Strong desire for ‘fairness’: Competition stepping up in mass/mid end skin care:: J.P. Morgan -India Consumer

Strong desire for ‘fairness’: Competition stepping up in mass/mid end skin care

Fairness creams account for over half of skin care market in India and continue to grow handsomely due to the importance Indian consumers ascribe to fairness. A space dominated by Hindustan Unilever has witnessed many new launches over recent years. However, we note a change in strategy for multinationals like L’Oreal and P&G who have now introduced more affordable brands to tap higher share in this category. Another emerging trend is the introduction of crossover skin care products which offer multi-benefits along with skin whitening. A changing competitive landscape (both on the product and distribution front) could imply higher brand investments for HUL’s leading mid end brand FAL as it tries to protect its turf.

Enhancing affordability – competition stepping up in the mass/mid end? Many multinationals like L’Oreal and P&G, who were operating in the premium end of fairness skin care segment are now targeting share in the mass/mid end. While P&G introduced Olay 3-in-1 fairness cream priced at Rs49 (20g) and Rs89 (40g), L’Oreal recently launched Garnier Fair Miracle priced at Rs49 (15g). These products may challenge the dominance of HUL’s leading brand Fair & Lovely (FAL)priced at Rs45 (25g). Interestingly the packaging for Garnier Fair Miracle is in pink and white color (similar colors as FAL). Both these launches have been coupled with aggressive consumer promotions/advertisements. HUL has also introduced a new Rs5 access pack for FAL to induce more consumer trials.

Pricing for various fairness skin cream brands

Company	Brand	Quantity	Price (Rs)
Hindustan Unilever	Fair & Lovely Expert fairness	25gm	45
		50gm	85
		80gm	140
	Ponds White Beauty	25gm	75
	Ponds White Beauty BB+	18gm	125
L'Oreal	Garnier BB Cream	18gm	99
	Garnier Light	100gm	179
	Garnier fair Miracle 2-in-1	15gm	49 (introductory price)
		40gm	99
	Garnier White Complete	40gm	150
P&G	Olay natural White 3-in-1 fairness	20gm	49
		40gm	89
	Olay natural White instant glowing	40gm	155
Himalaya	Fairness Cream	25gm	35
ITC	Vivel fairness cream	25gm	42
Johnson & Johnson	Clean and Clear fairness cream	20gm	65
	Neutrogena Fine fairness cream	50gm	299
Bieresdorf	Nivea mositurising + whitening cream	50ml	100

Source: Industry, J.P. Morgan

Cross over products being launched. Companies are introducing cross over skin care products which offer multi benefits like spot reduction, anti-tan and brightening in addition to whitening. HUL introduced variants like FAL Multivitamin, FAL Winter fairness, FAL Forever Glow offering additional benefits. While whitening continues to be more prominent in facial moisturizers, it also became significant in facial cleansers, face masks and anti-agers.

Skin whitening share (%) by product type

	2009	2012
Face Masks	12%	15%
Facial cleansers	8%	13%
Facial moisturisers	83%	84%
Anti-Agers	2%	3%
Toners	6%	6%

Source: Euromonitor, Industry

Indian males catching up with female counterparts. FMCG companies have been increasingly focusing on catering to men’s grooming products. While this segment is dominated by shaving creams and after-shave lotions, incrementally skin lightening creams are gaining ground at a fast pace. Emami entered the men's fairness cream segment in 2005 with the launch of 'Fair & Handsome' which still dominates the space. Hindustan Unilever in 2007 launched 'Menz Active'in this sub-category. Over the past few years we have seen multinationals such as Beiersdorf (Nivea for Men) and L’Oreal (Garnier Power Light) launching a slew of products for the men’s skin care range.

Pricing for male skin care brands

Company	Brand	Quantity	Price (Rs)
L'Oreal	Garnier Men Power Light Moisturiser	20gm	85
		50gm	180
	Garnier Men Power Light Intensive fairness face wash	50gm	85
Hindustan Unilever	FAL Menz Active	25gm	43
Bieresdorf	Nivea for Men Advanced Whitening	50gm	89
Emami	Fair and Handsome	30gm	54

Source: Industry, J.P. Morgan

HUL’s FAL to face heat? For HUL, skin care accounts for ~13-15% of sales and ~20-25% of profits we believe. FAL remains the biggest skin care brand for the company, accounting for over 60% share of the facial moisturizer market in India. FAL has witnessed sluggish growth in recent quarters and HUL has made significant brand investments (with a recent re-launch) to revive growth here. A changing competitive landscape (both on product and distribution front) could imply higher brand investments for FAL as it tries to protect its turf. We have an UW rating on HUL.

Consumer, Retail, Media

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