The Battle Is Getting Bigger In One Corner Of India’s Consumer Market

For most Indians, coconut oil means cobalt-blue—the colour of Marico Ltd.’s Parachute brand containers. The recall among buyers is so great that it’s spawned an industry of knockoffs. Dabur India Ltd., too, has been chasing this category and has stepped up aggression, selling in two types of packaging: lemon-green and deep sky-blue.

Coconut oil is a conditioner, a skin lotion, a cure against scars, and much more in Indian homes. It’s a Rs 4,500-crore market, according to Nielsen India data. Dabur, despite entering the segment in 1995, has a marginal presence. Marico, controlled by Harsh Mariwala, has a share of about 60 percent and Parachute ranks among some of India’s largest consumer brands like Hindustan Unilever Ltd.’s Wheel detergent.

About 30-35 percent of the coconut oil market is unbranded. Dabur offers variants under Anmol and Vatika brands in blue and lemon-green bottles, respectively. These compete with multiple offerings of pure and -added products under Marico’s Parachute umbrella.

Mohit Malhotra, chief executive officer at Dabur, told investors after the third-quarter earnings that while the company has renewed its focus on the overall hair oil market, 80 percent of its portfolio is restricted to perfumed oil.

“There’s a huge headroom in coconut oils also, which is available for us to capitalise on,” he said, adding that they have a marginal presence in this market. The company, he said, “will have a market share gain strategy... I find this category very exciting”.

Not that Dabur hasn’t tried earlier. But it’s going more aggressive now and has ramped up marketing.

The company’s consolidated advertising spends rose more than 14 percent year-on-year in the quarter ended December. In November, it came out with print ads in several newspapers that featured its Anmol brand alongside Marico’s Parachute, claiming to offer better at a lower price.

It’s also offering better margins to retailers to push its coconut oils, two distributors who supply Dabur’s products told BloombergQuint seeking anonymity out of business concerns. In Punjab, retailers were offered 6 percent higher margins to sell all its coconut variants, while in Goa they were given 18 percent higher margins, the said. That’s over and above the 10 percent margin Dabur usually offers retailers.

Still, winning share from Marico won’t be easy. Malhotra himself acknowledged tough competition. Marico’s marketing and brand positioning has ensured that what Colgate is to toothpaste, Parachute is to coconut oil.

Dabur will find it difficult to challenge that, Harminder Sahni, founder and managing director at brand consultant Wazir Advisors, told BloombergQuint. But what goes in its favour, according to him, is that the company understands the hair oil market and has a strong presence.

Dhanraj Bhagat, consumer and retail partner at Grant Thornton India LLP, said the maker of namesake honey, too had a brand recall and it could target the areas where Marico doesn’t have a strong foothold.

While the companies don’t disclose regional reach, dealers told BloombergQuint that Dabur has a stronger hold in north India, while Marico has a bigger presence in south and west of the country.

Still, Dabur will face increasing competition. Marico plans to push into the market where its rival is equally strong—the non-coconut, -added hair oil. At the premium end, the company is focusing on products for “sensorial and functional benefits”, Saugata Gupta, managing director and chief executive officer, told investors after the third-quarter earnings.

These include products to tackle greying and hair fall. Gupta said this market would be Marico’s big bet in the next two years.

The hair oil makers have yet to respond to BloombergQuint’s emailed queries.

Bottom Of Pyramid

Both the companies are also chasing growth at the bottom-end of the pyramid at a time consumption is flagging. Indians have cut spending in an economy that’s set to grow at its slowest pace in more than a decade. Consumers, particularly in rural areas, have either reduced hair oil usage or switched to cheaper alternatives.

While Dabur’s lower-priced Shanti Amla (gooseberry) and Shanti Jasmine brands saw double-digit growth in the January-March quarter, Marico launched its sarson (mustard), amla and jasmine oils under the Nihar brand.

Since FY18, amla-based oil category has grown 12 percent and contributes 25 percent to the Rs 8,261-crore hair oil market, according to Nielsen India data.

“We’ve lost a significant amount of market share to low-priced players where we want to regain it,” Dabur’s Malhotra said in the conference call with investors. “We will defend our market shares in amla, gain market shares in Brahmi Amla and Sarson Amla.”

Gupta said Marico, which stayed away from the lower end of the market, will now focus here and it has had some success. The initial results of Nihar Shanti Jasmine oil, he said, are not bad.