Big brands tip the scales, grow faster and bigger than regional ones

National consumer brands outpace regional labels three years in a row, reports Kantar. Will the pandemic halt the trend?

Big national brands topped the charts in 2019-20, reaching more consumer households and growing faster than their regional counterparts, according to the Brand Footprint Report 2020 (India ranking of the most chosen consumer brands). This is the third year in a row that the national brands have outperformed regional (local and hyperlocal) labels, thereby reversing a trend that had threatened the dominion of big multi-market players over several categories of consumer goods and pushed them to a corner on pricing and discounts. 

The growing power of local brands and their rising influence with consumers rang out as a warning bell, for large national and multinational consumer goods companies, explains K Ramakrishnan, managing director-South Asia, Worldpanel Division, Kantar. In 2017, regional brands grew 12 per cent (in volumes) as compared to national brands that went up by 7 per cent. However every year since then, the national brands have outrun the regional brands, with their volumes growing twice that of regional brands in the year ended February 2020. 

The top five on the list of brands with the largest footprint all have a national presence— Parle is the most chosen brand with its presence in households growing by 12 per cent). It is followed by Amul, Clinic Plus, Britannia and Ghari (detergent). Colgate is the highest penetrated brand, at 88 per cent and Surf Excel has a consistent CRP (consumer reach points) growth rate at over 20 per cent.

Will the pandemic spin the wheel back in favour of regional players? To answer that, Ramakrishnan points to the reasons behind the growth of the large brands. Big brands’ volumes have swelled at the expense of regional brands and in rural markets, which indicates that the gains may be long lasting. They learnt from the lean local approach of regional 

brands and adapted to suit the marketplace needs, Ramakrishnan adds.

 

 

The report lists three factors responsible for the success of big brands. Value packs, better channel presence and greater variety in the portfolio. Value packs play a big role in penetration and here, big brands score far better, across categories such as tea, floor cleaners, salty snacks and such others, than regional players. They also dominate modern trade and in the past couple of years have flooded shop shelves with different pack sizes and product extensions. This has edged out the regional players, who have also been unable to leverage the digital channels well enough to blunt the disadvantage in the physical world.

Finally big brands have also extended their scope to meet the needs of every customer. For instance, Aashirvaad Atta (ITC) has multiple variants of the core product (multi-grain, five-grain, organic and so on) while its regional competitors have just one or two, if any. 

Another example is Lizol that comes in eight fragrances as against its biggest regional competitor (Sunny Home Care) that has two. It also has cleaners for bathrooms, floors, and cement surfaces while regional brands have a catch-all cleaning agent. Meeting multiple needs and an articulation of the benefits have helped big brands firm up the foothold in rural and urban markets.

The pandemic will not change that and the shift to regional labels may well be on account of a broken supply chain, according to Ramakrishnan. But, will the vocal for local campaign hamper the reach of multinational brands? In consumer goods, it is often difficult to draw the line between local and foreign brands, Ramakrishnan says. Old brands with long standing relationships in the category are often seen as local even if they are not, he says. Size may well play in their favour, as will age.