Long lasting?

Remember the news item a few years ago about a young Indian man who sued Hindustan Unilever (HUL) over an ineffective Axe effect? The report said that Vaibhav Bedi was accusing the FMCG giant of cheating him and causing anguish since, despite using the deodorant for seven years, he had been unable to attract a single girl. The report went viral and was even printed in several mainstream newspapers across the world before it was revealed as a hoax that had originally appeared on a news parody website. The news may have been fake, but there are perhaps thousands of young men who empathise with the fictitious Bedi — after all, it’s not only Axe that has been hardselling the idea that smelling good is all it takes to attract women by the droves. And, going by the rising sales of deodorants, there are probably hundreds of thousands who have bought into the idea willingly — what level of success they’ve had, though, is anybody’s guess.

The Axe effect has been particularly potent in India, where men’s deodorants account for a staggering 70% of the Rs 1,886-crore market. Virtually all men’s deo brands run advertisements that show women going crazy for any man after getting just a whiff of whatever he has sprayed on. Simple logic would suggest that copycat advertising is perhaps not the best way to stand out in a cramped market where 500 brands are jostling for space. So, what explains the strong smell of success in the Indian deodorants market? 

Coming of age

According to a recent Euromonitor report, from just Rs 283 crore in 2007, sales of deodorants in India grew five-fold to Rs 1,520 crore in 2012, a compounded annual growth rate of 39.9% (see: Smells good). The explosive pace of growth will taper off in the coming years as the market matures, says the research firm, but will still grow at a very respectable 15%, and double to Rs 3,010 crore by 2017. Compare that with the overall personal care category of the FMCG sector, which has been growing at 17% in the past six years and is expected to clock 18% growth in the near future. “There aren’t many categories that offer the kind of growth deodorants do,” agrees MS Raghunandan, CEO, Jyothy Laboratories, which owns the Fa range of deodorants courtesy the buyout of Henkel’s brands in India in 2011. “Not much was happening in Fa. But we have activated the brand in the past one year and the results have been encouraging,” he adds.

Smells good - Graphic

It’s not just Jyothy with Fa. In addition to its blockbuster Axe, HUL has deodorants under the Dove, Lux, Sure and Rexona brands. Marico acquired Set Wet and Zatak brands from Reckitt Benckiser in 2012 for its entry into the deodorants space; Wipro Consumer launched the Yardley brand in 2010 after acquiring it from its British parent; and ITC unveiled the Engage range in May 2013. Everybody wants to get into the game, right from companies engaged in producing TV programmes, manufacturing condoms and homoeopathy products to sports personalities. Not to mention relatively unknown players who have launched brands such as 18, Killer, Fuel, Addiction, Bad Boi, Layers, Secret Temptation, Intense, Fogg, Streax Xenoh and several more.

And all this over the past five years. What makes deodorants smell good to so many companies? “It is one of the faster growing categories within personal care. Considering the low penetration levels, low entry barriers and increased affluence and disposable incomes, more and more players are entering this category,” says Sunil Gadgil, marketing director, Nivea India, which is the fourth-largest player in the deodorant market with a 5.2% share. (see: All pumped up)

All pumped up - Graphic

The numbers bear out the under-penetration claim. Vijay Udasi, executive director, Nielsen India, says penetration at the household level is barely 5%. And if just one in 20 Indian homes buys deodorant, the usage levels must be even lower since only one or two family members are likely to use deos. (In the US, in comparison, deodorant use is as high as 91%.) “On the distribution side, there are 8.4 million stores in India, but deodorants sell at just 840,000 — that is, just 10%.” 

"Considering the low penetration levels, low entry barriers and increased affluence, more players are entering this category" - Sunil Gadgil, marketing director, Nivea India

At the same time, there is a perceptible change in consumer behaviour in the past decade, with brand awareness increasing and personal grooming becoming a necessity more than just a desirable habit. “There is a focus now on outside beauty and grooming that aids confidence. A young population and workforce, greater social interactions and rising incomes have all favoured it,” adds Udasi. 

