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Aarati Krishnan

AFTER scouring the store shelves for bargains for the last couple of years, urban consumers are now willing to try out expensive FMCG products.

Listed companies are taking the cue. Most product launches over the past two quarters have been of premium brands or exotic lifestyle products.

Hair colours at Rs 399 a pack, styling spray at Rs 195 a canister, shampoos for coloured hair at Rs 120 a bottle, face wash at Rs 95 a tube, conditioning soufflés, shower crèmes... Priced several notches higher than the current product range, these launches hope to whet the urban consumer's appetite for "aspirational" products.

With the shampoo market expanding at a fast clip, both Hindustan Lever and P&G have added new high-end shampoos in the recent months. Lever's new Lakme Hairnext shampoo is 15 per cent dearer than Clinic All Clear, till recently the most expensive shampoo brand in its portfolio. It is also priced at a hefty 60 per cent premium to the popular Sunsilk range.

Lever's new skin care brands - Perfect Radiance and Lakme Matteffect - are priced at a 50 to 100 per cent premium to the Fair & Lovely range. "The recent product launches by listed companies are an attempt to regain the premium slot after the debilitating price wars of the past year. It is brands such as Garnier and Revlon that now dominate consumer mindspace as premium brands," says an FMCG retailer.

Companies have also redoubled efforts to tap into nascent segments such as hair colour, conditioners, shower gels and deodorants. Growth in the hair colour market revved up to 20 per cent in 2004-05, from just 7 per cent the previous year.

Henkel SPIC, which recently unveiled two new hair colour brands for home use, says that it sees the market for premium hair colour growing at 40-45 per cent, as consumers upgrade from dyes to fashion colours.

Along with high-end shampoos, Lakme has unveiled a range of hair styling sprays and a conditioning soufflé, under its Hairnext range. Marico Industries recently added a conditioning potion and an after-shower cream for men to its hair care range.

Mr Satish Kumar, Managing Director of Henkel SPIC India, says the high growth rates in these categories are partly a function of the small base.

But he doesn't doubt their growth potential.

"Market penetration in categories such as hair coloration, deodorants and cosmetics is still in the single digits. These markets will expand with higher purchasing power. The brisk business done by beauty salons and gyms is a clear indicator that consumers are willing to spend more on beauty, health and wellness," he says.

Do retailers see the high-priced products flying off their shelves? "There is no doubt that the demand for premium products is growing," says Mr R. Subramanian, Managing Director of grocery chain Subhiksha. But he sees such a trend only for select products.

"We expect non-functional and purely aspirational products to be the key growth engine for FMCG companies in future," he says, pointing out that consumers are willing to pay a premium for beauty, health and food products, but not for detergent powders or cleaning bars.

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