Hair Color in India

Hair Color – Category, Competitor and Customer Analysis Dr. Rohit Trivedi MICA

What’s happening…. • Have you seen your elder cousin/non-trendy professor/fashionista friend using hair color recently ?? • Hair color is a part of the cosmetics industry and has been growing at a CAGR of 25% • Total category is valued at more than INR 16 bn. • Poised for Growth ??

Category, Competitor and Customer Analysis • • • • • • • • • • • • •

FMCG – A Snapshot Personal Care – Growth prospectus Hair Color – Market Overview Types, Trends and Techniques Distribution Channel Brand Share Major Competitor Brand – User and usage insights Competitor Analysis and Profiling Porter’s Five Force Analysis Market Size and Market Share Analysis Industry Trends Drivers and Challenges

FMCG - Overview • FMCG : – Fourth largest sector in economy – Lower CAPEX – Higher RoCE – Highest % expenditure – Brand building – Contract Manufacturing – USP: Wide distribution network – Product Category introductgion-leg – Lower per capita consumption – Low rural penetration – Lower selected category penetration Source : KPMG “Indian FMCG Market – Giant Unleashed”

FMCG - Overview • FMCG

Personal Care • Indian personal care market is ranked 13th globally • Size of approx. USD 6 bn • Moving from health to beauty • Skin whitening – most popular claim • Category becoming more gender specific • Higher-priced new launch is an emerging trend

Source : Cosmetic-business "Indian cosmetics market continues to

Personal Care – Category Share

Source : Tata Strategic Management Group ”Outlook for personal care ingredients industry: An Indian perspective”, 2009

Growth in Personal Care Category

Source : Euromonitor International “Consumer Lifestyle in India” March 2012

Hair Care • Second largest segment of Personal Care • It comprises of one‐eighth of the fast moving consumer goods market • Hair care grows by 17% in 2013 to reach INR135.2 billion from INR 100 billion in 2011 • Colourants continues to record the fastest current value growth of 25% in 2013

Hair Care

Value of Hair Color market : Approx. INR 16 bn as on March, 2012. Source : Business World “Race For Crowning Glory”; Aug 2011

Hair Care

• Total market penetration – 35% ?? • Rural - ?? Urban - ?? • Is it a nascent or emerging category ?? Source : Business Today “Indian cosmetic market is all set for

2004

2005

Hair Color – Growth Trajectory

2006

2007

2008

2009

2010

2011

2012

2013

3,818.3 4,715.6 5,721.3 6,871.6 8,195.1 9,691.9 11,656.1 15,420.4 19,882.0 24,778.0 0 0 0 0 0 0 0 0 0 0 30,000.00

25,000.00

20,000.00

15,000.00

10,000.00

5,000.00

0.00 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Hair Color – Changing Trends • Shift in perceived need of consumption – from covering grey hair to ??? • Only 20% of Indian women use hair color as compared to 90% in developed markets • Hair color products have largely been aimed at 15‐45 age female segment -???? • Hair color use among male – Less than 3% (Surprised ???) Source : Business World “Race For Crowning Glory”; Aug 2013

Hair Color - Types • Comes in a variety of delivery format– Powders, Liquids, Oil‐based gels and Creams

Hair Coloring Techniques •

Ton-on-Tone • Non‐ammonia dyes • Not to lift the base color of the hair but one can have it infused with an arresting tone

•

Highlighting/Streaking • Anything from large strategically placed chunks of color to a more subtle back-to‐back weaving or slicing techniques can be employed to give either an outré or more traditional coloring of one’s preference

•

Global Coloring • All the hair is colored from root to end • Radical transformation (like bright red mop) or even settle for more honey or chocolate colored tresses

•

Grey Coverage

Distribution Channel

Source: Indian Franchise Association; business standard “Garn(i)ering volumes”, Oct 2010

Market Size and Market Share Analysis

Major Competitor and Brands Company Brand Categories Renew

Cream /Powder

Expert ‐ Original Godrej

Expert ‐ Care Expert ‐ Advanced

Powder

Nupur Kali Mehandi Colour Soft

Cream

Casting Crème Gloss Excellence Crème L’Oreal

Inoa Garnier Color Natural

Cream

Major Competitor and Brands Company Brand Categories Colorsilk Revlon

Top Speed

Cream

Color n Care Frost & Glow Hygienic Research Streax

CavinKare

Cream

Vasmol

Powder

Indica Herbal Hair Colour‐ Natural Black and Brown

Powder

Hair Color Brand Share

Market Share Analysis

•

Hair Color – Competitor Analysis Godrej is the market leader in the hair color segment with a market share of around 25%

• Hygiene Research with product ‘Vasmol’ and ‘Streax’ is an emerging player for mid-segment • Garnir, Loreal and Wella have capture the premium hair color market

•

Hair Color – Competitor Analysis Loreal with its premium brands ‘Matrix’, ‘Garnier’ and ‘Loreal Excellence’ account for more than three-fourths of creambased hair color market

• New Product Development is not a strong phenomenon in the category • All the players are MNC with deep pocket to finance marketing expenditure

Competitor Profiling • Godrej Consumer Products Ltd • A market leader in the hair color market and follows a 3 by 3 marketing strategy – presence in 3 continents through 3 core categories • Its care business grew by 19% for FY13 driven by robust sales of ‘Expert’ range of powder color and Nupur Mehendi • GCPL has acquired Darling Group, a leading hair‐care company in Africa in 2012

Competitor Profiling • Hygiene Research India • Operates in India and market its product across 15 countries • Has its flagship salons Streax Head Turner all across India

