Himalaya has built its herbal personal care business in a uniquely contrarian fashion
The bustling town off Pushkar lake is an unlikely place for a fast-moving consumer brand to locate an exclusive branded store. But that is where Himalaya Drug Company chose to set up an outlet for Himalaya Herbals, its range of shampoos, face washes, lip salves, moisturisers, foot creams and the like.
Tucked among shops selling cheap tourist bric-a-brac and luridly coloured snacks, this isn’t a random choice by this 80-year-old Bangalore-headquartered company. Together with a similar store in Delhi’s Hyatt Regency and over 100 such exclusive outlets around the country, it is part of an unusual strategy that the “Liv 52 company” has adopted for its 21-year-old personal care range.
Compared with big-budget competitors with formidable multinational antecedents, Himalaya Herbals isn’t a high-profile brand, nor is it a premium one. It rarely advertises and is sparing with price-offs and promos that characterise conventional personal care brands. Although it is positioned as a middle-of-the-road brand globally, market audit reports place it among the top five brands by value in several crowded and competitive categories, both in India and overseas.
In face washes, for instance, Himalaya has an all-India market share of 17.8 per cent, behind Lever and L’Oreal at 19.3 per cent each, according to Nielsen’s June audit report. In lip care, it is the second largest brand in India with a 14.6 per cent share, though in urban “modern trade” (shorthand for modern retail formats such as the Big Bazaars and so on), it registered as the largest brand with a 45 per cent share in the first quarter (April to June, or Q1) of 2010. In toothpaste, a crowded category with strong herbal competitors like Dabur, it was the fourth-largest brand in the modern trade format in Q1.
Overseas, in the United Arab Emirates, Nielsen’s audit report shows that Himalaya Face Wash leads the category with a 20.8 per cent market share, ahead of multinationals Johnson & Johnson, Nivea and Olay. In face masks, Himalaya leads with 35.9 per cent share, significantly ahead of Montagne Jeunesse (18.3 per cent) and Fair & Lovely (8.5 per cent).
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What the doctor ordered
So what drives the brand? The impulse first flowed from Himalaya’s therapeutic business overseas when, at the end of the nineties, it became evident that herbal personal care products were no longer just a fad. For Himalaya, therefore, the changing nature of the market provided an opportunity to extend its proposition to the entire wellness platform.
Initially, however, there was some uncertainty on the branding. As Prasad explains, “Being a pharma company meant our entire business was dependent on prescriptions from doctors, both allopathic and ayurvedic. We were not sure how doctors in India would react to Himalaya going over-the-counter, even though the product offering would be different.”
To be on the safe side, Himalaya leveraged Ayurvedic Concepts, a herbal supplements brands it owned in the US, as the platform for its personal care range and promoted it through the conventional mediums of TV and print advertising and below-the-line promos.
By about 2003, the company had to reconsider the branding concept — and it was the result of feedback from sales representatives from the therapeutics side of the business (personal care is a separate division). Like other pharma companies, Himalaya reps did the rounds of doctors with the usual complimentary gifts such as pens, paperweights and the like. After Ayurvedic Concepts was launched, doctors started demanding, say, a bottle of anti-dandruff shampoo instead of the usual keychain.
“That triggered a response in our minds that doctors had bought into the Ayurvedic Concepts brand,” said Prasad. By this time, Himalaya had introduced the same product portfolio in West Asia and the US as Himalaya Herbals, so the company decided to unify the brands as Himalaya Herbals and Himalaya Herbal Healthcare in India.
Talking shop
Unifying the therapeutic and healthcare brand obviously had its advantages, since it enabled Himalaya to link personal care products with the same company that was producing such trusted ayurvedic medicines as Liv 52, Septilin and Cystone. But emphasising the message was difficult in the prevailing retail environment.
As Prasad explains, “The retail environment in India was rather primitive. You had chemists or kirana shops where the product was separated by a counter. The stores were small, were not interactive and they didn’t always keep the whole range.”
Heavy TV advertising was also ruled out, since the company wanted to position Himalaya as a wellness brand that is backed by a lot of science. “How can you talk about all the science that goes into the brand in a 30-second spot?” Prasad points out, adding, “Besides, TV allows you to advertise a single product, not a range.” That apart, not advertising on TV also served as a brand differentiator highlighting the fact that Himalaya Herbals was not just another personal care products company. “We wanted people to see us as problem-solving, not FMCG-ish,” says Prasad (the spare, clinical packaging is part of that branding strategy).
