Bajaj Corp, with around Rs 800 crore annual revenue, currently holds less than 10 per cent share in the Rs 9,000-crore hair oil market in India. The company, which has popular brands such as Almond Drops in its stable, is now planning to launch two more products, acquire brands in niche segments and play up its ayurvedic credentials for names such as NoMarks and Brahmi Amla to take its revenue to Rs 1250-1300 crore in the next few years.
Talking to BestMediaInfo.com, Sandeep Verma, President, Bajaj Corp, said, "We are trying to gain a significant per cent of market share in the total hair oil category. We are in the 10 per cent category and want to move to 15 per cent. We will come out with two new brands in the next six to eight months."
The company is also trying to move consumers from the heavy oil category to the light segment in which it holds 61 per cent share. The light hair oil category is worth Rs 1400 crore. Bajaj Corp heavily relies on its Almond Drops brand as the product contributes 93% to company's total revenue. The other oil brands bring in just 4 per cent and remaining 3 per cent comes from the NoMarks face wash.
Speaking about the challenge from Patanjali, Verma said Ramdev’s company hasn't dented their sales in the hair oil category. However, it has affected sales of Bajaj’s NoMarks brand.
"We'll now be making people aware about our ayurvedic credentials. NoMarks is an ayurvedic product. So is Brahmi Amla," he said.
Bajaj Corp has no presence in the Rs 3000-crore coconut oil category. You're leading in the Rs 1400-crore light hair oil segment. The company recently said it wanted to turn coconut hair oil users to light hair oil for growth. What's the progress?
Bajaj Almond drop is a 30-year-old brand and we have essentially created the category called the light hair oil. We are the market developers and developed the premium hair oil market. Firstly, we are not just trying to convert coconut oil, but all heavy oil users to light hair oil users. That includes Amla hair oil, which is heavy. We are informing people there is no need to apply heavy hair oil because you can get the same nourishment with light oil. We are trying to convert the left outs (people who used hair oil earlier, but now abandoned it) to light hair oil users. Third, we are approaching consumers in rural India, where we have become the first company to launch sachets.
Will hair oil sachets get you more market share? How well do they work in comparison to bottles?
It is just to give the consumer a feel of the product. One usage is not enough to bring more consumers on board. One needs to use at least five to six sachets in a month.
Marico, the top player in the coconut oil category, has ramped up its light hair oil brand Hair & Care. How do you see the competition?
Marico is much stronger in the South and the West. Bajaj is stronger in the North and East. Our regions for play are quite different in India. Light hair oil is currently a very lowly penetrated category and has a huge room to grow. I am not worrying about them. Marico must be worried about their light hair oil gaining share from their own heavy hair oil because they have the largest portfolio of heavy hair oil.
But don’t you think your consumers might end up buying their light hair oil products?
If there are two very similar products then the difference is only in terms of pricing. In our case, we are an almond-based product. Marico doesn’t have any almond-based oil product. Their light oil is coconut-based. They have a very different set of consumers.
How is light hair oil performing in rural areas? Are you planning any products in the hair serum category currently dominated by Livon?
The penetration of light hair oil in the rural areas is very low at 16 per cent.
As far as the serum market is concerned, it is not a big category. The category took off very well when it was introduced in the market and was a new thing. Now it is stagnant. Approximately, the category is not more than Rs 150 crore, with Rs 100 crore with Livon itself. It hasn’t taken off that well because in India, hair oil is used before hair wash and serum is applied after.
How big is the branded almond oil category in India?
Our market share in the total hair oil category is around 10 per cent and the other 2.5 per cent market share is of Dabur almond oil. Altogether, almond oil shares 12.5 per cent of the total hair oil market. Our category is very fragmented. It’s not like the fairness category, where Fair & Lovely has a 50 per cent market share.
You have 60 per cent market share in light hair oil. What are your targets for other brands like Bajaj Kailash Parbat and Bajaj Brahmi Amla?
We are trying to get a significant per cent market share in the total hair oil category. We are in the 10 per cent category and want to move to 15 per cent. We will come out with strong six to eight innovations and two new brands in the next six to eight months.
For other brands, we haven’t had a successful innovation pipeline over the eight to 10 years. We have just set up an innovation centre in Mumbai. We brought in 30 people from various companies across India for the R&D innovation centre. We recently launched a campaign to re-launch our flagship brand Brahmi Amla oil.
For Kailash Parbat, we have pretty much gone back to the drawing board because we felt there were many things wrong with the product offering there. We need some more time. We don’t want to make some cosmetic changes because it won’t work in front of a very strong player like Navratna hair oil.
How has NoMarks performed under Bajaj post acquisition from Ozone and what are your plans?
