 "Achal Agarwal")
US consumer goods major Kimberly-Clark (KC) has been in India for two decades now in a joint venture with Hindustan Unilever (HUL). Products here include sanitary napkin Kotex and baby diaper Huggies. While the brands do induce recall especially Huggies, they still trail behind rivals such as Whisper and Pampers from Procter & Gamble (P&G).
Achal Agarwal, KC's Asia-Pacific region president, who is in India to take stock of operations, responds to questions from Viveat Susan Pinto on what the company is doing to improve its performance in a market it considers key. Edited Excerpts:
The perception is that you've missed the bus in both feminine care and baby care with newer rivals such as Unicharm (Mamy Poko Pants) doing better than you. Besides P&G and Johnson & Johnson (J&J), you now have to contend with Swedish major SCA Hygiene upping the ante in India. Your comments.
We are a strong number two in baby care (after Pampers from P&G) and are at number three in feminine care after Whisper (P&G) and Stayfree (J&J). Can we do better than this? Of course, we can. We have a focused approach to the Indian market and it may seem that we are not doing enough when compared with rivals.
That isn't true at all. We are studying the Indian consumer and looking to address needs that are relevant to her as a mother and a woman. Our attention right now is on the baby and child care market than feminine care. Baby and child care is also the bigger part of our business here.
But the category is small, not more than $200 to $300 million (Rs 1,220-1,830 crore). Compare it with the Chinese market and you are speaking of a $4 billion (Rs 24,400 crore) segment. Our efforts have to be commensurate to category size.
But what stopped you from introducing disruptive innovations such as pant-style diapers which players such as Unicharm have successfully done in India in the last four years they've around. And Pampers from P&G is the defacto name that comes to most mothers' minds when asking for a baby diaper. Haven't you not lost out both on innovation and brand awareness?
Wait and see what we have in store as we go forward. India produces 25-26 million babies a year. Is there a market here? Certainly there is. Are we behind the curve? I don't think so. Why? Because the category is small. Most players have to address this basic question first: How do you improve adoption rate of diapers?
Once that is cracked, the market will explode and we are doing just that. For instance, we are addressing concern areas such as how a baby's skin can be left soft even after use of a diaper or how to improve breathability etc. We prefer going step-by-step.
India remains one of the few markets in the KC universe where you have a joint venture. Won't you opt to buy out HUL's 50% stake at some stage as you did in Indonesia a few years ago?
No. We have no plans to buy out the 50% held by HUL in the JV. It is a win-win partnership where our objectives are perfectly aligned and they are as committed to the business as we are. We bring the brands, they have the distribution muscle and reach. I don't think I would want to part with a player like this.
You have indicated in the past that you would like to see the Indian venture generate revenues of $1 billion (or Rs 6,100 crore). What kind of a timeline have you set for this?
Ideally I would like it to happen by 2020 when we are looking at the APAC business as a whole to give us three times the revenue it now is. But much depends on how the category evolves here. Our efforts have to be paced to the market.
Are you looking to convert India into a manufacturing hub since you have now begun exporting pant-style diapers to neighbouring markets such as Malaysia?
While we are exporting to countries such as Malaysia, our mandate is to focus on the domestic market. I am of the firm belief that the Indian market will take off like the way the Vietnamese market took off this year for us. It is growing in double-digits because the category is beginning to evolve pushing up demand for our products.
