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A Mahendran, former Managing Director of Godrej Consumer Products, is creating a new segment in the ₹4,500-crore Household Insecticide (HI) category at the bottom of the pyramid.
Through his three-year-old ‘synthetic’ start-up, Global Consumer Products, Mahendran has created price points which are going to be the lowest in the liquid vapouriser category at ₹36 under its DND (Do not Disturb) brand of mosquito repellents.
With affordability being the key to further penetrate into the category, Global Consumer believes it will be catering to 50 per cent of the Indian population which has yet to enter the category with its pricing proposition.
“We are addressing those with an income of less than ₹15,000 per month and have never used any HI product. That will be about 50 per cent of population which exists at the base of the pyramid,’’ said Mahendran, CMD & Co-Founder, Global Consumer Products.
Passing on the benefits of GST is also one of the reasons for entering the bottom of the HI category.
“During the pre-GST days, HI had a tax rate of 26 per cent which has now come down to 18 per cent GST. This gives us a benefit of 8 per cent which we have passed on to the consumer with new pricing in the category. In fact, nobody has managed to give this kind of affordable pricing in HI as profitability would get impacted but we have decided to take a hit on our margins,’’ added Mahendran.
With its new price offering for DND at ₹36, the FMCG company almost halved the price of the market leader Goodknight (from Godrej Consumer Products) which is pegged at ₹72 for its refill vapourisers. DND will continue to have its premium liquid vapouriser pegged at ₹78 to cater to the top of the pyramid consumers.
Today, urban penetration is at 65 per cent, while rural penetration stands at 15 per cent in the ₹4,500-crore HI category.
“We want to bring in non-users of the HI category with our affordable pricing and at ₹36 which works out to ₹1 per night of usage in a month,’’ he added.
Backed by big ticket investors like Goldman Sachs and Mitsui Global, Global Consumer Products, is also planning to take its HI products to countries in Africa.
However, in terms of market share, the young FMCG player still has a lot of catch up to do since stalwarts like Godrej Consumer(55 per cent) followed by MNCs like SC Johnson (16 per cent) and Reckitt Benckiser (10 per cent) continue to dominate the segment.
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