Soaps, cosmetics & other FMCGs may get cheapear.
NEW DELHI: Fast-moving consumer goods (FMCG) may become marginally cheaper for consumers following the 2% reduction in excise duty. However, a
large part of FMCG product manufacturing is based in excise-free zones like Uttaranchal and Himachal Pradesh. The final impact of the excise duty reduction on product prices will depend on the ratio of manufacturing in excise-free zones to that in nonexcise free zones. Companies like Hindustan Unilever (HUL), Procter & Gamble (P&G), Godrej Consumer Products (GCPL), Colgate , Dabur and Marico have production facilities at excisefree zones. The excise reduction , nevertheless, strengthens the hands of marketers who will benefit from cost reductions on packaging materials and may intensify promotions to boost sales. GCPL executive director & president H K Press said: ‘‘ A large part of our manufacturing takes place in excise-free zones and thus the impact is not much. We are not planning to reduce prices as raw material costs are seen to be bottoming out.'' Press said the company may increase trade and consumer offers. Dabur India executive director Rajan Varma said: ‘‘ There could be some savings on excise paid on raw materials, which would result in overall cost efficiencies and savings for Dabur India.'' The categories on which excise duty has come down from 10% to 8% include soaps, skin-care , shampoos, hair oils, hair colours and cosmetics among others. Encouraged by the news, a P&G spokesperson said: ‘‘It should stimulate consumer demand. We will assess the implications of this reduction and take decisions as is appropriate.'' Prices of certain products were recently dropped by market leader HUL, which witnessed a volume growth decline in soaps and detergents in the December quarter.
Indian FMCG major CavinKare has entered into a strategic alliance with Coty Inc the world’s leading fragrance marketer, to market the entire adidas personal care range in India. Coty Inc is the exclusive global licensee of the adidas brand name in so far as personal care products are concerned.Both Coty Inc and CavinKare foresee a long term marketing alliance to successfully establish the business in India. This alliance will strengthen adidas’ position as a major player in the male personal care segment.
To begin with CavinKare will market adidas personal care products under the Sports Sensation and Action 3 range, which include top selling male body sprays and fine fragrance ranges. The men’s deo body sprays and fragrance market is one of the largest and fastest growing segments in India. In light of this alliance, the Indian market will also take part in global product launches in the future.
CavinKare’s Chairman and Managing Director, C K Ranganathan, states that, “Personal care is Cavinkare’s core business. The Indian deodorant and fine fragrance market is vastly untapped. With this alliance, we are hoping to unlock the potential of the Indian fragrance market with a strong lifestyle brand like adidas. CavinKare, has over the last 25 years, gained a very good understanding of the Indian consumer and has established a strong distribution network, both of which will help in this endeavour.”
Mr. Venkatesh Babu, Regional Managing Director of Coty Inc says “In this endeavour, as the license partner, Coty Inc. will be assisting CavinKare to build up the market for adidas personal care. Coty Inc., known for its astute acquisitions and licensing partnerships, is the global leader in fragrances. Coty has built a unique portfolio of brands that have produced some of the strongest consumer franchises in history.”
Since 1983, CavinKare has enviably emerged into a successful business enterprise in India’s highly competitive FMCG sector. Today CavinKare has business interest in personal care, food & beverages, dairy products and beauty services. Brands in the CavinKare portfolio include Chik, Nyle, Meera, Indica, Fairever, Spinz, Ruchi, Chinnis, Maa, Green Trends, Limelite, with Cavin’s Milk being the latest addition.
Aditya Birla Retail to launch pvt labels in durables, personal care
Aditya Birla Retail, the retail unit of Aditya Birla Group, plans to launch private labels in a number of personal care products such as hair oil, hair styling gel, shaving creams and gels, toothpaste under its brand ‘Enriche’ by March this year, to take the advantage of downtrading in the economy, said a top company official today.
The company is also planning to launch private labels in consumer durables and electronics once it takes the number of its hypermarkets to 14 by FY11, the official said. The company runs 670 supermarkets and two hypermarkets, under the name ‘more’ and plans to open 200 new supermarkets by FY11.
Currently, the company sells consumer durables in its hypermarkets and has tied up with Essar Telecom’s The MobileStore for retailing mobile handsets in its supermarkets.
“We are focussing on private labels in a big way. We want to take the share of private labels to 30 to 40 per cent of our total business in the next 4-5 years,’’ said Thomas Varghese, the chief executive of Aditya Birla Retail.
The company currently has more than 320 private labels in categories such as processed foods, personal care products, detergents etc. These products sell 10 to 15 per cent lesser than that of national brands in respective category. It sells food products such as ketchups, jams, honey, carbonated drinks, chips, cookies under the brand ‘Feasters’; detergents, dishwash bars under the brand ‘110%’, shampoos, soaps under ‘Enriche’ among others.
All the major retailers such as Kishore Biyani’s Future group, Mukesh Ambani’s Reliance Retail, RPG’s Spencer’s have launched private labels in staples and cereals, processed foods, personal care and detergents, apparels and so on as private labels carry higher margins, ensure higher volumes due to lower prices and help in brand building.
Private labels in food and groceries carry margins of 25-35 per cent while that of national and regional brands give retails a margins of 10 to 12 per cent.
“The whole idea of private labels is based on pricing and retailers get enough volumes on their shelf at marginal costing. It depends on their strategy on pricing and marketing right products,’’ said Naimish Dave, a director with OC & C Strategy Consultants.
Kishore Biyani’s Future group recently announced plans to become a Rs 10,000-crore consumer products major in the next four years by launching new brands in the fast moving consumer goods (FMCG), consumer durables, electronics and apparel space in anticipation of down-trading slows and also to take advantage of a slump in commodity prices.
As part of the plan, Future Brands, the group’s wholly-owned subsidiary, plans to launch sportswear, lingerie and beauty products in the next 3-4 months along with FMCG products such as toothpaste, soaps and detergents among others.
The Future Group has brands such as John Miller, Bare, DJ&C, Indigo Nation in apparels and Tasty Treat, Fresh n Pure in the FMCG category and Dreamline in general merchandise, Sensei and Koryo in consumer durables and electronics category among others. The group expects to earn at least 30 per cent of its revenues from its private labels in the next four years, Biyani said while announcing its plans.
Mukesh Ambani’s Reliance Retail sells staples and food items under Reliance Select and Reliance Value brands, dairy products under ‘Dairy Pure’ brand among others and plans to launch soaps, detergents, cosmetics and non-FMCG products under its private labels segment with a new brand name. Reliance Retail has plans to set up a separate company called
Reliance Foods.Both Future Group and Reliance Retail are exploring ways to supply their private labels in food and groceries to kirana stores and small retailers in the country to supplement their revenues. Future Group has already conducted pilot studies in this regard.