Who said that advantage belongs to the first mover alone? Since severing ties with partner JL Morrison & Co three years ago, Nivea India, the 100% subsidiary of the global cosmetics and toiletries company Beiersdorf AG, has managed to push its brands into the top-three league in their respective categories.
Of course, Nivea woke up to the potential of the Indian market a little later than its European peers such as L’Oréal India, which had formed a subsidiary in 1994 and posted a turnover of Rs 600 crore in 2007. Following the promoter group’s—Hamburg-based Beiersdorf, that is—tilt towards emerging markets, the need to take charge of matters here became imperative.
JL Morrison & Co was the Indian franchisee for Nivea, managing distribution of its products such as the Nivea Crème, the flagship cold cream, in the country.
“The group’s fully-owned subsidiary became operational by end 2005-early 2006,” says Soma Ghosh, marketing director, Nivea India. “By 2007, the company had taken over modern-trade distribution from JL Morrison. In 2008, we took over general-trade distribution too.”
This meant investing in a full-fledged team, investing in a network etc. The effort paid off with its turnover increasing from Rs 40 crore in calendar year 2006 to Rs 63 crore in 2007 to over Rs 100 crore in 2008. It is a fraction of what category leader Hindustan Unilever Ltd (HUL) clocks in its personal products segment.
In calendar year 2008, for instance, the fast moving consumer goods giant saw revenues of Rs 4,328.84-crore coming from its personal products segment alone. This is the second-best in terms of performance following soaps and detergents, which achieved revenues of Rs 7,868.37 crore in the same period.
Even as Nivea seems an upstart to HUL in terms of revenue, what is worth noting is how the company has been trying to bounce back into the consumer consciousness with its line-up of products. Controlling distribution has been one part of the strategy, coming out with intelligent products that target specific need gaps, backed by the right amount of noise and association, has been the other.
“I think what worked for us over the last few years has been our innovative products,” says Ghosh. Nivea, for the record, has almost 70 products in its portfolio at the moment in India spanning men’s and women’s face care, men’s grooming including care, cleansing and shaving, deodorants, lipcare, cold creams and body lotions.
Of this, the company has