India Personal Care Market-Case Study

1. Discuss industry structure and value chain analysis of Personal care industry in India

The Indian Personal care market is estimated to be around ~$7bn USD in 2012. The Personal care market can be categorized into distinct product segments such as skin care, hair care, oral care, cosmetics, fragrances, other toiletries. The bath and shower product segment is the largest segment in terms of market size in 2012.

The personal care market is highly dispersed, consisting both of organized and unorganized players. There are nearly 100 organized players, which includes international as well as Indian companies and various small-scale companies.

Since, personal care market includes those consumer products which are used for personal hygiene and for beautification. The figure below represents the value chain structure for personal care market:

Raw -M aterial Suppliers M anufacturing Super-Stockist W holesaler Retailer End-Consum er/

Com panies

TIER-1

TIER-2

TIER-3

Organized sector consists of three- types of companies:

1. Foreign owned or, international companies like, Hindustan Unilever Limited, Proctor & Gamble, L’Oreal, Colgate-Palmolive, Oriflamme, Amway, Schwarzkopf, etc.

2. Large indigenous companies like, Dabur, Marico, Godrej, Biotique, CalvinKare, Emami, Ayur Herbal, etc.

3. Small or, medium companies like, Cholayil, Vicco, etc.

In addition to organized sector, there is a very large unorganized sector, which comprises of micro/cottage scale enterprises, spread across the whole country. These enterprises thrive on products, which are based on traditional and local recipes.

Figure 1: Personal Care Market Structure

Directly through House/ Showroom

Figure 2: Value- Chain Analysis of Personal Care Industry

2. Discuss atleast 5 major players and their profile in Dental care market including business overview, business developments and financials from 2008-2013

Colgate Palmolive is founded in 1806, headquartered at New York City, United States

Colgate, sub-brand of Colgate Palmolive, is an oral care product, having product line of toothpastes, toothbrushes, mouthwashes and dental floss.

Colgate Palmolive employs around 37,700 people around the world

Colgate is market leader in oral care segment with market share of 56% in September, 2012.

In August 2014, Colgate launched Colgate Slimsoft Charcoa- India’s first and only toothbrush with super slim tip bristles now infused with charcoal.

Colgate had raised the standard in the brush

market with recent launches, such as SlimSoft and thus, enhanced their leadership position by registering a 57% volume market share for Sep 2013

Colgate strengthened its leadership position in the toothpaste category with launch of Colgate Visible White market share of 42.6% in January 2014

COLGATE PALMOLIVE - BUSINESS OVERVIEW COLGATE PALMOLIVE- BUSINESS DEVELOPMENTS

13 12 11 10 9 8

Total In-come

3191.53 2786.58 2351 2064.13 1786.87 1543.55

Total Ex-penses

2484.8 2158.03 1794.33 1542.25 1416.91 1244.83

Reported Net Profit

496.75 446.47 402.58 423.26 290.22 231.71

Total Lia-bilities

489.59 435.39 384.1 330.7 220.99 166.9

Total As-sets

489.61 435.4 384.09 330.7 220.98 166.9

Earning Per Share (Rs)

36.53 32.83 29.6 31.12 21.34 17.04

250.00

1,250.00

2,250.00

3,250.00

Colgate Financials (2008-13)

in C

rore

s

Colgate with market capital of Rs.3,191.53 crores, is leading in oral care sector

The company has shown constant increase in profits over years, with constant increase in net income and expenses

Company is able to meet all its liabilities through its assets, resulting in zero debt (approximately)

HUL , owned by Anglo-Dutch company Unilever (67% share in HUL), is headquartered in Mumbai, India

HUL employs 16,500 people in 2011 across the world

HUL is the market leader with well diversified product-portfolio of foods, beverages, cleaning agents and personal care products.

HUL owns second largest market size of 19% in oral care after Colgate Palmolive

Company sells its oral care products under the brand name Pepsodent and Close-up

HUL- BUSINESS OVERVIEW

HUL in its annual report for 2013-14 stated that in coming months, innovation, rural distribution and digital media will be company’s priority

Company’s share in toothpaste market has been constantly falling since last two years. In Sep 2014, the company’s market share was 21.5% against 22.8% in 2013 and 23.8% in 2012.

HUL- BUSINESS DEVELOPMENT

13 12 11 10 9 8

Total In-come

27056.64 22384.82 20505.75 17988.32 21215.15 14470.99

Total Ex-penses

21837.59 18696.3 17347.65 14990.89 17973.67 11966.19

Re-ported Net Profit

3796.67 2691.4 2305.99 2202.03 2500.71 1769.06

Total Liabil-ities

2674.02 3512.93 2659.52 2583.52 2483.46 1527.77

Total As-sets

2674.02 3512.93 2659.52 2583.52 2483.46 1527.76

Earn-ing Per Share (Rs)

17.56 12.45 10.68 10.09 11.47 8.12

2,500.00

12,500.00

22,500.00

Hindustan Unilever Limited Financials (2008-13)

in C

ro

re

s

The Company with market capital of Rs.27,056.6 crores is leading in personal care market in India.

