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Garn(i)ering volumes

Sayantani Kar  |  Mumbai 

After initial hiccups, L’Oreal found the right positioning for Garnier, the brand it had chosen to play up in India

Bright green bottles, some with a splash of strawberry and others with mango, dot the L’Oreal office at Lower Parel in Mumbai. These are cutouts of The excitement around is palpable. The product has been developed from scratch in India. As most multinationals draw freely from their international portfolio rather than rediscover the wheel in India, it is a clear message to the local team that L’Oreal is serious about the Indian market. Garnier Kids will be the consumer’s first contact with the brand; as he grows, he can use its shampoos, hair colours, and creams, deodorants and so on — clearly a plan for the long haul.

Much of the confidence stems from its recent success in the country. L’Oreal has corned 41.5 per cent of the Rs 117-crore market for hair conditioners, over 20 per cent of the Rs 1,214-crore market for hair colours, 6.5 per cent of the Rs 4,600-crore skincare market and 4.6 per cent of the fiercely-contested Rs 2,887-crore shampoo market. The profit it makes in India is not known; L’Oreal is estimated to have done a turnover of close to Rs 800 crore in 2009 (it also sells cosmetics and haircare products for salons in the country). Growth so far this year has been a smart 27 per cent. This may be small for L’Oreal which reported global revenue of 17.5 billion euros (Rs 108,200 crore) in 2009. But the upside in skincare in India, every fast-moving consumer goods company in the world knows, is huge because of the low penetration and sustained rise in incomes.

Rivals say it has stirred the market with huge ad spends and below-the-line promotion. Market estimates put total L’Oreal advertising budget at Rs 200 crore. This year it is expected to spend around Rs 350 crore . The company thus spent almost 25 per cent of its last year’s turnover on above- and below-the-line promotion. In personal care, companies set aside 15 to 18 per cent of their turnover for such expenses;

Dinesh DayalL’Oreal spends a much higher proportion to improve its visibility. L’Oreal India Chief Operating Officer says: “India is one of the biggest markets for Garnier anywhere in the world.” According to him, L’Oreal, driven by Garnier, is among the top four spenders in the personal care category in the country.

L’Oreal has three mainstream personal care brands in its global portfolio — L’Oreal Paris, Maybelline and Garnier — and a host of luxury brands such as Lancome, Biotherm, Ralph Lauren, and Diesel. It has positioned the three brands carefully in India: L’Oreal Paris (hair colour, shampoo and skincare) at the top end of the market, Garnier (hair colour, shampoo, conditioner, deodorants and skincare) between mass and premium, and Maybelline for cosmetics. The volumes, of course, are brought in by Garnier: It accounts for almost 90 per cent of the company’s turnover in India.

The first few steps were unsteady.
L’Oreal had entered India in 1992 with its Garnier Ultra Doux range of shampoos.

Garnier was chosen as the flagship brand for India because its natural-ingredient story was a fit in a country with a history of Ayurveda and natural remedies. (China, in contrast, lapped up the all-American Maybelline.) The entry strategy it adopted was competitive pricing. In the bargain, Garnier Ultra Doux was stripped of some key ingredients. Devoid of any differentiation, the brand languished. It couldn’t dent the shares of Hindustan Unilever and Procter & Gamble. In the meantime, the market place got tougher with the entry of homespun rivals like Dabur and CavinKare. The fate of L’Oreal’s skincare brand, Garnier Synergie, was no better. The only thing that seemed to have worked was L’Oreal Paris Excellence Crème hair colour. But it established L’Oreal in the premium end of the market. The mass market, for a moment it seemed, had been vacated by L’Oreal without a fight.

Repositioning the brand
The turning point came when L’Oreal began to rethink its strategy for India. It repositioned Garnier. Thus, Garnier Ultra Doux gave way to the bubbly Garnier Fructis and Garnier Synergie to Garnier Skin Naturals. The prices were set at a slight premium over mass brands such as Hindustan Unilever’s Lakme or Sunsilk. “It linked functionality to its price tag, rather than being aspirational for aspiration’s sake,” says Booz Vice-president & Partner Abhishek Malhotra. The advertisements exuded an international and youthful feel. “The communication broke the clutter of using celebrities for beauty products,” adds Malhotra.

The early years also taught L’Oreal that me-too products or those with superficial tweaks will not work in India. A global halo does not impress the value-conscious Indian. L’Oreal got its biggest breakthrough when it rethought for the Indian market in 2002. Its Garnier Nutrisse had failed to strike a chord with the consumers (and L’Oreal Excellence was positioned at the higher end of the price spectrum.) “When we came to the bigger need gaps, we decided to create products for India,” says Garnier Marketing Head Richa Singh. That was when it launched Garnier Color Naturals which came in a Rs -99 hair-colouring kit with blacks and browns.

Godrej had had a free run in the market till then with its Rs -7 pack of powder dyes. Dayal says: “Indian women are touch-up specialists because of their long, parted hair. Grey roots show more often; as a result they need to re-apply colour at the roots while not colouring the entire length of their hair.” The habit made existing small packs meant for Westerners with short hair expensive and inadequate. L’Oreal’s research team created a cream colourant that could be priced well below premium, spread uniformly and calibrated for touch-up doses. “We knew we were still priced more than the leader but we wanted the consumer to try us first,” says Singh.

