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Thursday, Feb 07, 2002

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Leveraging Lakme

Ratna Bhushan

Faced with fast changing industry dynamics and a dwindling image these past few years, Lakme Lever finally seems to be giving its competitors a spirited fight.

THE Orchids may have finally breathed in peace. For all the damage that this super premium cosmetics range caused to Lakme Lever's image, the `Shimmer Shine Sparkle' collection seems to be repairing. The latest collection from Lakme Lever has managed to put the brand on par - if not necessarily on top - with the best names in the industry on the image parameter. The period between September and December 2001 saw the brand's sales go up by 42 per cent, at a time when the industry growth was hovering at 16 per cent. "In real terms, we have recorded a 28 per cent increase, which is a direct effect of the Fashion Week line," informs Anil Chopra, Business Head, Lakme Lever Ltd.

For a brand that has been around for half-a-century and led from the front all these years, Lakme - the bastion of cosmetics and skin care - suddenly found itself being given a raw deal by the consumer around the mid-1990s. First, Revlon staged an entry through a 74:26 joint venture with Modi Mundi Pharma, Maybelline followed riding on its remarkable shade advantage, and competition further intensified with the arrival of a battery of names such as Oriflame, Avon and Amway, all selling under the banner of direct selling companies and armed with respectable global credentials. While these brands ensured that the premium end of the colour cosmetics and skin care segment catered to the image- conscious consumer, inexpensive Chinese brands filled whatever gaps existed at the mass level.

Acknowledges Chopra, "On the image dimension, the Lakme brand probably needed to be more contemporary and modern. While Lakme was recognised as a safe, high quality brand with a deep understanding of the Indian woman, we needed to build the fashion dimension of the brand."

As an industry analyst points out, the danger was in losing altogether the respect and trust of the upwardly mobile GeneratioNow consumer - fast turning out to be the biggest influencer in brand purchase decisions. A sentiment echoed by Kanika Kaushik, an 18-year-old college student from Delhi, "Lakme was good earlier, when very few cosmetic brands were available in India. But with so many foreign brands entering the market, Lakme's image deteriorated. Very few of us wanted to be seen using the brand; we would rather go for brands with a more with-it image."

Two years ago came the glitzy Lakme Fashion Week, a national-level event packaged with large doses of glamour and contemporary fashion designers. Lakme found itself on the ramp, and began the process of rewriting its fashion credentials. Here, Chopra is quick to point out that despite the presence of the Revlons and the Maybellines, it was Lakme that was chosen to co-partner the Fashion Week. "The Fashion Week association made us look a little more international and contemporary. It gave us a global connotation," he observes.

While the previous Lakme Fashion Week did see the creation of six individual colours, the range wasn't comprehensive, admits Chopra. "The realisation was that women wanted to own designer series, not individual shades. A need gap that the current Shimmer Shine Sparkle range addresses, what with the single fashion statement it makes," he says.

Henceforth, the creation of a fresh line to coincide with the Lakme Fashion Week will be an annual event. So does that mean Shimmer Shine Sparkle will die a natural death? Lakme Lever isn't telling, but maintains that the decision will depend on the fashion statement of the season.

What's certain is that the company will collate influences from international fashion events to infuse global trends into its portfolio back home. Lakme Lever now partners with Milan-based Intercos Italia, a Euro 130 million cosmetics giant, which gives the former access to global cosmetic technology.

Elle 18, Lakme's mass brand aimed at teenagers, meanwhile, is yet to be attached to a similar property. "While we haven't found a similar national property for Elle 18, if it does emerge we could take it," says Chopra. While Elle 18 hit big time initially, industry analysts are of the opinion that consistency in quality has become a problem with the brand, which Lakme Lever needs to address urgently. Also, Modi Revlon's decision to enter the teenage segment with an international brand by mid-year may spell bad news for Elle 18. Today, Elle 18 accounts for about 30 per cent of Lakme Lever's colour cosmetics sales.

In fragrances, the company had to withdraw its brands Ivana and Shie from the market not too long ago. While industry analysts attribute the move to slow offtake, Lakme Lever maintains that the decision came in the wake of HLL's policy of pruning and rationalising brands, and instead focus on its core thrust areas of colour cosmetics and skin care. For the time being, therefore, hair care and fragrances are out of the reckoning.

The skin-lightening segment, which accounts for almost 60 per cent share of the skin care category, has recently witnessed the entry of Lakme Fair Perfect Creme in tube format. Interestingly, while HLL already has a key brand in Fair & Lovely in this segment, the company doesn't foresee the two brands' interests overlapping. Meanwhile, last summer saw Lakme Lever debut in the minis segment with fragrant nail enamel, to be followed by water-proof eyeliner and similar `breakthrough' technology.

Industry watchers see Lakme Lever's entry into the minis segment as a reaction to Modi Revlon's move to introduce smaller pack sizes for lip colour and nail enamel around two years ago. Modi Revlon's strategy had dented Lakme's hitherto unbeatable price advantage (owing to the fact that it did not need to import content). At a time when stagnation had set in within the colour cosmetics industry, introducing relatively lower-priced smaller packs (for example, nail enamel in 8 ml bottles instead of the conventional 15 ml), was a strategy few players could afford to circumvent. The colour cosmetics market is currently estimated at roughly Rs 250 crore, of which Lakme's share hovers around 50 per cent, followed by Revlon.

In the regular size segment, prices of almost all players have now evened out within more or less the same bracket. Against Rs 89 for a Lakme lip colour, Revlon's lipsticks are priced at Rs 95, while Maybelline's are priced at around Rs 100.

One growth model that has emerged in recent years is that of branded beauty salons, a business area where Lakme Lever has the early bird advantage. Not only are branded salons high-potential growth areas by themselves, these also serve as significant points of sale for related and synergistic brands. While historically, company-owned Lakme Beauty Salons have existed in Delhi, Mumbai and Chennai for over two decades, the last 18 months have seen some 30 new salons being set up across metros and mini metros through franchisees. The company sees salons as a business model that gives it turnover, profits and strength to equity.

The objective now is to set up 200 salons within two-three years, and Lakme Lever intends to tie up with brands related to personal grooming in the forthcoming months. In addition to skin care, hair care and colour cosmetics, the Lakme Lever branded salon model could also finalise tie-ups in categories such as hair dryers, among others. A tie-up with hair-care major Wella has already been firmed up. On the retail front, while the combined distribution strength of Lakme and Elle 18 straddles 65,000-odd outlets, Lakme's skin care range is distributed across one lakh stores.

Meanwhile, competitors such as Modi Revlon, Oriflame and Avon have announced aggressive expansion plans as well, and the Rs 3,000-crore colour cosmetics and skin care industry promises more churn. So is Lakme Lever ready to regain its place On Top of the World. The mirror will tell.

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