Unilever (NYSE:UL) is planning to diversify its personal care product portfolio in India across categories and price points through brand extensions of its popular Lux and Axe brands. While Unilever and Colgate-Palmolive (NYSE:CL) have always been aggressive in expanding market share in the Indian personal care market, their strategies now also stand to benefit from rival Procter & Gamble‘s (NYSE:PG) shift in focus away from the emerging markets to defend market share in developed markets. P&G’s decision to put emerging markets expansion on hold has eased Colgate’s dominance in oral care as well as benefited Unilever’s plans to increase market share in deodorants and male grooming segments.
Unilever Expands the Popular Axe and Lux Brands into New Product Categories
Unilever recently announced plans to extend its Lux brand into the deodorant segment, making India the only country where the world’s largest selling soap brand is being launched as a deodorant. It is planning to set up a new manufacturing facility to produce deodorants in India, which will also cater to export demand. Unilever currently imports a large portion of deodorants as aerosols. The new manufacturing plant will thus provide Unilever a huge cost advantage.
It has also drawn out plans to develop its premium male deodorant brand Axe into a comprehensive male grooming portfolio, covering deodorants, soaps, body wash, shaving cream, talcum powder and cologne for men. Axe already had presence in shaving cream, talcum powder and cologne segments and is now extended to soap and body wash categories.
Unilever Eyes Higher Market Share in Male Grooming Market through Axe
Male grooming is one of the fastest growing segments of the Indian personal care business. With increasing attention over maintaining looks and professional appearance, concerns over aging, and rising income levels, Indian male personal care sales have grown by over 46% between 2004 and 2009. A recent Euromonitor report projects the Indian male grooming sales to continue to grow at a CAGR of 11% over the next few years.
So far, Proctor & Gamble’s Gillette brand has dominated the Indian male grooming market with one-third market share while Unilever just occupies 10%. By launching a comprehensive male grooming product range under the Axe brand, Unilever would be able to capitalize on Axe’s popularity among youth to increase its market share in other categories. It also competes with Godrej’s Cinthol, Colgate-Palmolive, Raymond’s Park Avenue, ITC’s Fiama di Wills, Paras and Nivea brands. Unilever already occupies the highest market share in the fast-expanding body wash segment in India through Dove, Lux and Pears and will now also enter male shower gels/soaps market with Axe.
We have a $33 Trefis price estimate for Unilever stock, at a 2% premium to the current market price.