 "Skincare makes a splash with satchets")
Ahmedabad-based Zydus Wellness, the owner of brands like Sugar Free, Nutralite and Everyuth, brought a new product category to the world of satchets. While every shampoo and even some hair oil brands would be familiar with the satchet pack unit, not many skincare brands have tried it before. Zydus launched facewash in a satchet last week at Rs 1.
Zydus' MD Elkana Ezekiel says, “It is a simple idea but something no one did earlier. We are the first ones.” While Zydus might have been first off the block with facewash, the satchet packaging is now increasingly being adopted with more and more FMCG categories.
Small in skincare is big
In fact, for skincare brand owners, satchets and small unit packs are finding a new relevance. To prop up the flagging sales of its blockbuster fairness cream, Fair & Lovely, HUL resorted to relaunching its satchet unit.
Abneesh Roy, associate director, research, institutional equities, Edelweiss, says, “Zydus’ breakthrough in facewash with satchets bodes well for it. It has a first-mover advantage in the under-penetrated facewash segment. However, if HUL decides to follow, it will be able to steal share from competitors due to its robust distribution network and stronger brand equity. Satchets account for over 75 per cent of the volumes of shampoo. Facewash also could potentially shift to satchet if more players step into the fray,” Roy says.
But big players aside, the small and mid-cap companies are thinking out-of-the-box when it comes to packaging smaller units of a product, effectively bringing down the entry price for consumers to trade up. Godrej Consumer (Godrej) launched a Re 1 mosquito repellent last year.
In the past two quarters, overall FMCG growth, according to market research firm Nielsen, moved up marginally from 8 to 10 per cent, led largely by improved sentiment and buying in urban areas.
Rural growth, on the other hand, slowed as moderate increases in the minimum support price of crops, and rationalisation of rural welfare schemes left consumers in the countryside with less money to spend. This year’s patchy rainfall – some parts such as north and central India saw scanty rains, while some areas saw floods – has only exacerbated the situation in rural areas, with most companies not expecting a rural recovery anytime soon.
“I am not hugely optimistic about any big revival of rural markets this year. There is nothing much on the horizon over the next couple of quarters in rural, so it is basically the overall growth in the economy which will fuel consumption. And that consumption will obviously be led by the urban sector,” Sunil Duggal, chief executive officer, Dabur India, said during a recent analysts call.
Urban small packs
It is no secret that low-unit packs are intended to drive penetration of products, especially where spending power is limited.
In some cases, small packs are also being pushed in discretionary categories. When Godrej launched a Rs 30 creme hair colour two years back, it prompted competitors to follow suit. LÓreal, the French beauty and cosmetics giant, responded to Godrej with a hair colour priced at Rs 39, its lowest offering in India, earlier this year.
Ezekiel says, “We see the facewash satchet as a growth-driver and I am confident that it will give us the necessary boost we are seeking.” The brand, estimated to be around Rs 115 crore, according to analysts, is popular in facial scrubs and peel-offs, but not so in facewash. Himalaya Drug Company’s Neem Purifying facewash too has a small Rs 5 pack, though not in a satchet. The Rs 1 satchet, a smaller variant of Everyuth’s 50-gm tulsi turmeric facewash, launched a few months ago at Rs 35, is intended to give it a leg-up in the segment.
Zydus' MD Elkana Ezekiel says, “It is a simple idea but something no one did earlier. We are the first ones.” While Zydus might have been first off the block with facewash, the satchet packaging is now increasingly being adopted with more and more FMCG categories.
Small in skincare is big
In fact, for skincare brand owners, satchets and small unit packs are finding a new relevance. To prop up the flagging sales of its blockbuster fairness cream, Fair & Lovely, HUL resorted to relaunching its satchet unit.
Abneesh Roy, associate director, research, institutional equities, Edelweiss, says, “Zydus’ breakthrough in facewash with satchets bodes well for it. It has a first-mover advantage in the under-penetrated facewash segment. However, if HUL decides to follow, it will be able to steal share from competitors due to its robust distribution network and stronger brand equity. Satchets account for over 75 per cent of the volumes of shampoo. Facewash also could potentially shift to satchet if more players step into the fray,” Roy says.
But big players aside, the small and mid-cap companies are thinking out-of-the-box when it comes to packaging smaller units of a product, effectively bringing down the entry price for consumers to trade up. Godrej Consumer (Godrej) launched a Re 1 mosquito repellent last year.
In the past two quarters, overall FMCG growth, according to market research firm Nielsen, moved up marginally from 8 to 10 per cent, led largely by improved sentiment and buying in urban areas.
Rural growth, on the other hand, slowed as moderate increases in the minimum support price of crops, and rationalisation of rural welfare schemes left consumers in the countryside with less money to spend. This year’s patchy rainfall – some parts such as north and central India saw scanty rains, while some areas saw floods – has only exacerbated the situation in rural areas, with most companies not expecting a rural recovery anytime soon.
“I am not hugely optimistic about any big revival of rural markets this year. There is nothing much on the horizon over the next couple of quarters in rural, so it is basically the overall growth in the economy which will fuel consumption. And that consumption will obviously be led by the urban sector,” Sunil Duggal, chief executive officer, Dabur India, said during a recent analysts call.
Urban small packs
It is no secret that low-unit packs are intended to drive penetration of products, especially where spending power is limited.
In some cases, small packs are also being pushed in discretionary categories. When Godrej launched a Rs 30 creme hair colour two years back, it prompted competitors to follow suit. LÓreal, the French beauty and cosmetics giant, responded to Godrej with a hair colour priced at Rs 39, its lowest offering in India, earlier this year.
Ezekiel says, “We see the facewash satchet as a growth-driver and I am confident that it will give us the necessary boost we are seeking.” The brand, estimated to be around Rs 115 crore, according to analysts, is popular in facial scrubs and peel-offs, but not so in facewash. Himalaya Drug Company’s Neem Purifying facewash too has a small Rs 5 pack, though not in a satchet. The Rs 1 satchet, a smaller variant of Everyuth’s 50-gm tulsi turmeric facewash, launched a few months ago at Rs 35, is intended to give it a leg-up in the segment.
With inputs from Sayantani Kar