The humble agarbatti, ubiquitous and fragrant, has caught the attention of some of the country’s best-known fast-moving consumer goods (FMCG) companies. Recent months have seen organised players either enter the market or consolidate their existing positions within the market with new and innovative launches.
Consider this: Godrej Consumer (GCPL), best-known for brands such as Cinthol and Hit, has recently stepped into the Rs 1,200-crore anti-mosquito incense-stick market, a sub-segment of the Rs 10,000-crore overall incense stick market in India. The product is called Goodknight Agarbatti. The launch, in a market dominated by unorganised players, is India’s first, legal anti-mosquito incense stick, experts say.
In an update last week on the business, GCPL said that Goodknight Agarbatti is winning share in a market dominated by illegal players. While the company did not specify the market share gained, analysts estimate that Goodknight Agarbatti could have gained about 5-10% share since launch in the December 2023 quarter.
“Goodknight Agarbatti uses a molecule, RNF, which is close to 2x more effective than most other registered molecules used in India. GCPL enjoys exclusivity to use this molecule in the medium term,” the company said. Analysts say that GCPL will have a first-mover advantage for at least three-four years in the anti-mosquito agarbatti segment, aiming for a 50% market share by the time rivals come out with a similar product.
Competitors such as ITC’s Mangaldeep, Zed Black from Mysore Deep Perfumery House and Cycle Pure Agarbathi from the Karnataka-based NR Goup have raised the fragrance bar in the broader incense stick market, blending elements such as rose, sandalwood, amber and jasmine, ensuring that products last longer, emit less smoke and have use cases beyond religious events (such as providing aroma within rooms or acting as an insect repellent).
ITC’s Mangaldeep, for instance, which produces over a billion incense sticks per month, has been focusing on premium fragrances, using digital channels for marketing and distribution and onboarding visually-impaired fragrance testers to figure out the best fragrance profiles for their incense sticks, according to industry executives.
Using their distribution might, competitive pricing (a pack of 10 incense sticks is priced at Rs 10-12) and aggressive advertising (Zed Black Agarbatti, for instance, is endorsed by cricketer MS Dhoni), organised players have been pushing their presence aggressively in the market.
“GCPL’s new product, for instance, rides the company’s extensive distribution network. This is helping it increase reach and win share from unorganised players,” says Sachin Bobade, vice-president, research at brokerage Dolat Capital.
However, some experts contend that the overall incense stick market in India remains highly fragmented, with 75-80% of the industry dominated by unorganised players. The big challenge remains shifting users from unbranded to branded use, especially in rural areas.
As Arjun Ranga, MD, Cycle Pure Agarbathi, said, “The challenge for us as organised players lies in becoming more relevant and prominent in a market of unbranded players.”
“Plus, margins are thin, since product prices remain competitive,” says G Chokkalingam, founder and MD of Mumbai-based Equinomics Research.
Yet, FMCG firms see opportunity as the government increases scrutiny of unbranded products, restricts cheap imports from China and Vietnam and looks at standardisation of the agarbatti market.