Company’s net profits are constantly growing with growth in total income and expenses along with

Moreover, the company is able to meet all its liabilities through its assets, resulting in zero debt over the years.

Dabur, founded in 1884 by Dr. SK Burman, is headquartered at Ghaziabad, India

In June 2008, German company Fresenius SE bought 73.27% equity stake at Rs.76.50 a share

The company employs 6,154 people in 2012 In February 2013, company expanded its

product portfolio with the launch of Dabur Super Babool+Salt Power Toothpaste

Company sells its products in oral care segment under brand name of Meswak, Dabur Red, Babool

DABUR- BUSINESS OVERVIEW

Dabur has doubled its rural reach over the past couple of years to grow their market share. Currently, Dabur has 11% market share in oral care segment, followed by P & G

Dabur, in the pace of growing market share, has slashed entry-level prices to Rs.5 and Rs.10, hitting local brands on their home turf

Dabur crossed Rs. 200-crore mark in oral care in 2013

Currently, Dabur Red toothpaste is the fastest growing brand in the market with annual growth rate of 17%

DABUR- BUSINESS DEVELOPMENT

13 12 11 10 9 8

Total Income

4410.45 3825.55 3391.9 2905.05 2476.52 2114.59

Total Ex-penses

3569.14 3158.74 2728.36 2325.58 2003.12 1706.82

Re-ported Net Profit

590.98 463.24 471.41 433.33 373.55 316.77

Total Liabili-ties

1836.36 1576.54 1354.51 855.45 877.18000000000

1

545.01

Total Assets

1836.36 1576.54 1354.51 855.45 877.17000000000

1

544.98

Earning Per Share (Rs)

3.39 2.66 2.71 4.99 8.53 6.11

250.001,250.002,250.003,250.004,250.00

Dabur Financials (2008-13)

in C

rore

s

The Company is 3rd largest player in the oral care segment with market share of 11%.

The company’s profits are increasing over years, but growth rate is very low as compared to its peers.

The company is able to meet all its liabilities through its assets.

The value of EPS has decreased by 60.25% from 2009 to 2013

3. India Personal Care market size comparison, 2008-2013

Countries 2008 2009 2010 2011 2012 2013

Proctor & Gamble (P & G), founded in 1837, is headquartered at Ohio, United States Of America

Company with its well-diversified product portfolio of pet foods, cleaning agents, personal care products, is one of the global leaders in personal care products

Proctor & Gamble employs 121,000 people around the world

Company sells its oral care products under the brand name of Oral-B and Crest

P & G- BUSINESS OVERVIEW

In 2014, company recorded $83.1 billion in sales.

On 1 August 2014, company announced streamlining the company, dropping around several brands and focusing on remaining brands, which constitutes 95% of the profit

P & G- BUSINESS DEVELOPMENT

Jun '13 Jun '12 Jun '11 Jun '10 Jun '09 8

Total Income 1787.13 1365 1036.21 923.170000000001

796.65 670.66

Total Expenses 1469.61 1113.87 834.94 661.61 562.41 478.43

Reported Net Profit

203.22 181.29 150.88 179.77 178.85 131.42

Total Liabilities 805.32 697.04 600.63 534.64 440.04 346.64

Total Assets 805.32 697.06 600.62 534.65 440.02 346.64

Earning Per Share (Rs)

62.6 55.85 46.48 55.38 55.1 40.48

100.00500.00900.00

1,300.001,700.00

Proctor & Gamble Financials (2008-13)

in C

rore

s

P & G with total income of Rs. 1787.13 crores, is 4th largest key player in oral care segment in India

The company is able to meet all its liabilities through its assets

The company’s profits are constantly growing over the years

Total Personal care market revenue in INR

Rs. 400 crores Rs. 570 crores Rs. 630 crores Rs. 700 crores

Growth Rate %

42.5% 10.52% 11.11%

Skin care revenue in INR

Rs. 64 crores Rs. 75 crores Rs. 96.75 crores

Rs. 130 crores

Growth Rate %

17.18% 29% 34.66%

Source: Dinodia Capital Advisors ‘Home and Personal Care-The Brightest Spark in Indian Story’, May 2013 Tata Strategic Management Group ‘Outlook for Personal Care Industry: An Indian Perspective’, October 2009

Compare the above two factors and provide reasoning of change in growth rate separately for both the factors (Total advertising industry and online advertising industry)

Instructions: Description should be atleast of 100-200 words

On comparing two factors, in my view growth in disposable income has resulted in increased purchasing power. Due to rapid urbanization and changing lifestyle, people are becoming more aware of personal grooming and thus, there is growth in demand from both urban as well as rural market. Along with this, easy availability of products in convenient size and sachets, made rural people inclined towards branded products, rather than unbranded products. All these factors in whole, contributed in the growth of skin care segment, along with growth in other segments too, like body care and hair care segment. This overall resulted in the increasing growth of personal care segment in India.

