The Killer Instinct

The household insect control arena gears up for a slugfest as multinationals compete to make life miserable for domestic pests.

It would hardly seem a market that any fast moving consumer products multinational would identify as the next hot growth area. Yet Hindustan Lever (HLL), the Anglo-Dutch conglomerate is quite clear that it expects a significant chunk of its new business to come from the Indian household insect and pest control market. In fact, it is quite gung ho about the market that it is entering in a 50:50 collaboration with the US-based household care major, S C Johnson. Last month, it launched Raid -- an aerosol spray for cockroaches. And after that, it has plans to come out with a specialist spray for killing mosquitoes as well.

 

Hindustan Lever is not the only multinational bullish about the profit prospects of exterminating insects either. Others like American consumer product giant Sarah Lee which has a 51 per cent stake in Godrej Hi Care, pharmaceutical and agrochem major Hoechst are also pouring out new products into the market in quick succession. Be it new products, market penetration and strenghtening distribution, the household insect control arena is seeing a veritable slugfest between multinationals as old time players like German giant Bayer are taking their own steps to neutralise new rivals.

All that new activity is certainly speeding up things in the Rs 400 crore market, which was growing at a steady, but not spectacular, pace till some time back. In fact, all the multinational activity has made sure that the market has started growing at a rate of 32 per cent per annum. That is much faster than what more high profile industries like foods, soaps or cosmetics are growing at. What's more, everyone expects those growth rates to continue -- or even accelerate -- in the next few years.

"The market is expected to grow at the same pace for the next three years because the rural areas are yet to be tapped,'' says a marketing executive from Godrej Hi Care, which bought over Transelektra which has such well known brands like GoodKnight, Jet and Banish under its belt. And the product specialists at Hindustan Lever feel that the market will show exponential growth given that it is at a fairly nascent stage even now.

All that activity is also ensuring that the market segments and resegments as new players define newer categories and introduce fresh product forms. Already, the market has got divided into a dozen or so different segments and niches. At a fairly broad level, the household insecticides market can be divided into two broad categories -- crawling insect control (cockroaches) and flying insect (mosquitoes) control. After that, further subdivision takes place based on whether it is an insect repellent (drives away insects) or an insecticide (kills them). And then further divided again into product forms like coils, mats, sprays, aerosols...

The cockroach market is worth approximately Rs 55 crore, while the flying insect control products, primarily mosquito control products, is infinitely bigger and valued at Rs 221 crore.

As far as the flying insect control market is concerned, though, it is again divided into two broad segments -- mosquito repellents and mosquito killers. Mosquito repellents have further subcategories like mats and mat machines, vaporisers, lotions, creams and coils. Mats have the lion's share of the market and is also the fastest growing in this segment. This is because it is the most consumer-friendly and the easiest to handle. The risk factor, unlike aerosols and sprays, is minimum which also makes it a great favourite of consumers.

Mosquito killers involve categories such as oil-based sprays, baits and chalks, and aerosols. At 10 per cent, oil-based sprays constitute the highest share in this segment, however, it has a low growth rate compared to aerosols. The low growth rate of oil-based sprays is because aerosols are used in large quantities by institutions and hotel industry than the former.

In the mosquito repellent category, mats and mat machines have a value share of 51 per cent in the market, and is growing at the rate of 30 per cent in terms of value. This is followed by mosquito coils at 21 per cent which is growing at the rate of 29 per cent. Liquid vaporisers have a value share of 7 per cent having a growth rate of 70 per cent in terms of volume.

The biggest competition is also in the mosquito mats category, where practically every major -- and half a dozen minor -- players are represented. Godrej HI Care (formerly Transelektra Products) is the market leader with brands such as Good Knight, Jet, and Banish, together having a market share of 78 per cent. The company is also the largest manufacturer and seller of mosquito mats in the world. Last year, it sold around one billion mats. In aerosols, with its brand HIT, Godrej is the leader with a 51 per cent market share. It is followed by Bayers Baygon Power at 23 per cent and Hexit at 11 per cent.

Old player Bayer, with its Baygon brand has a presence in mats, sprays, aerosols, baits and lotions and is the second biggest player today with a 10 per cent odd share of the total market. Reckitt & Colman, a relatively new player, is number three with a share of nine per cent and presence in categories like mats, coils and aerosols with its Mortein brand. One old player which has been practically pushed to the sidelines is Balsara, which used to dominate the insect control market once with its Odomos mosquito repellent cream. Balsara's problem was that it failed to react fast enough to the new product innovations of newer players and consistently lost market share.

While Godrej Hi Care is confident that its leadership will not be challenged by newer players, it can hardly afford to rest easy. For one, old rival Bayer, which was the undisputed leader till a decade back and was caught napping, is making an all out attempt to break back into the leadership position. Reckitt too is very aggressive in the market with its Mortein brand. And Hindustan Lever, of course, is easily the most formidable player to enter into the arena and is capable of unseating almost any rival.

While the bulk of the action is still taking place in the urban markets, which bring in some 85 per cent of the sales, the momentum is soon expected to shift to rural areas. That's because rural areas have been tapped only marginally, and most players agree that the bulk of the growth will come from there once the urban markets are close to saturation. In fact, all the players are already making plans to tap the rural masses. For example, of the total 6,600 towns, Bayers Baygon mats are available in only 500 towns, leaving it enough scope for market penetration. And while the market is expected to settle down after some time, one thing is certain. Life, henceforth, will only get increasingly tougher for the Indian insects.