What helped was that L’Oreal had trained a large number of hairdressers in India — more than 50,000 on last count — in the country. To drive trials for Garnier Color Naturals, its teams went beyond the salons in metros. “The category was still small then. We wanted consumers not only to eye the low price but also the features of the product. Education, then, was very important for us. We even went to the single-seat barber shops one finds in small towns to train them in everything about hair and the product,” says Singh.

In 2004, L’Oreal came out with Garnier Fructis shampoo and conditioner. “Sure it was an international product, but the formulae were all for India. With Garnier Fructis Long & Strong in 2006, we played with the braid as the imagery and immediately connected with the contemporary Indian consumer. The look was international but the product still spoke about long and strong plaits,” adds Singh. The unisex brand is seen as a high-energy and lively brand. V Sitaram, the former chief operating officer (consumer care) of Dabur, says: “It has established a strong franchise by depicting young people identifiable as a South Delhi or Mumbai youth as its core consumer. The fluoroscent packaging stands out on shelves as well.”

Another innovation came in 2009 when L’Oreal launched Garnier Fructis Shampoo + Oil which eliminated the need of two separate haircare routines. L’Oreal is not worried that such a product cannot be marketed in any other country because hair oil is not used outside the Indian subcontinent. But, according to Dayal, “It is the highest-selling Garnier Fructis variant.” By persevering in conditioners with Garnier Ultra Doux and then Garnier Fructis, L’Oreal has a headstart over others. Hindustan Unilever can now be seen trying hard to catch up in this rapidly-growing segment with Dove.

Smart moves
Search for newer extensions has now brought L’Oreal to shampoo for kids. “We were talking to men, women, teenagers with our acne-removers and older consumers with our anti-ageing creams and hair colours; so what were we missing out? The answer was kids aged four to six years. Kids are up there on the priority lists of Indians; we are ready to go that extra mile to pamper them. So, a no-tear, no-tangle shampoo with candy fragrances will be just the product to pamper them with during a bath,” says Singh. Other brands which have targeted kids with similar products are Marico (Parachute Advanced Starz shampoo) and VVF (Doy soap).

Redefining skincare too has worked for L’Oreal. In 1995, it broke the clutter of moisturisers and cold-creams with its anti-wrinkle cream. “Nobody was talking of it. If we had entered with tradition in mind, we would have looked at only the larger pies. We decided to enter segments which would be differentiated. We would still have basic products but the drivers would be the different ones,” says Singh. Thus, L’Oreal advertised its Garnier skin lightening cream as one that removes marks and makes the skin fairer. “Harnessing nature through science, Garnier has always been a rational brand. Its products are a solution to a problem. It has a rational and not emotional pay-off,” claims Singh. Accordingly, products come with tone cards to measure changes in skin tone.

L’Oreal has used the mantra in Garnier Men’s range of skincare and deodorants as well. It came in to tap the market opened up by Emami’s Fair & Handsome. Garnier Men, conceptualised, packaged and marketed first in India, promises tangible benefits. For example, its deodorant promises to absorb sweat five times more effectively than talcum powder — “a benchmark unique to India”, claims Singh. Coupled with a mascot in John Abraham, it has helped the brand corner around 10 per cent of the men’s skincare market. Garnier Men now sells in other Asian countries as well.

L’Oreal’s retail strategy also rewrote its fate in India. “India was very different from servicing a thousand departmental stores that we do in other countries. But we were quick to bring in different strategies, including one for kirana stores as well,” says Dayal. Signalling a hands-on approach, managers were told to roll up their sleeves and spruce up the in-store while on a round of the market. “Shopkeepers saw the same men in business suits who had presented L’Oreal’s plans to them working with sales representatives to clean shelves, windows and place the Garnier merchandise,” says Dayal.

This is important. Except in the premium category, shampoos, conditioners, and deodorants are impulse purchases where the advice of the retailer plays a crucial role. A better display therefore helps sell better. Sitaram says: “If one compares their market shares with the share of shelves in urban stores, it is evident L’Oreal spends a lot on retail display.” Agrees Malhotra: “It introduced a lot of new concepts at the store level. Garnier reps were the first to roam about in the aisles of modern stores to induce trials, even before Hindustan Unilever did that with Lakme.”

However, there are miles to go before it can match the distribution span of Hindustan Unilever or ITC which entered personal care a few years back. Compared to their reach of 2 to 3 million outlets, Garnier reaches 450,000 stores. “We are not even competing with them in distribution. We can only talk to certain kinds of retailers and have to give others a miss because we have only beauty-based products. We can’t pitch any other category. So urban markets are what we have restricted ourselves to,” says Singh. However, the introduction of sachets and smaller packs is a clear signal that L’Oreal wants to penetrate deeper with Garnier.

But rivals are not sitting idle. Procter & Gamble has just launched the global hair colour giant, Wella Kolestint, which will operate in the mid-premium segment. Malhotra points out Godrej’s acquisition of South America’s leading hair colour maker Issue Group could lead to an Indian launch in the masstige (between mass and prestige) segment. Hindustan Unilever’s Dove has overtaken Garnier Fructis in shampoo and ITC’s Fiama di Wills is snapping at its heels. Rivals such as ITC have tried hitting the sweet spot of nature and science as well. This will dictate the next move of Dayal and his team.

First Published: Mon, October 18 2010. 00:23 IST