The spoke in Emami's brand wheel

The company has struggled to turn around its two-year old acquisition in the women's hygiene category. What holds it back?

Even as the Kolkata-based company powers its national ambitions by taking local brands to the big stage, it has struck nought with a sanitary napkins brand it bought two years ago. ‘She Comfort’, acquired from Royal Hygiene Care in 2014 is almost invisible in the marketplace today. This despite the fact that two other brands Emami acquired, Zandu and Kesh King have turned into money spinners and the company has just put its weight behind a male grooming brand, The Man Company. Why has Emami stumbled at the hurdles with this one?

Known to leverage the strength of local labels in terms of their knowledge of the customer base and their long recall with the communities they serve, Emami Ltd, the FMCG arm of the Emami Group, has long relied on such acquisitions to expand its brand footprint. It has done that with a brand it acquired before She Comfort, Zandu in 2008 and one after, Kesh King in 2015. The two are now power brands or the growth drivers for the company. Kesh King commands a 36 per cent market share in the herbal hair oil segment and Zandu (balm) makes for 60 per cent of the total pain management market. It is estimated that the two are valued at Rs 2,384 crore. But, She Comfort has practically vanished from the shelves. 

An Emami spokesperson said, “She (Comfort) is not a focus brand for Emami at this point of time. The company is focusing on categories that have more potential and is investing in them accordingly.”

Out of depth

One of the reasons for the failure, say industry experts and financial analysts, is that Emami strayed too far from its core with sanitary napkins. She Comfort was a struggling brand in a category that Emami had little experience with and hence the fumble.

With Zandu that it acquired for Rs 750 crore in a hostile takeover deal Emami was stepping into the balm and over-the-counter medication segment. Although it did not have a product in this category, it was not entirely an unfamiliar segment. Plus Zandu was a strong brand with a 98-year-old legacy and a familiar name for distributors and consumers. When Emami added its retail strength to the mix, Zandu spread faster into newer territories. Kesh King that it acquired for Rs 1,684 crore helped expand the hair care portfolio.

While Emami was playing to its strengths with these acquisitions, She Comfort, wasn’t Emami’s forte. Abneesh Roy, research analyst with Edelweiss Securities believes that Emami understands the “herbal category too well” which explains why Zandu and Kesh King are success stories. With sanitary napkins, it was shooting in the dark. 

“It is a tough category dominated by the multinational corporations (MNCs). Also She Comfort was a weak brand when they acquired it,” he added. An analyst with ICICI Securities says that Emami lacked the necessary distribution architecture. 

Emami’s distribution framework, until recently, was mostly wholesale and direct distribution channels. Access to modern retail and the pharmaceutical chain was limited. “They (Emami Ltd) were not able to crack the distribution chain and product reinvention also didn’t take place,” said the analyst requesting anonymity.

Roy however contends that Emami’s distribution problems are secondary. The company was unable to understand the requirements of the customers. Quality was an issue and the company stopped investing in the brand after the initial months. Analysts believe that the brand will soon be put on the block or Emami will look to license it out. 

Up against MNC power

The category of sanitary napkins is dominated by multinationals. Emami found it difficult to take on their financial muscle power and fight the perception battle in the market according to industry experts. The Rs 2,900 crore women’s sanitary napkin market is heavily polarised. Procter & Gamble, the category leader, commands nearly 50-58 per cent of the market with its brand, Whisper,  followed by Johnson & Johnson’s Stayfree and Carefree brands which account for close to 30 per cent of the market. It has been impossible to break their hold.

Harish Bijoor, CEO Harish Bijoor Consults points to the toothpaste category to explain the problem with Emami and sanitary napkins. Colgate, he says, has been in the dental care segment for so long that it is impossible to separate the brand from the category. Similarly Emami is linked with face cream, hair oil and other skin care products while Zandu has high recall in pain management. In sanitary napkins, the MNCs hold sway and he adds, “It becomes extremely difficult for others, to break that consumer loyalty.” 

A report from Motilal Oswal bears this out. Local brands like She Comfort, Shapers (Gufic Biosciences), Don’t Worry (Mankind Pharma) and Wow (Future Retail) have token presence in the category and poor brand recall. “Feminine hygiene is a difficult market to penetrate, given the personal touch and trust factor involved,” the report stated.

Brand Record

•Emami acquired Kesh King in 2015 for Rs 1,684 crore, Zandu in 2008 for around Rs 750 crore
 

•Kesh King commands 36 per cent market share in the herbal hair oil segment and Zandu makes up for 60 per cent of the total pain management market
 

•She Comfort was bought for an undisclosed amount from Royal Hygiene in 2014, but the brand is hardly visible in the market today