Sachet king moves to shed regional tag

Chinni Krishnan Ranganathan is best known for selling shampoo in 50-paise sachets in the seventies — almost a decade before multinational competitors such as Unilever and Procter & Gamble woke up to the huge potential in India’s bottom of the pyramid market.

But CavinKare’s Chairman and Managing Director has many others firsts to his credit, enhancing his reputation as somebody who is super-fast in spotting new opportunities. So when sachet became commoditised, Ranganathan tried a new selling strategy: whoever comes with five empty Chik shampoo sachets will get one for free. If retailers collect sachets from three customers, they will get one free. Though common now, it was a new initiative that time.

“This is where I think the big change came in,” Ranganathan says. CavinKare’s turnover zoomed to Rs 10 lakh from just Rs 35,000 in just nine months. It soon became Rs 25 lakh after the company brought in differentiation of its products through fragrances – again a first such move in the industry.

“While competitors used fragrance costing Rs 500-700 for their products, we imported fragrances, spending Rs 3,000. It was a disproportionate investment, but it worked,” Ranganathan says.

CavinKare’s turnover has of course crossed Rs 1,000 crore now, and Ranganathan has now set his sights on more than doubling it to Rs 2,500 crore shortly. The game plan is simple: the CMD wants to shed the regional tag for the company’s products and is going national — even international — with a vengeance. So Meera — the company’s oldest shampoo brand — will see a makeover and is expected to be relaunched nationally next month. The company is also looking overseas, including the US, Australia and Africa.

Other FMCG products such as Chik, Nyle and Fairever, which contribute 60 per cent of the company’s turnover, will also be relaunched. Ranganathan says the plan is to “rejuvenate” the brands and increase market share, which is at 20 per cent now. Most of these products are now being handled by ad agencies in Mumbai. Ranganathan does not want to reveal any further details at this stage.

“There’s a lot on the plate already. The focus will be to expand existing businesses by launching new products, brand building, expanding the market to new geographies both in India and abroad,” he says.

Ranganathan is hopeful that his latest move to go national will succeed just like his earlier gambles. The biggest strengths of the company are ability to spot consumer needs, strong R&D with over 100 scientists, and distribution. The company’s products are sold through 800,000 outlets across the country.

The large distribution set-up helps as CavinKare is present in a long list of areas — hair care, ethnic care, skin care, coconut oil and home care.

The company is also into the salon business under the brand name Green Trends and recently acquired Naturals, promoted by his brother C K Kumaravel.

“At present Naturals has around 90 salons. “With this merger, we have become the country’s largest salon chain. Over the next one year we will add another 100 salons across the three brands”, says Ranganathan.

Ranganthan says the cornerstone of his strategy is how to increase the distribution reach further. “The more outlets you reach with your product, the more would be the growth,” he adds.