Amrutanjan: Pain for suitors

The heritage brand, which has retained its number two position through an aggressive rural push, seems to be a permanent takeover target. But the bidders have had zero luck so far

The Chennai-based Amrutanjan has been in the news as a takeover target over the past couple of years. And the buzz just refuses to die down even though the promoters have told the stock exchanges time and again (the latest denial was issued last month) that they have no intention to sell out.

The scrip has gone up over 150 per cent in the last one year because of the takeover reports. What added fuel to the fire was Emami Chairman R S Agarwal’s reported statement last month that he was interested in buying Amrutanjan. His company, however, was quick to clarify that the chairman had only expressed his desire to acquire any fast moving consumer goods or pharma business or company, including Amrutanjan, within its financial and operational resources. Meanwhile, names of various other suitors including Dabur have been doing the rounds.

So what makes the 115-year-old Amutanjan brand an attractive takeover target? “It’s difficult to dislodge Amrutanjan,” says the executive of a firm who has been trying hard to steal some market share from the brand in the hope of improving his company's prospects in the Rs 1,500 crore pain management market. But Amrutanjan, as the executive points out, sits firm in the marketplace with a share of 29 per cent — second only to rival Zandu, which has a share of 45 per cent, and was acquired by Emami in 2008.

Emami’s other pain relieving product — Mentho Plus — has a market share of 15 per cent only. Elder Healthcare’s Tiger balm, on the other hand, has an even smaller share at 5 per cent, and this, despite it being a strong brand overseas.

Tiger, for the record, has a strong franchise on its home turf of Singapore. It was out licensed to India via an agreement with Elder a few years ago. The latter hoped to make a dent in the marketplace with Tiger, but to no avail. The market share continues to be in single digits though Managing Director Anuj Saxena says the brand is doing well. He says, “We spent the first few years fighting legal battles with copy cat versions of the brand. We lost some time there.”

Even then, Tiger’s inability to make much headway in the balm market speaks for itself — Zandu and Amrutanjan are just too strong.

For Amrutanjan, in particular, retaining its number two slot over all these years has been far from easy in a market that has seen competition growing at the same time. As an FMCG analyst points out, “When competition increases, the first to be attacked are the number two and three brands. They are the ones challengers go after typically. The number one is secure in that sense because challengers are not baying for its blood at the first instance. The number two always has a greater threat of seeing market share eroding as challengers increase.”

So how has Amrutanjan managed to hold its own in a market that has seen Emami and Elder get active over the last few years, not to mention the growing threat of duplicates as well.

By staying relevant, say analysts. Amrutanjan has transformed itself into a youthful product with new packaging and variants. There are three key variants as of now - a pain balm, a strong balm and a maha strong balm. Plus, the brand has extended into segments such as roll-on liquids, cold gel packs, reusable gels, joint ache creams and sprays in quest for neo users.

Amrutanjan’s pricing of its balm is also on a par with leader Zandu - Rs 20 for the standard 8-gm-pack. Tiger is slightly expensive at Rs 22, say observers. “So that gives consumers a choice of two products at the same price point,” says a source.

That’s not all. To increase brand recall, Amrutanjan has also changed its advertising strategy - moving away from regional-level campaigns to a national-level exercise replete with a new tagline - Be ready with Amrutanjan.

As the brand makes the transformation from regional to national, it has retained one attribute though — its grip over rural and semi-urban markets. That has been the heart of Amrutanjan’s distribution strategy - keeping its key consumer profile intact even as it seeks new users.

Amrutanjan, as rivals point out, is strong in non-metro markets. “By and large, pain balms are strong in tier two and three cities. It’s not an urban phenomenon unlike pain rubs and creams which are. That is because consumers in small towns and cities are comfortable using pain balms as opposed to pain rubs or creams,” says an executive from Elder Healthcare.

In these small towns and cities, the fight then is a square one between Amrutanjan and Zandu, say analysts. Both have their strongholds - Zandu in the north, and Amrutanjan, in the south. Both over the years have moved to allied areas - taking the battle to each other’s door steps in the process. So Amrutanjan has been fighting hard for share in the north, while Zandu has been seeking consumers in the south. Have they succeeded? For now, Zandu seems to be having an upper hand with greater market share, say analysts, though Amrutanjan is not giving up yet in its quest for market share beyond the south.

What it is banking on are its trademark properties, say sources, its distinctive yellow balm with a strong aroma. It is these medicinal properties that have ensured that consumers in the south have remained loyal to it despite the onslaught of Zandu. As an executive with a rival healthcare firm says, “People love applying a balm before retiring for the night in the south. And if that is an Amrutanjan nothing like it.”