FMCG biggies betting big on chemists to push sales

22 Nov,2012

By Sagar Malviya & Ratna Bhushan


When Chennai-based Cholayil hired a medical representative earlier this month to push its Medimix soap, it surprised most conventional marketers and also confirmed the increasing importance of chemists as a sales channel for consumer goods companies.


Chemists account for about 9.1% of overall FMCG sales in the country, or some 45% higher than modern retail, according to a study by market research firm Nielsen.


And sales through this channel are growing faster than through traditional trade as more and more people trust their neighbourhood chemists to choose personal care and healthcare products.


No wonder, from Cadbury India to Hindustan Unilever to L’Oreal India, most FMCG companies bet on chemists to push their premium personal care and healthcare products.


“It’s about time marketers started writing their own prescriptions to win with chemists,” Ranjeet Laungani, VP at Nielsen India, says. Nielsen estimates chemist channel to swell to an FMCG market worth $6 billion by 2016 and $12 billion by 2020 from its current size of $3 billion.


Over 75,000 chemists joined the FMCG world last year, mostly in towns with less than 10 lakh people. L’Oreal, world’s largest cosmetics and beauty care firm, says chemists are its biggest sales channel in the country, contributing more than 20% to its total sales. “When it comes to premium personal care products, consumers tend to take the advice of chemists more seriously,” Satyaki Ghosh, director of consumer products at L’Oreal India, says.


The same goes with healthy products too.

Cadbury, maker of Bournvita malt drink, believes chemists drive growth in this category. “First time users of milk food drinks generally buy from chemists due to their high credibility,” Narayan Sundararaman, director – powdered beverages, gum & candy, at Cadbury India, says.


A spokesperson of its rival GlaxoSmithKline Consumer Healthcare, maker of Horlicks and Boost, says chemists are gaining importance as products get more specialised.


About 30% of malted beverage drink sales come from chemist channels, while for traditional consumer products like shampoos, the percentage is about 15%-18%.


A Threat to Modern Retail?

Devendra Chawla, president, Food Bazaar, at India’s largest retailer Future Group, does not think so. “While modern trade is fast becoming a launch pad for FMCG products, for value-added personal care and health categories, brands rope in chemists as a channel first within general trade for mass dissemination…,” he says.


And it’s not just categories such as diapers, deodorants and milk food drinks that chemists stock. Nielsen finds that chemists are increasingly stocking impulse-buying products such as salty snacks, chocolates and biscuits.


Bhavesh Dedhia, proprietor of Apple Medical Store in a Mumbai suburb, says it works. “While pharma products have higher margins, consumers tend to buy chocolates or snacks while they shop for medicines,” he says.


Marketers say chemists demand higher margins on FMCG products. “The terms of trade and margins are generally higher in the case of chemists as space for consumer products is limited in their stores,” Anil Chugh, senior vice-president at Wipro Consumer Care and Lighting, says.


Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved


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