MUMBAI: Beiersdorf AG, the owner of the Nivea brand of consumer products, has harnessed its newly established production base in India to challenge the entrenched rival Hindustan Unilever, vindicating the German company’s latest strategy to replace outsourcing or imports with local manufacturing.
“We have become the market leader in a couple of sectors, against the mighty Hindustan Unilever (HUL). So, we are quite pleased. We have, for the first time last year, crossed $100 million in India and we are profitable,” Stefan Heidenreich, Beiersdorf ’s chief executive, said in an investor call last week.
For year ended December, Beiersdorf surpassed HUL in the deodorants segment for the first time, with an 8.7% share of the urban market, compared with HUL’s Axe that had 7.7% share. A year ago, HUL’s share was 8.3%, versus Nivea’s 7.1%.
The German skin-care company, which had hitherto largely outsourced production in India or imported Nivea products from its home base, opened its first manufacturing unit in the country about two years ago. Local manufacturing has helped the German company lower prices and introduce affordable sachets that can be purchased by millions of Indians who are at the margins of the consumption threshold.
For its part, India’s biggest multinational consumer goods company HUL said it does not comment on market share as a policy. “India’s deodorant market is underpenetrated, with a big headroom for growth. Our new launches across Axe Signature and Rexona are delivering strong growth for us, while gaining consumer franchise,” said an HUL spokesperson.
Since 2011, Nivea India has been the fastest growing affiliate within Beiersdorf’s operations. “In all the segments that Nivea has entered, it has gone from being an insignificant brand into one of the top three brands in the category,” said Rakshit Hargave, SVP for Beiersdorf India and Sub-Saharan Africa. “In 2016, Nivea has outgrown the category by three times and has been able to beat market sluggishness in the December quarter.”
Experts believe that the company has been historically very strong in the modern trade segment, wresting skin-care business from HUL and Procter & Gamble. “Nivea has been innovating and stayed most relevant to consumers in the changing times.
Within deodorants, it has consistently gained share despite several new entrants, while its body lotions have been growing the fastest at 30%,” said Devendra Chawla, group president at organised retailer Future Group.