How Garnier plans to take on Patanjali

The French cosmetics brand rides the herbal train, hopes to reach out to a larger consumer base and counter the growing influence of local challengers

L'Oreal has just launched a herbal hair care line under its Garnier brand in India, taking a cue from companies such as HUL that recently revived its Lever-Ayush line of products and the growing popularity of local brands such as Patanjali, Kama Ayurveda, Iraya by Athena Life Sciences and such others. The company, which also owns the Body Shop line of products, is keen to tap into the growing fervour for herbal-naturals among Indian consumers while positioning itself as a premium brand in a category that has seen a rash of new players and relaunches.

The newly launched Garnier Ultra Blends, the company claims, uses natural ingredients like henna, almonds and green tea and taps into familiar formulations for hair care in the region. "The choice of the five blends was carefully developed by our research and innovation centre in Mumbai for Indian hair," Jean-Christophe Letellier, managing director, L'Oreal India, said. The idea behind the new launches is to not just add to the Indian portfolio, but bring in products that will resonate with the people in the country and thereby help the company attract its targeted 150 million new consumers in the next few years, he adds.

India's love for natural and ayurvedic products is not new. However, the renewed vigour with which various modern-day consumer goods companies in the country have jumped in is changing the market dynamics. Visibility of herbal-ayurvedic products on shop shelves has gone up and the industry, which relied mostly on word-of-mouth publicity in the past, is spending heavily on advertising and promotion. Many (Patanjali and even new brands such as Athena's Iraya) are now regular advertisers in national dailies, bagging expensive page one slots for their products.

According to Euromonitor, the beauty and personal care products market in India is estimated at Rs 74,700 crore. While most FMCG product categories have struggled to post double digit growth, this category grew by 13.6 per cent during 2014-15, the report states. Within this fast-growing segment, increased marketing activity has further fuelled demand for ayurvedic and natural products.

"The demand for natural, herbal and ayurvedic products was on the rise in 2015 due to strong promotional campaigns carried out by top players in the industry such as Hindustan Unilever, Colgate-Palmolive India, Dabur India, Marico, Godrej Consumer Products and Patanjali Ayurved," Euromonitor noted in its report.

For companies looking to grab a slice of the Indian market, ignoring this trend is not only difficult but it would also be ill-advised. For one, India's clout in the world beauty market is growing. It is expected to become the sixth largest market for beauty products in the next 10 years from being fourteenth on the list currently.

"With its growing middle class and strong appetite for beauty products, India is a strategically important market and at the heart of the universalisation strategy of L'Oreal," said Letellier. A natural line also helps companies create a premium category within an existing range as customers are willing to pay a higher price for such products. Letellier endorses this view when he says that the Garnier range is just the beginning and his company "will continue to upgrade the beauty market to accompany the premiumisation of consumers".

The company has two manufacturing units in India which supply 90 per cent of the products sold in the country and two research and development (R&D) centres. The new line of products were developed in India for the local market. The company says it is furthering its global strategy of paying heed to local needs. "Garnier is a global brand but localised and made relevant to each country in terms of blends, formula and price," he said.

Localisation has become the leitmotif for the entire beauty industry, in a way. Over the past year and more, major FMCG firms have revived or introduced new brands and product categories using locally popular formulations. HUL decided to revive Lever Ayush, an ayurvedic brand that it had held in cold storage for years. According to Samir Singh, executive director of HUL, the very concept of ayurvedic products in modern packaging by a multinational company was "way ahead of time" when the brand was launched. In late-2000's, it was rumoured that the company even considered pulling the brand out from the market. But then the winds changed and herbal formulations became all the rage and the brand is being given a fresh lease of life.

Although customers are showing a growing penchant for local formulations, the market remains the domain of multinational companies, the report from Euromonitor says. But the growing presence of Patanjali Ayurved, its aggressive campaigns and the perception about the brand's fiery rise up the ranks are threatening to disrupt the status quo. Many MNCs are building an extended arsenal of herbal and natural products and a new band of beauty care providers has set up shop. Now, as L'Oreal jumps into the fray, the only thing it can be sure of is that there are many others waiting in the wings.