Personal care companies hope to capitalize on premium market with herbal products

Personal care companies hope to capitalize on premium market with herbal products

Hindustan Unilever (HUL) has announced the launch of a new selection of personal care products with the ayurveda tag, as more and more companies focus on herbal products in a bid to break into the premium market.

 Whether pitched as herbal, natural or ayurvedic, the products are all marketed with a much higher price tag than their stablemates. For example, a 50-gm pack of Fair & Lovely Ayurvedic Care, a herbal fairness cream, is priced at Rs.120 while a similar pack of Fair & Lovely Advanced Multi-vitamin Cream costs Rs.89. This amounts to a price difference of 35 per cent. 

The HUL products are yet to launch, and when they do they will be sold online. The move follows the announcement from HUL Managing Director Sanjiv Mehta stating in the earnings call for quarter ended June 2015 that premiumization would be one of the three key focus areas to drive growth for the company. 

Despite the herbal products currently only comprising six to seven per cent of the personal care market, according to a research report by UBS Securities India Pvt Ltd, the volume is growing at about twice the segment average. 

Analyst Sunita Sachdev said in the report, “We estimate herbal could grow to about 10 per cent of the segment by FY20 as the trend accelerates.”

Meanwhile a HUL spokesperson said, “There is a growing consumer trend for natural and ayurvedic products and an emerging need in this space. In the modern times, stress and lifestyle-related problems are here to stay. More and more people are seeking fundamental solutions from holistic natural sciences like ayurveda, to fix and solve their short-term and long term-beauty and wellness needs.”

Indeed, Sachdev has suggested that companies within India and worldwide are using this growing trend to premiumize their portfolio and scale up their range. Two companies said to have done this are Dabur India and Emami. Colgate Palmolive has also shown signs of being up to date with the movement, launching neem and charcoal variants of the Colgate toothpaste into the herbal category. And in keeping with the consensus that the herbal products demand a higher price tag, Colgate Total Charcoal Deep Clean is priced 10 per cent above Colgate Total Advanced Health toothpaste, while Colgate Active Salt Neem variant is priced 4 per cent above Colgate Active Salt toothpaste.

Sachdev said, “Consumers around the world are ‘going organic’, and, in many ways, the movement to herbal and ayurvedic products in India is a manifestation of the same trend. Consumer companies are using this trend as a premiumization tool to upgrade their revenue mix. HUL and Colgate (while aligning with their respective parents) have launched premium ayurvedic offerings in their key brands.” 

Indeed Colgate is said to be launching a multi-function ayurvedic toothpaste. While Dabur and Enami are ahead of the game and already have strong herbal portfolios. 

“Dabur, Emami and Himalaya have deep roots in Indian medicine and have gained from their traditional herbal positioning. These companies are extending brands into new and emerging segments to improve profitability. Most of their brands are already on the herbal platform and should gain materially from this trend,” Sachdev said.

Embrace the Sun: Your Ultimate Summer Skincare Routine