Can HUL take over L'Oreal's hair care market share?

The country's largest fast moving consumer goods company - Hindustan Unilever (HUL) - has set its sights on the parlour-going consumer with its new range of hair care products under the Tresemme umbrella.

A premium set of products, Tresemme is available between Rs 60 to Rs 1,000 (a 100 ml Hair Fall Defense Shampoo, for instance, costs Rs 64; a 225 ml bottle costs Rs 128, while a 600-ml bottle costs Rs 249; conditioners and other styling products such as serums, hair sprays etc are higher priced).

HUL has targeted high-end beauty stores and modern-trade outlets to push the range in keeping with its premium image.

While HUL executives say that the initial response to the range has been good thanks to a felt need for salon-style products at affordable price points, market experts say that the road ahead is not likely to be easy.

The salon-going consumer, according to industry experts, is unlikely to give up her habit of frequenting the parlour and is most likely to go with the recommendation of her stylist or beautician on what to use for her hair.

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Even then HUL seems to be in no mood to give up. Says Nitin Paranjpe, MD & CEO, HUL, "We remain optimistic about its prospects in India. It has been a few weeks since we launched the range in India and the best part is wherever Tresemme has been taken whether Brazil or the United Kingdom, consumers have appreciated it."

Tresemme alongwith other brands belonging to the US-based personal care company Alberto Culver was acquired in 2010 by Unilever in a $3.7 billion all-cash deal - its second-largest acquisition after Best Foods in 2000, which the Anglo-Dutch major had bought for a whopping $24.3 billion.

The Alberto Culver acquisition was expected to boost Unilever's professional hair-care portfolio, which the company had stepped into the year before (that is, in 2009) with the acquisition of TIGI salon brands from salon experts Toni & Guy.

But while both TIGI and Alberto Culver in a sense gave Unilever access to salons - considered a high-margin, lucrative business and dominated by companies such as L'Oreal and Procter & Gamble (P&G), the Anglo-Dutch major also wanted to ensure that it did not miss out on a presence in shops with these products. Tresemme is playing that role, say market experts.

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Industry sources say that HUL may also push Tresemme into salons, but there is no confirmation on this from the company. It has its own Lakme Salons, where the product could be placed, but HUL appears keen to make a difference in the marketplace with its new range. Will it succeed?

Analysts say that Tresemme sits a rung above products such as Dove, targeting very specific requirements. In a sense HUL appears to be taking its premiumisation agenda to the next level, say analysts.

"Consumers in urban markets are exposed to international trends and are looking for products that can address these needs," says Anand Shah, senior FMCG analsyt at Mumbai-based brokerage Elara Capital.

HUL in the last few years has been quick to identify these aspirational needs of consumers in personal care, which gives it 30 per cent of its revenues, premiumising its portfolio with Dove and Pears.

Even mid-segment brands such as Sunsilk have undergone a transformation with the company tying up with international stylists and experts to design the product.

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What rivals are doing

L'Oreal so far has indicated no plans to push its professional range of products into shop shelves.

The company has three lines - Matrix, L'Oreal Professional and Keratase - targeting the mass, mid and premium salons respectively in the country. In all, the three lines together target a total of 30,000 salons in India, says Aseem Kaushik, director, Professional Products Division, L'Oreal India.

"The salon segment has its own specific needs and requirements. We have in the last fifteen years, for instance, made sustained investment in the quality of products, training and development of hair dressers and stylists. We work closely with the latter to transform their parlours. In turn, these people push our products to their clients," he says.

While rival P&G has two lines - Wella and Sebastian (the latter imported and sold directly by distributors) - targeting the mass and premium salons in the country, the company did launch its retail hair colour brand called Wella Kolestint in India two years ago.

Much like Tresemme, this product is available in stores across the country. But P&G has articulated no plans to push its professional range of products in the marketplace.

Experts say that both P&G and L'Oreal are not likely to take their professional haircare range into shop shelves since it would dilute the brand promise of these products.