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Godrej Consumer lowers the price bar for creme hair colour

Source : BUSINESS_STANDARD
Last Updated: Mon, Nov 19, 2012 19:30 hrs

In what could trigger a reaction from rivals, Mumbai-based Godrej Consumer Products Ltd (GCPL) has launched single-use hair colour packs at Rs 30, far lower than the current price of similar products in the market place.

The launch has happened under the Expert brand name in the creme segment, one of the four lines in GCPL’s hair colour portfolio, the others being Renew, Nupur and Color Soft.

To promote it, GCPL has launched a new advertising campaign and is also pushing the product aggressively at the retail level. While announcing the company's second quarter results recently, Managing Director A Mahendran had said they’d look at all possible levers of growth in core categories. In recent months, GCPL has given its creme portfolio under Expert a rejig to boost growth. The current launch takes that endeavour to the next level, company executives say.

Market experts say cutting prices while retaining value is the best way for GCPL to move ahead in hair colour, given the stiff competition from local and foreign players. GCPL derives nearly 15 per cent of its domestic revenues from hair colour, the others being house insecticides and personal wash, 45 per cent and 25 per cent, respectively. It has dominated the powder hair colour segment within the roughly Rs 1,800-crore hair colour market in India but has struggled in creme, dominated by multinationals such as L'Oreal.

According to industry estimates, powder hair colour constitutes 45-50 per cent of the market, while creme is 25 per cent. While powder is growing at 15 per cent yearly, creme is growing at 20 per cent, partly because of the ease with which one can use it. But creme is also higher priced. Typically, powder hair colour is available between Rs 10 and Rs 20 for a small pack.

Creme price points, which for a long time were above Rs 100 for a 100-ml bottle, began coming down last year, when L'Oreal, which has Garnier Color Naturals at the lower end of the market, launched a 40-ml product of the latter at Rs 59. Till that time, Garnier Color Naturals was available at Rs 150 for a 100 ml pack. Rivals such as Streax from Mumbai-based Hygiene Research Institute (HRIPL) and Color Mate came out with products priced between Rs 45 and Rs 50 for a 40-ml unit.

Their 100-ml units were priced between Rs 105 and Rs 150. The Rs 30 creme sachet, also a 40-ml pack, launched by GCPL, say market experts, is likely to be a game changer against this backdrop.

Satyaki Ghosh, director, consumer products division, L'Oreal India, said his company was not a price warrior. "What we thrive on is the innovation we bring to the table. That comes at a price," he said.

Manish Chhabra, managing director, HRIPL said they were not contemplating launching a creme sachet at the moment.

Analysts say rivals are watching closely the consumer response to GCPL's Rs 30 creme sachet. Me-too products, if any, are likely to be launched after a few months, they say.




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