For brand owners, too, deodorants make business sense. Most manufacturing is outsourced and accounts for about 40% of the retail price; distribution and marketing accounts for another 40%, leaving a very attractive margin of 20%. “Where 10 years ago, soaps or creams were driving growth for FMCG companies, today, deodorants are driving the growth,” says Anand Ramanathan, associate director, KPMG. Besides, he says, it may be easier to launch a deodorant brand, which is a relatively new category, than to break into a mature market such as shaving cream or talcum powder. But launching a new deo is far easier than overcoming the barriers to growth in a cluttered market.

What’s driving growth

“Impulse, I suppose,” says Mukesh Bisht, a 32-year-old Delhi-based government consultant, explaining how he buys deodorant. In the past two years alone, he has tried Set Wet, Wild Stone, Nivea and Park Avenue but can’t pinpoint what triggered the impulse. Bisht is a very typical deodorant consumer, says the industry. There is little or no brand stickiness, near perfect competition and most purchases are made on the spur of the moment. “It is a flirtatious category,” concedes Anil Kulkarni, business director for Park Avenue at JK Helene Curtis. Which makes it very difficult to build loyalty and grow the consumer base.

That’s not the only hurdle. Deodorants are an urban phenomenon and even in the cities, have a strong rival in talcum powder, which, as the Euromonitor report says, is “comparatively affordable and... preferred by many consumers across the country”. Darshanbhai Patel, a veteran of sorts in the deo business, agrees. “Deodorants have become commoditised in India. About 75% of business is done in the top 20 cities where customers are always looking for new things.” Patel, who helped launch Set Wet and Zatak under Paras Pharma (the brands were sold to Reckitt Benckiser in 2011, which sold them to Marico a year later), is the founder of the Ahmedabad-based Vini Cosmetics, which owns the Fogg brand of deodorants. “There is very little a brand can do to differentiate itself,” he adds. 

 "Deodrants have become commoditised in India. About 75% of the business is in 20 cities where people are looking for new things" - Darshanbhai Patel, founder, Vini Cosmetics

Not quite true, says KPMG’s Ramanathan, pointing to three distinct layers in the market. “At the top are international brands catering to urban customers. Next are mass Indian brands and then low-priced alternatives for tier 1 and tier 2 cities,” he says. But within each band, pricing is competitive and similar: imported labels such as Ferrari, Hugo Boss and United Colors of Benetton sell for about Rs 800 per 150 ml, while mass brands such as Axe, Fogg, Park Avenue retail at between Rs 150 and Rs 200 for similar-sized cans; at the bottom are brands such as Explore, Eva and Gatsby for Rs 100 per can. Even market leader HUL has six deodorants catering to different customer groups at different price points. Despite that, the competition has taken a toll: between 2008 and 2012, the FMCG giant has lost nearly 9% market share. “The size of market has grown during this period, creating opportunities for new players, but it has become fragmented. So, in a much larger but fragmented market, HUL has lost some share, but gained in absolute terms,” says Ankur Bisen, vice-president, retail, Technopak. The drop in market share notwithstanding, Axe is still the market leader by a huge margin (26.8%, compared with McNroe Chemicals’ Wild Stone, which is at second place with 10.7%). And the market has taken its cues from the leader. 

Racy to the top

A couple of years ago, the Advertising Standards Council of India pulled up a few brands for their racy ad campaigns. That doesn’t seem to have made much of a difference. Most men’s deodorants in India still follow Axe’s spray-this-and-become-a-babe-magnet positioning. That won’t work for too long, warn market observers. “The category is still in its growth phase and the target is the youth. So, all the intangibles such as sex appeal and being accepted in society are being talked about. But we need to transition to highlighting the functional benefits of the products,” says Ramanathan.

