Top FMCG brands gain market share during economic slump

26 May,2014

By Sagar Malviya


Mondelez India, maker of the country’s top chocolate brand Cadbury, had been struggling to hold on to its market share over the past few years, but in the January-March quarter it managed to improve its share for chocolates by 2.5%. With new chocolate capacity in place in India, the company has been able to regain the share it lost in the first half of last year, Mondelez International CEO Irene Rosenfeld said in an earnings call for the quarter two weeks ago.


Perhaps it’s not just about higher capacity. It seems that in a downturn consumers tend to lose their impulse to experiment and stick to established ones, as around a dozen market leaders including Gillette, Colgate, Dabur Real and Chyawanprash, Godrej’s Good Knight and Jyothy Laboratories’ Ujala, have improved their market share in their core categories over the past one year.


“In a downturn, consumers might not want to risk and experiment buying new brands and generally stick to trusted or established brands especially in the health space even if it has a slightly premium pricing,” said Sunil Duggal, CEO at Dabur. The Delhi-based firm’s Real juice and Chyawanprash have gained around 200 basis points to improve their market share to 54% and 64%, respectively.


While several small players could not hold their price lines in the wake of inflating input costs since last year, several large companies increased their marketing spends and focused on innovations to push growth amid weakening consumer demand for most daily products.


The overall consumer goods market growth fell to nearly 6% during the January-March quarter compared to 18% in the same period last year. Top companies aggressively tried to develop mass-products that would be easy on consumer wallets. “We have continued to focus on launching some great innovations,” Vivek Gambhir, managing director at Godrej Consumer Products, said. “For instance, we have launched three innovations in home insecticides over the last 12 months — more than the previous ten years,” he said, adding that new products accounted for more than a third of the firm’s incremental growth.


Top oral care brand Colgate claimed a 60 basis points gain in its toothpaste market share year-on-year at 53.8% in the March quarter despite increased competition driven by new entrant and global rival Procter & Gamble. Colgate launched newer products and stepped up its reach and advertising spends substantially on the face of heightened competition. “Strong communication and trade plans have helped drive these results,” it said in a global earnings call last month.


Source:The Economic Times

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