Consumer goods makers look beyond soap, tea

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Consumer goods makers look beyond soap, tea

Indian consumer goods firms are looking beyond their traditional strongholds in packaged tea and soap and tapping emerging trends in health and personal care in search of bigger profits in an increasingly competitive market, reports Reuters.

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Consumer goods firms are looking beyond their traditional strongholds in packaged tea and soap and tapping emerging trends in health and personal care in search of bigger profits in an increasingly competitive market, reports Reuters.

"The consumer goods space is seeing a buoyancy, with younger consumers, higher disposable incomes, and the growth of organised retail," said Hemant Patel, an analyst at Enam Securities. "But some categories like soaps are highly penetrated, while others like detergents are seeing pricing pressure," he said.

Tata Tea Ltd ., the world's second-biggest branded tea maker, last month said it would buy 30% of Energy Brands Inc., which makes Glaceau vitaminwater, for USD 677 million.

Leader Hindustan Lever Ltd . has launched a water purifier and a skin cream for men, while tobacco giant ITC Ltd. has rolled out foods and fragrances and is investing more than USD 1 billion on its rural shops and distribution centres.

India's branded retail sector, estimated at about USD 6 billion, makes up only 3% of the total market, but is forecast to grow at 25-30% a year over the next four years, with plush department stores and malls springing up across the country. That has encouraged Marico Ltd., Godrej Industries Ltd ., Dabur India and Emami to foray into areas including men's grooming and ready-to-eat food.

Hair oil major Marico has rolled out skin care centres and is testing baby care products, while Dabur has added packaged foods and beverages and Emami has a skin cream for men. "Their bread-and-butter products provide the cash flow initially, and while immediate profitability is difficult, as a long-term strategy it works," Patel said.

Revenue from Marico's Kaya centres more than doubled in the fiscal year to March 2006 and Marico expects new products and services to make up one-fifth of its total revenue shortly. "Increasing urbanisation, a focus on wellness and healthcare and a shift to services is encouraging concepts like Kaya," said Marico's Chief Financial Officer Milind Sarwate.

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