NoMarks has been a journey where we have learnt more from failures. We had not had any success on NoMarks since the acquisition until last year. First we chose the wrong product to promote in the range of crème, face wash, face pack, scrub, etc., which was face wash. The market size of the entire skin care category is about Rs 1,000 crore in which the anti-marks face wash category has the larger pie with Rs 650 crore. So we chose to begin with the bigger part of the category but, after spending huge money, we realised very little differentiation is possible in face wash. The second mistake we made was in choosing the channel. We chose grocers. Being a specialist category, we should have chosen chemists.
This year we changed our advertising and put all our monies on crème with a focus on chemists. The biggest market for the anti-marks category is Uttar Pradesh with 40 per cent market share and hence we decided to put our focus there. So far we have doubled our market share from 3.5 per cent to seven per cent. This year, we hope to close with 30 per cent growth in NoMarks crème portfolio.
Patanjali has emerged as a serious competition in almost all your categories. How much has it impacted your balance sheet?
Patanjali has not impacted the hair oil part of the portfolio, but has impacted the Nomarks part of the portfolio because they have aloe vera gel, which they claim removes spots. It did have a significant impact on Nomarks as a brand. In the hair oil category, it was beneficial for us because Patanjali brought in the whole ayurvedic perspective in the forefront. That gave us the confidence to re-launch Brahmi Amla as an ayurvedic product. Ayurveda as a segment is growing at the fastest in the hair oil category and that is largely because of Patanjali. Nomarks is also an ayurvedic product and we have seen that the acceptance of Nomarks as an ayurvedic cream has gone up. Also, Patanjali motivates people not to use foreign products and in this category, the companies are mostly Indian.
As you mentioned, Patanjali has a significant impact in the skin care portfolio. How do you intend to cope up with that?
We have realised we have been downplaying on our own Nomarks cream ayurvedic credentials. We were the first anti-marks ayurvedic product in India. Now, we are trying to make people know about our ayurvedic credentials because that is a strong differentiator.
What is the possible reason behind the company’s slow growth post 2015?
It is more because of internal reasons. Also, in the last six to seven years, we have not had much success in innovation. There is only as much as you can grow on back of one successful brand. The reason to acquire Nomarks was to diversify into another category. But that didn’t happen in the initial years. Too much was expected from Almond drops. We had other tail brands that were not doing anything. Only one single brand was driving the company. We have brought back Nomarks and expect it to become the big engine of growth.
Bajaj Corp plans to acquire more brands to grow inorganically. Which categories you think have faster growth opportunities?
We are looking for the acquisition opportunities in the personal care space. In the personal space itself, we are not looking at oral care. We believe that there is enough competition in the oral care category and won’t be able to provide much differentiation. We are looking at acquisition opportunities in India and as well as other Asian markets.
What are your views on emotional vs functional advertisements and what has been Bajaj’s focus?
In my view there is no such thing as emotional or functional advertising. There is just good and bad advertising. The starting point of making an ad is basically you have a nice story to tell. If you are just trying to sell your product then it is very transactional kind of advertising. Good advertising is where one builds recall if you sell your brand philosophy and not products. Each brand should engage with the consumers and tell interesting stories with relevant insights.
How much has your ad spend been in recent months and has the slowdown in growth affected your ad spends?
Our ad spends have not reduced and in the range of 16-18 per cent. It did reduce during the time of demonetisation and reached around 10 per cent. If we rule that out, it has not gone down below 15 per cent and has not gone up beyond 18 per cent.
Which mediums worked best for Bajaj and how do you see digital?
Currently, we are a TV-focused company. A significant part of sales comes from the rural India. Also, every campaign that we have run in last one year has been 360-degree.
Why do you think that the record of the “World’s Longest Head Massage Chain” will achieve the objective of promoting the importance of regular hair oiling?
We wanted a higher amount of consumer engagement with the brand. People have a habit of compromising on the sensorial when they apply hair oil. Nobody likes the stickiness but feels the need to apply hair oil. This is the insight we have got from a lot of consumers. We wanted to spread the message of ‘well-oiled hair is nourished hair’ to as many people as possible. Simply saying that in the form of a TVC would not cut ice. With the idea of creating virality, the Guinness World Record came into the picture, which promoted the right way of using hair oil by massaging.
How confident are you about the RoI (Return on Investment) on this initiative as far as the growing market share is concerned?
The RoI is obviously very high because the ‘I’ is very low. More than RoI on this particular activity, I am looking at absolute return. So, the percentage RoI would be very high. The fact is that we have managed to shift the needle on the brand, a greater amount of people have got to know about the brand and the right way of oiling hair. As part of the promotion of this activity, we have added five more seconds to the ad film on air talking about us holding the Guinness World Book Record. We would get to know about the success of the campaign, only by the end of this quarter. On the coverage point of view, it has passed our expectations, but how many people are going to remember it, is a challenge and how many people get converted in using the brand will be the second challenge.