Vi-John, Maker Of India’s Most-Selling Shaving Cream, Has A Beard Problem
Makers of razors to foams are having a hard time as it’s no longer uncool for men to sport scruffy days-old stubble, pointy ducktail, suave Van Dyke and even copious Bandholz beards to work. A tiny Indian company that makes the nation’s most-selling shaving cream wasn’t left unscathed.
The market has been stagnant for the last two years as men now choose to retain beards, Vimal Pandey, chief executive officer at Vi-John Group, the maker of namesake products, told BloombergQuint. That’s something its peers have acknowledged. Even Procter & Gamble Co., the owner of Gillette brand, blamed the decline in grooming segment sales to fewer men choosing to scrape the crop frequently.
India’s men’s grooming market comprising razors, blades, creams, gels, foams and after-shave lotions was worth around Rs 4,737 crore as of 2018, according to Euromonitor International’s estimates. Shaving creams contribute about just Rs 350 crore, according to Pandey. But Vi-John has the highest 30 percent share by volume, he said. It competes with P&G’s Gillette, Reckitt Benckiser Ltd.’s Dettol and Hindustan Unilever Ltd.’s Axe brands.
Prashant Agarwal, joint managing director at brand consultant Wazir Advisors, said Vi-John dominates with the largest market share by volume and value in shaving creams. BloombergQuint couldn’t independently verify it as data on shaving-cream market is not publicly available. Moreover, Vi-John, being a partnership firm, isn’t required to file its earnings with the Registrar of Companies. BloombergQuint awaits P&G India and Reckitt Benckiser’s response to emailed queries.
Founded by the late Suchet Singh Kochar as a maker of perfumed hair oil and petroleum jelly in 1960, Vi-John is the first choice at barber shops and households outside Indian metropolitan cities. That’s because it’s the cheapest.
At Sawantwadi Hair Cutting Salon in Mahim, central Mumbai, up to 80 percent customers go for the regular shave with Vi-John, according to the owner Sanjay, who refused to give his second name. It costs Rs 40 compared with Rs 80 for a shave using the Gillette gel or foam. The nearby Popular Hair Cutting Salon sees 90 percent of its customers opt for a Vi-John shave.
The Delhi-based company focuses largely on the mass market. “We don’t intend to cater to the premium segment unlike our competition, which focuses on foams or products purely meant for urban India,” said Pandey.
Wazir Advisors’ Agarwal said product positioning has worked well for Vi-John. “It’s a daily-use product and the mass market has found quality at a competitive price.”
The strategy to sell through wholesalers that only cater to barbers also paid off. “We have been intentionally reaching out to barbers, where the consumption of shaving cream is extremely high,” Pandey said. “No one else thought of this.”
Higher margins to retailers also helped Vi-John that sells through 150,000 stores and indirectly via one million outlets. While the company offers distributors and wholesalers about 6-7 percent mark-up, retailers get 25 percent. That’s nearly twice the margin offered by its competitors. “We work on thin margins,” said Pandey. “But we make it a point to give the retail trade higher margins.”
P&G offers 24 percent on the revenue a distributor earns by selling its products, according to a company distributor in western India. But it offers retailers a lower margin of 10-15 percent, he said.
The company is doing the right thing by focusing on reaching the right audience and setting up the necessary distribution chain, according to brand consultant Harish Bijoor. “They have their business-to-business distribution in place and haven’t focused on branding like other companies.”
And its rural-first approach has helped it maintain the edge. “That client base is not focused on branded labels,” said Bijoor.
The grooming company had a turnover of Rs 450 crore last year, growing at an annualised rate of 15 percent, according to Pandey. By comparison, grooming segment contributed Rs 1,331 crore—of about 80 percent—to Gillette India sales in the financial year end June 2018. But besides shaving cream and gels, the P&G unit also sells razors and electrical grooming products like trimmers for both men and women.
Managed by the third generation of the founder’s family, Vi-John now also makes deodorants, lip balms, almond oil, aloe vera gel, lotions, fairness creams and talcum powder. And Pandey said it’s looking to counter the stagnating shaving-cream market by launching new products.
“We plan to start with beard cleansers and beard oil.”