Cotton Wool/buds/pads in India- MARKET REPORT
Headlines
·
Cotton wool/buds/pads grows by
7% in value terms to reach sales of Rs305 million in 2007.
·
The advent of modern retailing
drives growth of branded cotton wool/buds/pads.
·
Manufacturers increase unit
prices in 2007.
·
Johnson & Johnson Ltd
dominates in a highly unorganised market.
·
Cotton wool/buds/pads is
predicted to grow by a CAGR of 2% in value terms over the forecast period.
Trends
·
The rise in modern retailing
provided a boost to sales of branded cotton wool/buds/pads in 2007. With the
major player, Johnson & Johnson Ltd, tying up with various
supermarkets/hypermarkets and enhancing its presence in upmarket health and
beauty retailers such as Health & Glow in cities, cotton wool/buds/pads
witnessed a slight increase in value sales in 2007.
·
The growth rate of cotton
wool/buds/pads in 2007, at 7%, was faster than the review period current value
CAGR of 5%, mainly due to price increases by manufacturers in order to sustain
their margins and cover the rising cost of raw materials and production. In
addition, the growing presence of branded cotton wool/buds/pads in
supermarkets/hypermarkets and health and beauty retailers served to boost sales
of branded cotton wool/buds/pads.
·
Average unit prices increased
in 2007, following category leader Johnson & Johnson Ltd’s hike in the unit
price of Johnson’s Cotton Buds. Since Johnson & Johnson is the largest
national player in cotton wool/buds/pads, other manufacturers followed suit and
increased prices. The price hike was mainly to cover the rising cost of raw
materials and overheads in order to sustain margins.
·
Cotton buds dominated in 2007,
with 94% of value sales, followed by cotton wool with 6% of value sales. Cotton
pads are not commonly available and constituted less than 1% of value sales of
cotton wool/buds/pads in 2007. The dominance of cotton buds arises from the
presence of Johnson & Johnson, a national branded player in cotton buds. On
the other hand, cotton wool and cotton pads are littered with a number of
regional and unorganised players.
·
Cotton wool is crowded with a
number of regional and unorganised players, and lacks any national level
player. Of the total cotton wool/buds/pads category, cotton wool accounted for
6% of total value sales. Cotton wool is marred by lack of differentiation,
product innovation and brand building activities.
·
Cotton pads has a negligible
presence, accounting for less than 1% of value sales of cotton wool/buds/pads
in 2007. Low product availability and the price-conscious nature of most
consumers towards cotton wool/buds/pads makes them less receptive to higher
priced cotton pads, and they end up using cotton wool instead.
·
The key purchasers of cotton wool/buds/pads
in India are middle class and upper middle class households. Lower middle class
households generally tend to purchase unbranded products from the unorganised
market due to cheaper prices. The later product launches have been established
through newer product variants.
Competitive Landscape
·
Cotton wool/buds/pads was
dominated by Johnson & Johnson Ltd in 2007, which held a share of 93% of
the category. The company faces competition from a number of regional and local
players with economy brands, as well as the unorganised market, which sells
unbranded products mostly through independent small grocers and
chemists/drugstores.
·
Johnson & Johnson lost
share in 2007, dropping from 94% in 2006 to 93% in 2007, as private label and
regional brands advanced due to their lower pricing compared with the leader
and their increasingly sophisticated packaging, look and feel. Due to the
commodity-like nature of the category, consumers are open to substituting one
brand for another, as long as the appearance of the product and packaging looks
reasonable. Thus, with the expanding presence of private label and regional
brands in supermarkets/hypermarkets and health and beauty retailers, Johnson
& Johnson lost some ground.
·
There were no key launches in
cotton wool/buds/pads in 2007.
·
Since cotton wool/buds/pads are
a low margin category, manufacturers did not advertise on television throughout
the review period.
·
There were no packaging
innovations in cotton wool/buds/pads in 2007.
