The Nielsen Company has suspended providing marketshare data to the analyst community. It, however, will continue to do so to fast moving consumer goods (FMCG) companies. The suspension may last till June 2011, after which the market research firm will reconsider its position in this regard.
Branded the 'Financial Index Track', Nielsen till recently provided analysts with data that revealed the marketshares of FMCG firms on a monthly basis. Investment bankers and brokers also subscribe to Index Track. Services to them, too, will soon be suspended.
Consequently, the analyst and banker communities will have to base their investment reports and decisions, on the companies' versions of marketshares. A Nielsen spokesperson confirmed it had decided to suspend the Financial Index Track service with effect from May.
Though not many brokerage firms subscribe to the Nielsen data because of the exorbitant subscription fees (Rs 15 lakh per annum), the clutch that do so is significant. These include names such as ICICI Securities, Morgan Stanley and DSP Merrill Lynch. Their reports, especially of firms such as Morgan Stanley and DSP Merrill Lynch, are keenly awaited and read.
For instance, it was only two weeks earlier that brokerage firm Morgan Stanley used Nielsen data to report that Hindustan Unilever's (HUL) efforts to arrest the fall in its marketshare appeared to yield little fruit, as the company continued to see share loss across categories barring shampoos, tea and coffee.
HUL, in particular according to the report, has lost share in crucial categories such as soaps, laundry, oral care and skin care. The data pertained to the month of April 2010. Many investment decisions are based on these reports.
Nielsen, however, has its reasons to do so, said the company spokesperson. “Nielsen has embarked on a significant investment programme to expand its service coverage and improve representation of rural and emerging urban markets. This is being done along with deployment of new technology to capture data, which would involve a significant investment by Nielsen. As different elements of the enhancement programme are implemented, we will restate past reports, essentially changing historically reported growth rates and share positions taking into account our best estimate of brand performance at that time with the latest inputs available,” he reasoned.
“Analysts benchmark companies based on the data they get from Nielsen. If the data are not positive, the report is not likely to be positive too. This obviously impacts the company under review because people base their judgement on what they read,” admitted an executive with a FMCG company. Meanwhile, the issue of under-reportage and lack of consistency is an old one as far as the Nielsen data are concerned. About six months ago, firms such as Dabur came out in the open stating there was a huge disconnect between what Nielsen was reporting in categories such as hair oils and fruit juices, and their own assessment of sales.
Following the uproar, Nielsen said it would work out a “comprehensive plan” to tackle advertiser grievances. This included updating the universe used to extrapolate the sample size, increasing the sample size itself, using better technology to capture data and reducing non-sampling errors. The firm’s retail audit obtains data from roughly 17,000 stores out of a universe of 7.5 million stores. This will increase to 24,000 stores, said a person familiar with the development.
| CHRONOLOGY OF EVENTS > Six months back, major FMCG firms expressed their unhappiness with the methodology adopted by Nielsen > Nielsen said it would work out a “comprehensive plan” to tackle advertiser grievances > Just 2 weeks back, Morgan Stanley released a report backed by Nielsen data which stated that HUL was losing marketshare > Nielsen suspended release of marketshare data to analysts from this May > Investment bankers, brokerages too will not get the data > Nielsen says it requires time to improve the data before it can release it to analysts, third-parties > FMCG firms, however, will continue to get the data |
When asked to comment on the continuing controversy, Sunil Duggal, chief executive officer of Dabur India, concluded: “The issue is about the lack of consistency that exists between what is reported by Nielsen and our own internal figures. If that is corrected, it will take care of all the problems.”
Nielsen, meanwhile, has been working closely with a CII-FMCG sub-committee over the last few months to improve the accuracy of its data. Almost all major FMCG companies are represented on the sub-committee headed by Cadbury India MD, Anand Kripalu. “Among other things, enhancing the sample size is the key,” said Kripalu.
The firm’s retail audit obtains data from roughly 17,000 stores out of a universe of 7.5 million stores. This will increase to 24,000 stores, said a person familiar with the development. Besides the sample size, improving coverage to include more rural and modern trade outlets — as well as getting paanwallas under its ambit — are also being considered, said a person familiar with the development.
