the eagerness of multinationals such as Nestle India and Procter & Gamble (P&G) India to beef up portfolios across categories by making products from their international stables available to Indian consumers as economic growth puts more in the hands of consumers, fuelling their propensity to spend.

Thomas Varghese, chief executive officer, Aditya Birla Retail Ltd (ABRL), says the number of products across retail shelves have gone up dramatically in the last one year, with the pick-up in the economy.

Adi Godrej, chairman, Godrej Group, can’t agree more. “I think most companies are growing strongly and the consumer demand is growing strongly. Rural India is growing much faster. The rate of consumption of FMCG, durables is growing very strongly. Generally, I expect the next decade to be the best for India and our companies are gearing up to meet these demands.”

“Very clearly, the 8.5-9% GDP growth is translating into massive aspiration growth for people. And aspirations are finding their way into new products. My feeling is, in the next 5-10 years, FMCG companies are going to have their hands full launching aspirational products,” says Varghese.

The low penetration level in many categories is a strong attraction for the players, as is the rising disposable income of consumers. To top it all, competitive intensity is increasing in every segment, making it mandatory for companies to have full and fresh product baskets.

The year saw major retailers such as Future Group, Hypercity, Aditya Birla Retail and Spencer’s Retail launch snacks, processed foods, health cereals, hair care and skin care products under their own in-house brands, increasing the brands and categories in retail store shelves.

Alpana Parida, president of branding services and packaging design firm DMA Yellow Works, said, “There was a time when there were just a few categories in FMCG. For example, hair care as a category had only hair oil and shampoo. Today, the number of hair care categories is enormous.”    

“You have hair oil and shampoo, but you also have revitalisers, nourishers, serums, hot oil, cooling oil and others,” she said. “Within the number of categories, the number of brands has gone up tremendously. Within each brand, the number of variants has gone up and within the number of variants, stock-keeping units (SKUs) have gone up. So, from what used to be two or three products on the shelf, today you have many brands, variants, formats and SKUs.”

Consumer goods giant Hindustan Unilever Ltd has been leading the trend by relaunching all its brands and changing the packaging of products.

“Increasingly, smaller brands in the market are realising the same thing, and they are looking at packaging as rejuvenation of their identity on a more frequent basis,” Parida said.

So, brands like Amul, with a number of iconic brands that had not made any change in communication or packaging for several years, are now undergoing a revamp owing to competition in a space like dairy.

Companies are also taking inspiration from peers. Originally sold in a silver packaging, Nestle’s BarOne chocolate, for example, has now been relaunched in a golden packaging to appear similar to its more successful competitor Cadbury’s 5Star.

According to a November research report by Enam Securities India Research, India is amongst the fastest growing FMCG markets (home and personal care, and foods) in the world with a 15% CAGR in the last 5 years, valued at $28 billion in 2009.

Going by analysts, categories such as toilet soaps, detergents and hair oil, which have over 90% household penetration in India, will grow slow, with some growing in low single digits. Categories like toothpaste, biscuits and shampoo, with moderate penetration of around 50-53%, are likely to grow faster. Categories like skin creams, fruit beverages, health supplements, deodorants, which have household penetration of 1-20%, will grow the fastest.

The fruit juices category, which is growing in excess of 25% and has established players such as Parle Agro and Dabur, has seen the entry of newer players such as Cola-Cola, PepsiCo, Tata Global Beverages and Del Monte with more set to come in.

In oral care, Colgate Palmolive is the market leader with more than 50% market share, followed by HUL and Dabur with 26% and 10% market shares, respectively.

Today, GlaxoSmithKline Consumer, Elder Healthcare, Johnson & Johnson India, P&G are all vying for the spoils in the category which is growing in double-digits. P&G is believed to be launching OralB toothpaste early 2011.

Similarly, a category like instant noodles, which was till a year ago dominated by Nestle’s Maggi, has seen launches in a row by companies like GlaxoSmithKline Consumer, HUL and ITC Ltd.

The trend is also visible in the consumer durables space, where the year saw the maximum number of mobile handsets by players big and small, and 3D televisions by brands like Sony, Samsung, LG, Panasonic and Philips launched.

Many believe the growing focus of international FMCG companies and retailers on India is inevitable.

“Indians have arrived. Do you think it is a coincidence that you have had Obama, you have Chinese Premier (Wen Jiabao), Nicolas Sarkozy... you think this is a coincidence? It is not. India is up there. Now it is one of the biggest markets in the world,” says Varghese.