Already, the deodorant category is “over-advertised”, says Harminder Sahni, founder of brand consultancy Vazir. “If one brand starts spending, the others feel compelled to follow. But most of the ads are highly sexist and while ads help a brand get noticed, people may not be asking for the brand by name,” he says, pointing to the contradictions in the market. 

So, what works? “Fast innovation and a sense of newness,” says Sameer Sathpathy, executive vice-president, marketing, Marico. And new markets. Since taking over Set Wet and Zatak in July 2012, Marico has been slowly pushing the latter in rural markets, with focused advertising and leveraging its distribution and marketing muscle. “Our advertising is different from the boy-chasing-girl and vice versa route. We are focusing instead on competition between men.” 

"Our advertising is different from the boy-chasing-girl and vice versa route. We are focusing instead on competition between men" - Sameer Sathpathy, executive VP, marketing, Marico

Much more is needed to grow the market, says brand consultant Kiran Khalap, founder of chlorophyll. “Given that we are a hot, crowded country, this category should have grown much faster,” he says. Traditionally, the task of converting non-category users lies with the market leader. In toothpaste, Colgate would routinely address black toothpowder users through its white toothpowder, the idea being that they would gradually upgrade to white toothpaste, gel toothpaste and mouthwash. Surf converted washing soap users to detergents using similar tactics. But, “I have not seen any deo brand attempting conversion,” points out Khalap. 

Even if creating new users is still to be addressed, some firms are trying to break free of the Axe effect. Vini Chemicals’ Fogg is a case in point — and its differentiated positioning has won it appreciation not just from analysts but even industry people. Instead of pushing the fragrance or its appeal with the opposite sex, ads for Fogg emphasise the get-your-money’s-worth angle (at Rs 170, the deo is priced slightly higher than other mass brands). Fogg is liquid, not gas, which means there is no wastage, say the ads, “guaranteeing” 800 sprays per can. “If you are not differentiated, it is difficult to survive. Look at how a new brand such as Fogg has differentiated itself. As a result, it has come to the top of the table in just two to three years,” says Raghunandan of Jyothy Laboratories. 

But then there are some with quirky differences too. For example, there is the Mumbai-based Eternal Personal Care, which launched Bad Boi deodorants in May 2013. Six variants have been launched and the differentiator is not the names, which are the usual deo-sounding Envy, Dash, Ace, Rave and so on. Instead, the company emphasises the unique sound the can makes when opened. “We have stressed that in our television ads also where girls tease the boy with that sound,” says SM Menon, co-founder and managing director, Eternal Personal Care. 

Ironically, HUL itself hasn’t replicated the Axe positioning for its other deo brands. While Denim is portrayed as a value-for-money brand, new launch Sure stresses the product’s anti-perspirant qualities more, claiming that the deo is effective even at 58 degrees C. In a limited response to queries, HUL indicated its strategy as broadening its portfolio by extending existing brands and covering all segments of the market. “Deodorants is an important category for HUL and over a period of time, as the market has evolved, we have added brands and benefits in the portfolio to meet the diverse consumer needs. HUL has led the market development for the category by straddling the pyramid,” says a statement from the company. 

Advertising in women’s deos, however, mainly emphasises functional aspects — and that’s true not just for HUL but other brands as well. Nivea, for instance, has been pushing its variant as an underarm skin-whitener, a stand HUL copied for Dove, when it extended the brand into deodorants in 2011. “There is lack of differentiation in the male deo category. But in women’s deos, we have a very differentiated product offering with our underarm whitening spray, which we pioneered in the Indian market,” says Nivea’s Gadgil. And it’s making a difference, he adds, claiming to have gained 1.3% market share in the past 12 months. Then, there’s the May 2013 campaign for Fa; it showcases a simple benefit of using deodorants: removing body odour. Perhaps if more advertisements spoke about that basic aspect of deodorants, selling more cans, even in a crowded market, wouldn’t be so hard.