The solution lay in setting up standalone stores, the first of which opened in Bangalore in 2004-05. Each of these stores stocks the entire range and is staffed by trained reps who can explain the products to consumers. Initially, the idea was to establish these stores in strategic locations frequented by tourists — Pushkar, Goa, Rishikesh, Puttaparthi and so on.
A brick-and-mortar solution to expanding retail reach can be expensive but Himalaya made sure that the stores were small — not more than 200 to 300 square feet — so that rentals were not unduly high. Prasad says all the stores have broken even now, and they play a critical strategic role. “It is important for the consumer to come and see our entire product line-up and, second, the stores serve as information centres. So consumers can talk to our store managers and then get back to their chemists or kirana shops and buy the products,” he explains.
Ironically, it is the modern retail format that has proved a boon to a company built on a traditional system of health and wellness. The Big Bazaars of the world now enable Himalaya to take shops-in-shop to showcase the brand. Today, the company’s personal care range has a retail reach of 150,000 chemist/kirana outlets and 900 shops-in-shop.
The price buy-in
Typically, standalone stores and shops-in-shops are the retail strategy of choice for niche, premium brands like Shahnaz Hussain, Biotique or Forest Essentials. But Himalaya Herbals is none of the above. Its pricing is stolidly middle-of-the-road, by choice. When they are launched, Himalaya’s products are typically benchmarked against a popular product in the category (say, Pantene in the shampoo category) and then priced accordingly. For instance, a 50 ml pack of Himalaya Herbal face wash costs between Rs 40 and Rs 45; the cheapest variant of Pears face wash from Hindustan Unilever is Rs 50 for the same pack size. That also explains why Himalaya Herbals has a 25 per cent volume share in face washes in the modern trade format but a 23 per cent value share.
“It’s a sort of unwritten philosophy of the founder that the product must be priced favourably enough for the maximum number of people to benefit,” says Prasad. This is true for its overseas offerings as well. For instance, Himalaya has just launched its organic range of personal care products in Hungary (Germany and France will follow soon). Called Organique by Himalaya. “We could have launched it at a price point that was one-and-a-half times its current price, but we kept it just below premium,” Prasad adds.
Off the pace?
Given the rate at which Himalaya’s personal care business is growing, it is likely to overtake its therapeutic business — a factor that is also partly driven by the longer development process for drug launches. But it is still a minnow in the Rs 30,000-crore personal care market and competitors don’t really view it as a challenger. “It’s not really a destination brand,” says VS Sitaram, former chief operating officer (consumer business), Dabur India.
Prasad says it doesn’t intend to be, an outlook that flows from necessity as much as strategy. As he points out, Himalaya doesn’t have a great deal of money to advertise and operates through internal accruals, which automatically puts the brakes on expansion. “When we enter a country, for instance, we make sure we consolidate before we get into another — because we don’t have funds to get into 20 countries at the same time,” he says.
The other reason for choosing to grow at its own pace is the competitive one of maintaining its brand promise. As a policy, Prasad says, Himalaya uses herbs it can cultivate or sustainably collect. Its agro-technology division works with over 1,000 villages and with tribes analysing soil and water for contaminants and advising farmers on growing herbs suitable to the habitat or collecting forest produce in a sustainable way. “We consciously don’t want to buy from the open market because quality is suspect. So if we grow at 50 per cent, where will we get our herbs from?” says Prasad.
Time-to-market for new products is also relatively slow at four or five years. This is partly because of the way its R&D division functions. Scientists in its R&D division constantly work on new herbs that are gathered from the various forests, testing for new leads. Himalaya’s Hair Loss Cream, for instance, incorporates a molecule from the Flame of the Forest trees (the company recently won a patent for this).
Certainly, as long as it remains unlisted, Himalaya can afford to pace itself. But with herbal personal care attracting greater attention from multinationals — Himalaya’s chairman Meraj Manal recently declined a buyout offer at a “humungous multiplier” — the low-profile brand may have to cultivate the art of aggression too.