MUMBAI, February 12: The personal products powerhouse that will emerge with the coming together of HLL, Ponds, and the country's largest cosmetics business is driven by a synergic logic that has driven Unilever's growth in India in the past as well.The proposed merger of Pond's India Ltd and Hindustan Lever Ltd, emerges from synergies in products which also led to the amalgamation of the distribution network of the two companies some time back.
In fact, with HLL taking over Lakme Lever Ltd by acquiring Lakme's 50 per cent stake, also stems from the fact that internationally Unilever has a strong presence in cosmetics with strong brands like Elizabeth Arden and Calvin Klein.
As against the merger of the erstwhile Brook Bond Lipton India Ltd with HLL in 1996, which had no product synergies, Lakme Lever, which will become a 100 per cent subsidiary of HLL, and the merged entity (post merger of Pond's with HLL), share good synergies in their product portfolio.
While Lakme, the leader in the colourcosmetics business, does not share the synergy in colour cosmetics with either Pond's or HLL at present, it's brands in perfumes, moisturisers and shampoo have a lot in common and would fit in the basket.
However, Lakme's colour cosmetics range of lipsticks and nail enamels (Elle 18, Lakme Ultra and Wine collection) and other brands of eyeliners and face compacts, fall in the same bracket as Unilever's range of colour cosmetics like Elizabeth Arden and Calvin Klein, though not as premium as the latter.
Cosmetics has a high potential for dramtically increasing future growth, he said. HLL expects the proposed subsidiary for cosmetics to post a turnover of Rs 600-650 crore, said chairman KB Dadiseth.
Colour Cosmetics is a roughly Rs 200-crore business in India which is growing at a pace of 25 per cent per annum. Over the last few years, global names like Oriflame, Avon, Revlon, Amway and Benckiser have been making their presence felt in the domestic personal care market.
With the emerging competition, itwas necessary for Lakme to increase investments in order to drive the market with new marketing initiatives and new brand launches. With HLL's financial strength, the task has been made easy, feel analysts.
In skin care, which is worth around Rs 350 crore, HLL's Fair & Lovely brand dominates the fairness creams segment (Rs 185 crore market size). The cold/vanishing creams market at Rs 80 crore is dominated by Pond's. The moisturisers segment with market size at Rs 600 crore has the presence of both Lakme and Pond's. In the talcum powder segment which has a market of over Rs 220 crore, HLL's presence is negligible with Liril talc having over 2 per cent market share, Pond's dominates the market with a 68 per cent market share. HLL recently introduced the Denim talc whose market share is not known.
In the fragrance market, where the grey market is significant making it difficult to estimate the market size, HLL's presence is marked by the Denim brand in the male fragrances market. In the female frangrancescategory, Lakme has recently launched Elle 18 perfumes.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
