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Prime Minister Narendra Modi’s Swachh Bharat initiative is likely to fuel growth for the world’s second-largest baby diaper maker SCA Hygiene Products in India, a market it entered only in 2013.
“India has always been seen as a big opportunity. But the recent initiatives by the Modi government such as Swachh Bharat, which educates common people about hygiene targeting healthy living, are great efforts by the government. We entered India much before the Swachh Bharat was initiated,” said Cecilia Edebo, managing director, SCA Hygiene Products India.
At present, Germany is the largest revenue contributor for the €10.7-billion Swedish hygiene products firm SCA, followed by the US, the UK, France and Mexico.
According to Edebo, who has worked for SCA across 27 markets, India will be one of the top five revenue contributors for SCA over the next five to 10 years. However, Edebo believes India is one of the most difficult countries when it comes to doing business. Edebo is of the opinion that bureaucracy in India makes things complicated.
The baby diaper market in India is estimated at ~4,000 crore, dominated by multi-national firms such as Procter & Gamble (P&G), Kimberly-Clark and Unicharm. “We are young in the market. There are big players. However, the market is highly under-penetrated. The opportunity here is immense. We play on great quality and price our products at par with the competitors. It’s a long-term game in India,” said Edebo.
SCA, which is establishing a production unit at Ranjangaon near Pune spread across 30 acres, will be investing about ~500 crore in the first five years, she said. The company, however, will spend much more in brand building and awareness development in India. According to market estimates, total investments could be upwards of ~1,000 crore in the first five years. When asked about the break-even target, Edebo said the company would achieve that within five years of operations.
Besides Libero, which competes in most markets across the world with P&G’s Pampers, Kimberly-Clark’s Huggies and Unicharm’s MamyPoko Pants, SCA will also roll out Tena (adult diaper), soon. “This (adult diaper) market in India is yet to start,” she added.
Other products such as Tempo, the world’s largest consumer tissue brand, will also be rolled out. Tork hand sanitisers and other hygiene products in the institutional segment have been operational in India for a few years now through the import route.
“At present, we’re available just across 100,000 retail outlets. This has to grow fast,” said Edebo, adding that the company would start rolling out products from the India factory soon.
The company, Edebo said, had initially looked at possibilities of acquisitions in the hygiene space in India, but had decided to go on its own. “We are a global company that meets local needs,” she added. Notably, it’s through acquisitions that SCA has scaled up globally.