·
National brands from
multinationals such as Johnson & Johnson Ltd are considered to be premium.
Such brands have a uniform presence across supermarkets/hypermarkets,
independent small grocers and health and beauty retailers. Standard brands are
usually regional brands such as Premier Cotton buds, Krish Surgicals Absorbent
cotton wool and Butterfly cotton buds, which are available usually in
independent small grocers and chemists/drugstores, and are priced cheaper than
national leading brands. Unbranded products from the unorganised market, usually
retailed through chemists/drugstores and priced substantially lower than
standard brands are considered to be economy products.
·
Private label held a share of
2% of value sales of cotton wool/buds/pads in 2007. As this is a low
involvement category, consumers are more willing to try new brands and private
label products, which are priced lower than leading brands. Thus, private label
has benefited as a result of the increasing number of supermarkets/hypermarkets
being opened across the country.
Prospects
·
Cotton wool/buds/pads is likely
to be an underperformer in the disposable paper products market in the forecast
period. As the category faces significant competition from the unorganised
market, and is marred by its low margins, lack of product innovation and
brand-building activities, it is unlikely to post strong growth rates in the
forecast period.
·
The forecast growth rates are
expected to gradually fall over the forecast period as cotton wool/buds/pads is
a commodity-like product in India, with a large number of unbranded players in
every region. As consumers are price-conscious and are unwilling to spend in a
low-involvement category such as cotton wool/buds/pads, growth rates are
expected to fall gradually over the forecast period. Nonetheless, the growth of
supermarkets/hypermarkets is expected to provide a minor boost to sales of
branded cotton wool/buds/pads.
·
Potential forecast threats
mainly arise from the unorganised market for cotton wool/buds/pads, which
distributes its products through chemists/drugstores at substantially cheaper
prices than the organised market.
·
The unit prices of cotton
wool/buds/pads are expected to increase over the forecast period due to an
increase in the price of raw materials and overheads, in the form of rises in fuel
prices and transportation costs.
·
Johnson & Johnson Ltd, the
main player in cotton wool/buds/pads, is likely to lose share in the forecast
period, as it faces growing competition from emerging regional players such as
Premier Tissues India Ltd.
Sector Data
Rs million
2002 2003 2004 2005 2006 2007
Cotton
wool/buds/pads 244.3 255.0 265.4 275.3 284.1 304.8
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
% current value
growth
2006/07 2002-07 CAGR 2002/07 TOTAL
Cotton
wool/buds/pads 7.3 4.5 24.8
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
% retail value
rsp
2006 2007
Cotton buds 94.5 94.0
Cotton wool 5.0 5.5
Cotton pads 0.5 0.5
Total 100.0 100.0
Source: Trade associations, trade press,
company research, trade interviews, Euromonitor International estimates
% retail value
rsp
Company 2003 2004 2005 2006 2007
Johnson &
Johnson Ltd 96.0 95.0 94.5 94.0 93.0
Private Label 1.0 1.0 1.0 1.0 1.5
Others 3.0 4.0 4.5 5.0 5.5
Total 100.0 100.0 100.0 100.0 100.0
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
% retail value
rsp
Brand Company 2004 2005 2006 2007
Johnson's Cotton
Buds Johnson & Johnson
Ltd 95.0 94.5 94.0 93.0
Private label 1.0 1.0 1.0 1.5
Others 4.0 4.5 5.0 5.5
Total 100.0 100.0 100.0 100.0
Source: Official statistics, trade
associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
Rs million
2007 2008 2009 2010 2011 2012
Cotton
wool/buds/pads 304.8 313.0 319.7 324.5 327.8 329.7
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
International estimates
% constant value
growth
2007-12
CAGR 2007/12
TOTAL
Cotton
wool/buds/pads 1.6 8.2
Source: Official statistics, trade
associations, trade press, company research, trade interviews, Euromonitor
International estimates
