The changing dynamics of the colour cosmetic industry have a latest casualty — the super premium brand in Lever’s colour cosmetics portfolio. A look at what went wrong.

At another level, however, the missing Orchids range in the cosmetic counters also illustrates the changing scenario in the Indian colour cosmetics market in recent times.

Orchids, the brand, was introduced to the Indian market in late 1994, but had its origins in the export market, targeted at places like Russia and West Asia. In the Indian market it was intended to appeal to a select genre of customers.

At the time, Orchids was a double-edged weapon. At one end, it was part of Lakme’s strategy to straddle every price point in the market segment: with strong sub-brands like Elle 18, the low-priced mass market brand, and Ultra, the mid-priced brand (phased out more than a year back) being the others.

At the other end, Orchids was to help power Lakme in the premium category, which was waiting to open up on the back of deregulation. With the impending launch of international colour cosmetic brands like Revlon and Maybelline, Lakme had to be at the top end to flank the mother brand from attack.

After all, the mainstay Lakme brand, launched in 1954, had the image of being a home-grown brand that catered largely to the mid-priced segment. So a distinct identity at the upper end could only be satisfied with a brand that had an international flavour and hence the decision to launch the export-friendly Orchids. And brands like Revlon had a very high recall (90 per cent upwards) among affluent colour cosmetics buyers who bought the brand during trips abroad or in the grey market.

Though this made sense, it was also true that the top end of the market was barely growing. In comparison, the lower end of the market — the mass market — with players like Amber, Petals, Blue Haven and others, were growing in excess of 30 per cent.

What this meant for Lakme was that having put its premium-end defences in place with Orchids, it willy-nilly had to focus on its mass market Elle 18. And to be sure, the top end stagnation was true not only for the Orchids range, but for also the others like Revlon, which entered the Indian market in September 1995. Revlon, for instance, was expected to notch up a turnover of Rs 100 crore in the first year of operation; it managed Rs 20 crore. Indeed, three years after Orchids was launched, the premium end of the market barely touched Rs 3 crore.

Given the backdrop, Lakme went wrong in the pricing strategy: the Orchids range was priced two-and-a-half times more than Lakme’s Ultra range and, more importantly, was more expensive than the international arrivals.

Where Revlon and Oriflame carried sticker prices in the Rs 80-Rs 100 band for their lipsticks and nail enamels, Orchids entered the market in 1994 with a lipstick costing Rs 195 and a bottle of nail enamel costing Rs 165.

In late-1998 the Orchids range was relaunched. The campaign had the tagline: “The best of both worlds,” emphasising the export qualities of the product and also the upgradation of the product using inputs from the parent company, Unilever. The Orchids range now covered a starting point of Rs 125 for a nail enamel to Rs 545 for an Orchids “beauty palette”.

Company sources say this had resulted in a 300 per cent growth for the brand in terms of value. However analysts point out that the brand’s contribution would have still been less than Rs 10 crore.

Later, in mid-1999, Lakme rolled out its new line of colour cosmetics. Sold under the Lakme name, this range was priced an average of 15 per cent more than the Ultra range. For instance, a Lakme lipstick offering a superior proposition of vitamin enrichment was priced at Rs 74 compared to an Ultra which cost Rs 66 and a nail enamel cost Rs 48 against Ultra’s Rs 42.

While the success of this new range lifted Lakme’s market share from 32 per cent before launch to 41 per cent, it also signalled the end of Ultra, the brand that was used as a stepping stone for the Lakme brand; subsequently, it was phased out.

Today the Lakme lipstick is priced at Rs 90 while a nail enamel costs Rs 54. Moreover with superior product introductions like non-transfer lipstick, liquid lip colour and water-proof eyeliners, the Lakme brand was moving up the ladder of aspiration to match Revlon and Maybelline in its product offerings.

But this had its inevitable impact on Orchids. As an advertising agency executive describes it, “The disparity between Lakme and the Orchids brand was disappearing, even in the product range.”

In the meantime, rivals like Revlon had learnt from past mistakes and started to live up to the market’s expectations in terms of pricing. In 1999, Revlon introduced smaller pack sizes like an 8 ml bottle of nail enamel instead of the earlier 15 ml offering and started cutting prices on high-end products like transfer-resistant lipsticks. This was an important move as nail enamels and lipsticks account for 65 per cent of total colour cosmetic sales.

Revlon’s new strategy helped it increase volumes by 57 per cent over the previous year.

This also ensured that the gap between the Orchids range and the competition widened further. The problem was that lowering the price of Orchids would not help because there was the danger of cannibalising the Lakme brand.

And with import restrictions getting increasingly relaxed, the top-end was being rede- fined with super-premium international brands like Estee Lauder, Elizabeth Arden, Yves Saint Laurent and Shiseido [a Japanese cosmetics major] being freely available. With this, a new price band emerged.

For instance, a nail enamel from Yves Saint Laurent retailed at Rs 850.

Suddenly, Orchids found itself in the middle of nowhere. According to a Lever spokesperson, the Orchids range was barely netting 3 per cent of the Rs 90.51 crore Lakme Lever turnover (January-December 2000). Clearly, there was no reason for the company to support two brands — that too when one brand did not justify its existence by volumes and figures.

For sure, there would be a few ruing the absence of the Orchids range. But as a consul-tant points out, “With its high price point the company could have looked at Orchids more as a strategic offering and image driver, rather than as a harbinger of sales.”

He illustrates several points to sum up this conclusion. Fir-st, 90 per cent of the Orchids range of sales happened from export markets and, second, the product was available in less than a hundred top-of-the-line outlets throughout the country, while the Lakme retail coverage is in excess of 65,000 outlets.

Further, Orchids could have lured the competition to settle into the wide price-gap left open between the Ultra and the Orchids range, thus protecting Ultra’s fortunes.

And like it happens in every classic flanking strategy, the flanker had to die. May the Orchids rest in peace.