JLL is drawn to the thriving market around ayurveda, especially in hair care, cosmetics and oral care. According to a Nielsen report (June 2017), the natural segment contributed 41 per cent to total sales in the personal care category and products made of natural, herbal and ayurvedic ingredients are a Rs185 billion market. JLL wants a 10 per cent share of this market by 2021 and it is extending the Margo and Neem brands within their respective segments while developing a slew of new products under new labels.
Ayurvedic health products alone are forecast to cross $1 billion by 2021 in value as consumers are looking for ‘natural’ or ‘organic’ ingredients when choosing their hair and skin products. As lucrative as the market seems to be, experts say JLL has a fight on its hands. For one, ayurveda has not been a part of its brand identity (Margo and Neem are acquisitions). And secondly the market is being rapidly carved out between large FMCG players Hindustan Unilever Ltd (HUL), Colgate-Palmolive, Emami, Himalaya, Dabur, Patanjali and a slew of local brands.
“I don't find any difficulty. We are not getting into the healthcare base of ayurveda. We have the talent and marketing, so it is not at all a problem. A lot of work is going on in the lab about ingredients . Our propaganda or communication will be based on that. It will be true and fair,” said M P Ramachandran, chairman and managing director of JLL.
A bigger basket of products
JLL has a portfolio of six power brands: Ujala (fabric whitener), Exo (dish bar), Maxo (household insecticides), Henko (fabric detergent), Margo (soaps) and Pril (dish wash). The six contributed 87 per cent to total revenue in FY17. Ujala is the flagship brand and has about 77 per cent share in the niche fabric whitener segment.
The company says that while it has steadily increased its market share with the power brands, there is enough room to grow considering the large category that it operates in and the relatively lower share of JLL brands. This is especially true for the two brands Margo and Neem. Margo has a market share of around 1.1 per cent in the soap category, which is estimated to be around Rs 150 billion.
Ramachandran says that Margo and Neem are seen as homegrown brands made with local ingredients and are best placed to drive the company’s expansion plans. He expects the ayurvedic range of products to contribute about 10 per cent of total revenues by 2021. Ayurveda will raise JLL’s revenues from personal care to around Rs 4-5 billion by 2020-21 from around Rs1.8 billion now, he said.
It will not be an easy transition, however, warn brand experts. Pure ayurveda players have the first advantage here and then come the multinationals that are investing heavily in building the market; for companies such as JLL, it is critical to convince consumers about the authenticity of their claims. “There is a difference in the language of a pure ayurveda player and that of partial operators,” said Harish Bijoor, CEO Harish Bijoor Consults. He adds that ayurveda is not a brand play, it is a product play and JLL does not have the legacy that other players have on this score. “Unless they have an intelligent strategy and can build niche products, it will be very difficult,” he said.
Advertising and communication play a big role in the space. Customers are more likely to trust established players or popular celebrity influencers rather than go by the company’s past record in other product categories. What this means is that JLL’s success with Ujala is unlikely to rub off on its ayurvedic range.
Ramachandran is not worried. He says that the new range will be largely aimed at the beauty segment. JLL will roll out body, face and hair care products by 2020. “We are doing a lot of R&D and it may take at least one year to bring out these products. Jyothy's products are differentiated. We will not talk what others are talking. We will not give what others are giving,” said Ramachandran.
JLL will also adopt a different advertising strategy for its new range. Ramachandran says that the brand communication will be distinct from that applied to the rest of the JLL portfolio. “We are not in healthcare and we are not getting into that. As far as the beauty or hair care is concerned, it is one of the biggest markets and people are catering to that more and more,” he added. While JLL is right about the opportunity in the segment, it would be important for the company to assess the clutter in the market to create a truly differentiated offering say experts.
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