Himalaya needs to reach out to more consumers
Increasing consumer demand for natural products presents ayurvedic brand Himalaya many opportunities in the FMCG space. But will they grab the opportunity? BE explores.
The bustling Indian FMCG sector is worth over Rs 86,000 crore, growing at 15% and the potential that the space holds makes it an attractive avenue for businesses to enter. One such entrant is pharmaceutical company Himalaya. Started in 1930 with a vision to contemporarise Ayurveda, Himalaya has formulate popular drugs like Liv.52, Cystone and Serpina that made it a household name.
However, 69 years after incorporation, in 1999 Himalaya turned to FMCG and today is a Rs 1,000 crore brand growing at 26% CAGR in India and 35% CAGR internationally.
Ravi Prasad, executive chairman, The Himalaya Drug Company is optimistic about the FMCG space. Reminiscing the decision to enter the space, Prasad says, “Global trends in personal care began to change in the 90s. Customers were going ‘back-to-nature’ and were demanding herbal and natural therapies.
The general perception was that products containing herbal actives were gentler on skin and safer compared to chemical products. These evolving trends presented interesting opportunities for Himalaya,” he says. The R&D strength that the company possessed, due to its pharmaceutical lineage, made the move to herbal personal products easy.
Himalaya’s first offering in the personal care space were personal care products under the brand Ayurvedic Concepts in 1999. Subsequently, the company has launched 63 products in personal care, nine in baby care and 66 in pharmaceuticals. The consumer product division contributes 40% to the company’s turnover in India, while internationally the division contributes 55% to its kitty.
In 2001, two years after entry into personal care, Himalaya undertook a massive rebranding exercise — from changing the logo and product packaging to redoing the company’s website. Ray+Keshavan helped them create the umbrella brand Himalaya Healthcare.
“Earlier the personal care range was marketed as Ayurvedic Concepts, but even shopkeepers found it difficult to sell. The Himalaya name gave brand the momentum it needed,” says Sujata Keshavan, co-founder, Ray+Keshavan. The rebranding exercise also made way for their entry into international markets. When compared to other pharmaceutical companies like Zydus Cadilla or Paras Pharmaceuticals, Himalaya has more offering in the personal care space — from hair care, skin care, dental care, baby care and health care.
In India, Himalaya is currently focused on urban markets where it is present in modern retail, general trade and pharmacies — the brand also have over 126 exclusive retail outlets to help customer experience the brand. Himalaya works with Meridian and Starcom for its advertising requirements, but compared to heavyweights like HUL & P&G in the FMCG space, spends a paltry Rs 10 crore on its marketing.
Saket Gore, business head, consumer products says, “Our marketing is mainly focused on engaging the customer, creating awareness for our products and increasing availability and accessibility. We are not a brand given to high decibel advertising.”
Therefore, product trials — sampling, information dissemination, advertorials and word-of-mouth has been the route for Himalaya. “The fact that our personal care division is growing at a rate of over 40% is testimony that our strategy is working for us,” explains Gore.
Internationally Himalaya has been more successful — as the 35% CAGR indicates. Some of the important markets for the brand abroad are US, Russia, South-East Asia and CIS countries among others.
“For every international market we have localised and customised our strategy,” explains Prasad. “We do not operate as an Indian Ayurvedic company catering to ethnic communities residing overseas. We have consciously targeted the mainstream consumer and made investments in educating the local population about Ayurvedic products,” he says. Himalaya also partners with leading distributors and retailers like Whole Foods, Vitamin Shoppe and GNC in the US to help them be as local as it can.
Part of its strategy also has been to develop product range just for a single market based on the demand there. For example its range of organic products, called ‘Organique by Himalaya’ — made from organic herbs — was launched to tap the booming organic industry in the West,explains Prasad.
Even internationally, Himalaya relies largely on trials and word-of-mouth to gain traction. While they are in no rush, some operators in the same space think Himalaya should dig their heels in some more. Harsh Agarwal, director, Emami Industries says, “It is a natural ingredients brand and has created a niche for itself in the herbal area space. But they can still be very aggressive in their marketing and look at smaller towns for more customer acquisition.”
The company is aware of the potential and going forward, will broad base their distribution to reach more customers,” says Prasad.
Pinakiranjan Mishra, partner & national leader, retail & consumer products practice, E&Y, thinks the brand name — Himalaya is itself a good advantage for them. “The natural connotation that the brand name has is their biggest advantage and they should leverage it better,” says Mishra. The relaxed pace probably comes from the fact that Himalaya is a partnership firm unlike HUL or P&G which are public limited MNCs.
A part of Himalaya Global Holdings, The Himalaya Drug Company is a Manal-family investment entity, which owns assets by virtue of being the parent of Himalaya. However the company is managed by independent professionals, while the family retains ownership control.
Its patience has helped the brand grow but for it to move forward and take on the biggies, Himalaya will need to move out of its comfort zone. “There is immense opportunity for Himalaya in the small market. But it has to build consumer connect. They are still perceived as a clinical and therapeutic brand and do not exude the warmth that a brand like Dabur does.
They have a huge potential, but are lacking on the marketing front, which needs more push,” explains VS Sitaram, operating partner, IEP, who until a few months back was the COO of Dabur’s consumer care division. While industry observers want the company to change colours, Himalaya is in no hurry to shed the pharmaceutical tag. Customers, who have used the product, find it sticky and go back for more. But those who haven’t heard of it remain oblivious to its presence. The trust that brands wish from consumers is probably the easiest part for Himalaya.
What it needs to do to reach out to more of them. What remains to be seen is whether Himalaya continues its pursuit of FMCG excellence or goes the Paras and Zandu way in the years to come.