Increase in disposable income Growth in rural demand is expected to

increase because consumers are moving up towards premium products

Rapid urbanization Emergence of small-pack and sachets Changing lifestyle Greater product choice and availability Increased marketing

Reason of Change in Growth Rate in Personal Care Segment

Increase in per capita income Rapid urbanization Aspiration among youth Indian to look as

good as local and global celebrities Changing lifestyle People are becoming aware about personal

grooming Easy availability and greater product choice

Reason of Change in Growth Rate in Skin Care Segment

4. Discuss major segments of the Personal care industry in India (Rank the segments on the basis of market positioning)

01.5

3 2.82.41.31.3

0.60000000000

00010.3

Market Size (2012, USD in Billions)

Segments

Source: Morgan Stanley ‘India Consumer & Retail’, Feb 2013

0%20%40% 37%

27%16% 13% 12% 11%

Projected Growth Rates (2011-17)

Segments

Source: Spark Capital ‘Indian FMCG Sector’, June 2011

a. Skin Care :

The skin care market is estimated to be around $1.3 billion in 2012

Skin care in India is currently at very basic stage and is predominantly, considered as facial care

Hindustan Unilever occupies 58% of market share, while other players have smaller shares

The skin care segment has grown at a CAGR of 13% from 2000-12

18%

7%5%

3%3%3%

2%

19%HULL'OrealAmwayCavinKareOriflameEmamiZydusOthers

Source: Dinodia Capital Advisors ‘Home and Personal Care-The Brightest Spark in Indian Story’, May 2013

b. Hair Care :

c. Bath & Shower :

SKIN CARE-OVERVIEW Key Skin Care Companies (2011)

The hair care market is estimated to be around at $2.4 billion in 2012

This segments consists of shampoos, conditioners, hair-oils, etc

Shampoo makes up 31% of the hair care segment, while perfumed oil and coconut based oil make up 27% and 25% of the market respectively.

The hair care segment has grown at a CAGR of 12% from 2000-12

HAIR CARE- OVERVIEW

18%

11%

10%

8%8%

6%4%

4%

31%

HULDaburMaricoP & GL'OrealGCPLCalvinKareEmamiOthers

Source: Dinodia Capital Advisors ‘Home and Personal Care-The Brightest Spark in Indian Story’, May 2013

Key Hair-Care Companies (2011)

The bath & shower market is estimated to be around $2.8 billion in 2012

The segment consists of bar soap, body wash, shower get and talcum powder.

BATH & SHOWER- OVERVIEW

50%

10%

9%

8%

4%4% 15%

HULGCPLReckitt BenckiserWiproNirmaITCOthers

KEY BATH & SHOWER COMPANIES (2011)

5. Which sector is leading in personal care market in India (For eg dental care, skin care, etc…?

6. Performance of personal care market in India in last five years (2008- 2013)

The bath & shower market is estimated to be around $2.8 billion in 2012

The segment consists of bar soap, body wash, shower get and talcum powder.

50%

10%

9%

8%

4%4% 15%

HULGCPLReckitt BenckiserWiproNirmaITCOthers

Source: Dinodia Capital Advisors ‘Home and Personal Care-The Brightest Spark in Indian Story’, May 2013

2.8

2.4

1.3

1.3

0.60000000000000

1 0.3

Market Size (2012, USD in Billions)

Bath & Shower Products

Hair Care

Oral Care

Skin Care

Colour Cosmetics

Deodrants

Talking in terms of market size, in my view, bath and shower sector is leading in personal care market with total market size of $2.8 billion

This sector is further followed by hair care sector with total market value of $2.4 billion

Hair care sector is simultaneously followed by oral care and skin care with total market size of $1.3 billion and $1.3 billion respectively. Currently in India, skin care is at very primary stage with projected growth of 13% annually Source: Morgan Stanley ‘India Consumer & Retail’, Feb 2013

2009 2010 2011 20120

100200300400500600700800

400

570630

700

Personal Care Segment

Personal Care Segment

Personal care segment, one of the segment of FMCG industry, is constantly growing over years.

Its growth can be attributed to various factors, like, changing lifestyle, increasing purchasing power, etc

In 2013, personal care segment constituted 26% of the total FMCG industry

Low penetration in rural markets, which constitutes 70% of the population of India, Presents a major opportunity for growth in this segment