No flying start for Dove's Elixir

However, HUL's premium hair oil has got its packaging right, say analysts

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Dove, one of the over-Rs 1,000-crore brands of Hindustan Unilever (HUL), India's largest FMCG company, has come a long way from its initial days in the 1990s. From outlasting P&G's similarly-positioned Camay with its toilet soap to being extended to haircare and skincare like shampoos and body lotions, Dove has also been one of HUL's fastest-growing brands. However, its latest brand extension may not have done as well as expected last year, say industry experts.

HUL ventured into the premium end of the hair oil market, one of the more penetrated and tougher playgrounds in FMCG, with the Dove Elixir range, late-2012. It launched variants - Rose & Almond Oil (hairfall rescue), Hibiscus & Argan Oil (nourished shine) and Lavender & Olive Oil (dryness care) -meant for women aged 21-35 years, who are not able to oil their hair due to their hectic schedules.

However, its positioning has led to a slow growth. It has been able to corner around 0.2 per cent of the light hair oil market so far, according to industry insiders. The light hair oils segment has grown at 12.8 per cent (please see chart).

While Dove, has traditionally catered to a masstige (straddling mass and premium) audience, the hair oil range is far more premium than existing brands. The 90ml bottles costs Rs 185, while other premium hair oils like Dabur Vatika costs around Rs 50 for 100ml and Bajaj Corps has priced its 100 ml Bajaj Almond at Rs 55. A close contender, Parachute Hair Oil-Ayurvedic is cheaper than Dove Elixir at Rs 95 for a 190 ml bottle. Parachute Advanced Hot hair oil, which is targetted at users strapped for time as well just like Elixir, costs Rs 45 for 100 ml.

HUL says that its entry into the premium segment was part of its strategy, as it was already present in the mid-market segment, with Clinic Plus Vita Oil and Clear Anti-Dandruff Nourishing Hair Oil.

"Across categories, we have products with distinct price points and distinct benefits addressing the entire spectrum of consumer needs. Straddling the consumer pyramid has been integral to our strategy of developing and growing the markets. Dove Elixir targets the premium segment while Clinic Plus Vita Oils targets the popular specialty hair oil segment," says an HUL spokesperson. The spokesperson adds that women aspiring for a more pleasing hair oil could also turn to the brand.

A senior executive who handles a rival premium oil brand says that hair oils are unlike other FMCG categories, where growth comes with new customers upgrading to a higher price bracket. These products comprise a highly penetrated category with consumers sticking to their preferred type of hair oil, rather than aspiring to move up the price ladder.

Arvind Singhal, chairman of Technopak Advisors, says, "The hair oil segment is largely concentrated in the mid-market, i.e. the middle-income group, with coconut-based oils being the most popular. There isn't much of a premium market in India."

A traditional category like hair oils has a market penetration of around 90 per cent. Growth is coming from conversion from unbranded oils and premium variants for most players.

But Singhal says that not many of Elixir's target audience use hair oil these days as they are more into haircare at salons than at home: "While premiumisation can be done for haircare products, you can't create a latent need for a product that is not required. Hence, the positioning may not be right".

However, HUL seems to have got its packaging portion right. When customers upgrade to a better (or expensive) product, they need not necessarily buy a big pack. Gaurav Gupta, senior director at Deloitte India says, "The frequency of usage is less for hair oils, which builds a case for smaller packs. Thus, the premium price-point may not turn away customers."

In light hair oils, where HUL has innovated with Elixir, Bajaj Almond Drops leads with over 58 per cent value and volume share. Coconut hair oils are still lorded over by Marico's Parachute (around 56 per cent) while cooling oils, which also command a premium over amla and coconut hair oils, are led by Emami's Navratna brand (around 55 per cent).

Elixir is a part of HUL's premiumisation drive which has seen a setback due to the decline in discretionary spends on personal care products. Industry experts point out that in the light of the news of Unilever CEO Paul Polman's focus on fewer but globally uniform brands, local innovations such as in hair oils could see less attention from the company.
With inputs from Sayantani Kar