Disclaimer: This is an informative post and not a recommendation to buy/sell/hold any security/instrument.
Aditya Birla Fashion & Retail, which has brands like Peter England, Van Heusen, Allen Solly & Louis Phillipe under its fold (we'll cover why "foreign-sounding" brands work so well in India in a later piece) is now venturing into deodorants with its INR199 line which it will sell in stores across India. In this post, we try to see the allure of the deodorant market, what this does to the brand, and the importance of focus and control in a market like India.
The deodorant market in India:
In a hot humid country like India, there is always room for deodorants. The emerge of mass-market deos backed by aggressive campaigns have (Fogg, Axe et al) have certainly helped the growth of the segment in India. The sector currently stands at close to 3750cr, and is expected to grow at a 14% CAGR over the next few years. This presents a reasonably large market with good growth potential, and has been attracting a lot of new entrants to the space. One of these is clothing manufacturer Peter England that will launch its mass-market deodorants through its 500+ stores and 10,000+ kirana stores (mom & pop stores) in India.
What this does to the brand:
On the positives, this does two things: 1. Brings in another source of topline growth for the firm 2. Increases the number of touch-points & interactions with the customer. The Peter England branding is very prominent on the bottle, and given that this would be an item you use pretty regularly, it helps keep the brand "top-of-mind" so to say. The issue downside seems to be on the price point and the channel front. For a "middle-class-aspirational" brand like Peter England, having a presence in kirana stores can partially dilute the brand. A much better strategy would have been to have it as a in-store exclusive (that way you get to control the customer experience around it end to end, get to slowly pivot your brand from a fashion to a lifestyle brand, and have an opportunity to cross-sell deodorants to begin with and be there to cross-sell clothes when people come in for their deodorant refills!). The second issue, and this one is less important, is that the price point could have been higher to preserve the brand image.
The importance of focus & control in a market like India:
The good thing about a market like India is that you have a lot of opportunities. The bad thing about a market like India is that you have a lot of opportunities. In his book on Coffee Can Investing, veteran investor Saurabh Mukherjea stresses on the importance of focus in a market like India, and how it has been a key driver of long term success. The Indian markets are extremely competitive, and the winners are often players who focus on a few things with extremely high-precision improving consistently and maintaining their edge. With a contract manufacturer making the product, and a channel available to everyone selling it, the only competitive edge the firm has is the brand. And with very little control over the customer experience in the channels it is targetting, the brand could face challenges too.
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