Competitor Profiling • L’Oreal SA • L’Oreal India was established in 1993 when it first entered the country in a joint venture with • MJ Group. • Has its presence in 130 countries and offers 23 global brands • It sells its products to hair salons; mass market retail channels; department stores • Its ammonia and odor‐free hair color Inoa was used in more than 81,000 salons one year after its launch in 2010

Competitor Profiling • Procter & Gamble Co. • Wella AG operates as a subsidiary of P&G and is headquartered in Darmstadt, Germany • Wella Professionals has earned its title as the global authority on hair color • It has re‐launched both the permanent hair color line Koleston Perfect and Color Touch demi‐

Competitor Profiling • Revlon Inc • One of the strongest consumer brand franchises in the world with its products being sold in over 100 countries across six continents • It markets its products primarily under Revlon ColorStay, Almay Intense i‐ Color, Almay Smart Shade, Revlon ColorSilk and Gatineau brand names

Porter’s Five Forces Analysis Buyers power: Strong Threat of entry Medium

Industrial rivalry : Low/Medium Supplier’s power: Low

Threat of substitutes Low Thus, overall the category is profitable

Major Brand Insights

?

Brand Analysis • • • • • • • •

Brand Objective Brand Positioning Brand Promoter Value Proposition Differential Competitive Advantage (USP) Brand Strategy Expected future strategies Target Market, their key expectations, usage and socio-psychographic make-up

Brand Positioning • Can we identify how they are positioned ? • What is their core value proposition ? How are they different ? (or not so different ?) • What is their TG ? • Core marketing strategy? How it has evolved ? • What could be possible strategic future direction for the brand ?

Brand-User Insights • Godrej – Leader in both Dye and Color • Dye used by people in age category 45 years and above • Color more prevalent in 25-34 years • SEC AB Female – Color Natural, Color Soft

Brand-User Insight • Rural – Consumption by R1 and R2 – Hair Dye more prominent

• Urban – Hair Dye prominent in SEC C and lower – Color Natural and Color Soft most prominent – Highly dominated by SEC B

Brand-User Insight • Media – TV, Friends and Retail Showroom are most promient – Media awareness high for both Dye and Color – Most favourite for Dye : Family Drama and Comedy – Most favourite for color : Reality show, sports and News

Brand - CB • Autonomy – Hair Color associated with autonomy

• Discount – Hair color and Dye – Extreme differentiation

• Value for Money – Dye is more associated with value for money

Usage • Low Penetration – about 20% • Equal usage by Male and Female • Usage equally spread among age group • More usage by SEC B then SEC A

Hair Color – Industry Trends • • • •

Usage of Herbal Products Tie‐up with salons Brands seek to be natural 3D Color service

Usage of Herbal Products • Consumers opting for ammonia‐free or herbal hair care products, especially in the hair coloring segment • Growing demand for products offering nourishment benefits usually associated with natural ingredients

Source : Business Standard “Herbal products add colour to hair

Tie-up with Salons • Partnering with beauty salons to train beauticians • L'Oreal's Professional Products first to start initiatives in in 1997 • GPCL targeted barbers and salons in rural areas • Application of specialized products like 3D Color

Salon Segment Salon Segment

Buying Criteria

Pricing Power of end customer

Differentiatio n

Luxury

Brand, Quality

High

Exclusivity for use of the product

Premium

Quality, Price, Availability, Specialization

Moderate – High

Salon specific brand created by co.

Mass Premium

Quality, Price, Margin, Availability

Moderate

Private Labels

Mass

Price, Availability

Low

No differentiation

3D Color Service • In this, panels of color are outlined and layered on top of each other and different shades are graduated • This gives an illusionary effect of added depth and dimension for an upgraded color look • The idea of colors fading from one into the next without any real demarcation gives an enhanced 3D look • Wella Professionals unveiled their Autumn/Winter 2011 Seasonal Collection which featured this innovation in hair color ‐ 3D Color Effects

Brand seeks to be natural • Products such as natural hair colorants and styling agents are beginning to gain force in hair care segment • Penetration of these products is very low even in urban markets • Though it is not possible to have a complete natural hair colorant, players are looking to introduce products that have limited chemicals in them Source: mydigitalfc.com “Hair color brands seek to go

Hair Color – Drivers and Challenges • Increase in disposable income • Growth in fashion conscious consumers • Rise in organized retail • Increase in awareness • Increase in Men’s grooming • Adverse impact on health

Hair Color – Drivers • Increase in disposable income

Source : McKinsey Global Institute “Rise of India’s consumer market”, May 2007“;

Hair color - Drivers • Growth in fashion conscious consumers – Increase in the population of women in the age bracket 15‐49 is impacting growth positively – Working population, in India today, have started paying more attention to their personality (Corporate identity syndrome ??) – More as ‘Personality enrichment’ rather than ‘Deficiency hideout’

Hair color - Drivers • Increase in Awareness – Players have been focusing on product differentiation by highlighting the description of the product formulation as well as the benefits of the same

Hair color - Drivers • Increase in Male Grooming – Market estimated to be around Rs 1250 mn – More male opting for hair color treatment while going for hair cut – More consumption emerging in age category 18-40

Hair color - Drivers • Increase in organized retailing – FDI in retail – a boom for FMCG at large – More option for comparison and differentiation

Hair color - Challenges • Perception among consumer about health problem emerging due to hair color chemicals • Link between hair dye and possibility of cancer • Allergic reaction due to certain hair color