Whats up CK Ranganathan, chairman and managing director of CavinKare, says all this is routinesuch activities help fight brand fatigue keep them alive and fresh in the minds of the consumer. Relaunches are always around the corner as they revitalise brands, he told BrandWagon recently. When done properly, relaunches really help a brand. We may look at adding more brands down the line.
It is this very attributeto be able to stay on the ballthat has helped this single-product company (it started its journey in 1983), to grow into a big force in the Rs 17,300-crore personal care market in India managing over 25 products across a range of categories. Clear positioning and smart marketing have not only ensured steady growth for this Chennai-based company over the years, but has also helped the company take on multinationals in the most difficult market of fast moving consumer goods (FMCG).
As things stand, besides managing a diversified product portfolio comprising shampoos, fairness creams, deodorants and talcs, masalas and ready mixes, hair dyes and toilet cleaners, the company has made its presence felt in the dairy business through Cavins Milk, and the retail and services industry through unisex beauty salons under the brand Limelite and Green Trends, and in the restaurant business with CKs. The personal care segment alone accounts for 70% of the companys revenue, while the balance comes from the other businesses.
CavinKares goal is ambitious: To become a Rs 5,200 crore organisation by 2012.
Most of the categories in India are far from saturated.
With the exception of categories such as toilet soaps etc, none of the categories have seen penetration levels higher than 60%. There is a lot of scope for the category growth and it is good to have competition so that the categories grow faster, says Ranganathan. In value terms, we have a 11.5% share in the shampoo category, 80% share in the hair wash powder category and 4.2% in hair colour category.
In deodorants, we have a 4.2% share while in the talcum category it is at 6%, he adds.
So what makes CavinKare tick
Ramanujam Sridhar, chief executive officer, and founder of Brand-Comm, is of the opinion that CavinKare has a strong feel of the market and has an aggressive attitude towards growth. The company has widened its ambit of products and services to have a fair share of the common mans wallet. CavinKares entry to other lines of business only reaffirms the confidence of the top management that it knows the pulse of the consumer, he says.
CK Ranganathan, the person who led the sachet revolution in the Indian market, started his journey with Chik India, a partnership firm with just an investment of Rs 15,000. The company was renamed CavinKare Pvt Ltd in 1998. Years of studying and understanding the dynamics of mass marketing enabled him to take the company up the value chain and succeed in achieving the much-needed competitive edge.
We started off with just one shampoo brand called Chik. Today, our shampoo brands Chik, Nyle, Meera and Karthika together account for nearly a quarter of the overall shampoo volumes of India, making us Indias second largest shampoo manufacturer after Hindustan Unilever, says Ranganathan. For the record, the Rs 2,500-crore shampoo market in India is growing at 15% per annum and since the penetration level is just about 50%, the growth opportunity looks robust.
Similarly, in the Rs 850-crore hair colour market, which is growing 25% plus annually, CavinKare has two brands Indica for the mass market and Spinz for the urban audience. It has a 4.2% market share in this segment in terms of value.
It has the products and the marketing muscle. What it lacks perhaps is the appeal of an aspirational brand, says a senior marketing executive with a Delhi-based diversified group of companies.
To fill this gap in its product range, the company has started distributing Adidas and Jovan products. The idea is to develop an affordable range of fragrances, besides getting a presence in the growing male deodorant market, leveraging the benefit of its arrangement with Coty.
Besides having a strong line-up of products, what has worked in CavinKares favour is its single-minded focus on marketingworking with top global agencies to develop its packaging, advertising, media planningin other words the overall brand strategy. To stay top of mind, the company has roped in a bevy of celebrities including souths superstar and Bollywoods new found muse Asin, Genelia DSouza (who has acted in Telugu and Hindi films), television personality Ronit Roy, Prakash Raj, who has acted in Kannada, Tamil, Malayalam, Telugu and Hindi films.
Also interesting is the way it has broadbased its portfolio to cut out risk associated with price/demand fluctuations in one category. This is a problem that faces quite a few companies in India. Think Britannia Industries. It is over-dependent on one product, with biscuits accounting for 90% of its turnover last year. Tiger is Britannias highest selling brand, accounting for 30% of the companys sales in 2007-08.
That kind of dependence is perfect recipe for disaster, especially in a market where entry barriers are not too high and competition is really hotting up. Consider Colgate-Palmolive. Its single-minded focus on the oral-care market began to threaten its very existence, until it aggressively scouted for opportunities in the larger personal care space with Palmolive.
To its credit, CavinKare has had the gall to get into completely unrelated categories. It forayed into the food business with its pickle brand Chinnis and subsequently acquired the Ruchi pickle brand from Shyam groups Ruchi Agro Foods. This acquisition gave the necessary impetus to grow that category of business. Today, the company has developed a strong presence in the pickles category, manufacturing about 6,000 tonnes of pickle annually, which it markets under both the brands. The company has beefed up the Chinnis and Ruchi brand with other food products.
Similarly, in 2008, CavinKare stepped into the beverages market by acquiring a regional player. It now has a fruit drink under the brand Maa and is taking its early steps in the diary market through Cavins milk.
After setting its foot in the food business, retail or the service segment was the next logical extension. It got into the business of providing personal styling and beauty solutions through group company Trends In Vogue. Now the company has a network of unisex beauty salons. Today there are 60 salons spread across Chennai, Bangalore, Hyderabad, Delhi, Coimbatore, Trichy, Mysore. Plans are afoot to expand the network to over 100 in a year and become the largest salon services company in India.
The company has taken another huge risk by opening its first restaurant, CKs, at Puducherry. It is a fusion restaurant modeled on fast food chains, but has a strong influence of Indian culinary preferences. Getting into the restaurant business was a planned move, as we are already in the foods business through our brands Ruchi, Chinnis, Maa (beverages) and Cavins (milk), says Ranganathan. We need to wait and see on how our first couple of restaurants fare; then well tune and take the initiative forward, he adds.
Even while the company was growing steadily in the domestic market, it wanted to explore opportunities off shore. It is this hunger that made the company form an exclusive international business division way back in 1999.
The division was formed to handle sales and marketing of brands across the globe.
International markets offer a tremendous opportunity for expansion especially with a very large South Asian population dotting the globe. CavinKare has a sizeable presence in Bangladesh, Sri Lanka, Nepal, Malaysia, the Gulf countries and the USA and has a little less than 10% of its sales coming from international markets.
So where does leave the theory of core competence Sridhar of Brand-Comm feels, The theory of core of competence, which evolved in the Western countries might not be relevant for the Indian economy. We are still developing and the market here provides a lot of opportunities for firms willing to take a calculated risk.
The personal care segment is huge and so is the food service business. But knowing his penchant for growth, Ranganathan may already be scouting for his next big market opportunity.