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Competition is key to survival

May 17, 2007 12:38 IST

Monthly household shopping list, 1987: Lipton Tea, Nescafe, Kisan jam, Amul butter, Modern Bread, Britannia biscuits, Surf washing powder, Vim, Bengal Chemical Phenyl, Lux soap, Binaca toothpaste, Charmis cream, Sunsilk shampoo, Tata Eau De Cologne.

How many of the brands above survive in my 2007 list?

Answer: None.

It is well established that the signals for consumer goods marketers are embedded in the transitory nature of the middle class household's monthly shopping list. For competitors in India, the permanence of global competition, slimmer margins and fickle tastes are obvious ones.

But the striking point is the provenance of the replacement brands. Not all are multinational imports that flooded the shops with the fall of tariff barriers. New domestic companies have more than held their own in this tough new world - maybe not as market leaders but certainly as significant challengers.

Where Hindustan Lever dominated the kitchen and bathroom, a mix of domestic and imported variants weighs in. But, unlike in the past, their presence is not necessarily permanent or even of a long duration.

Depending on the persuasive powers of the local shopkeeper, Pear's soap might easily be replaced by a Biotique shower gel one month and a FabIndia herbal variant the next. Vim has been variously jettisoned for the latest fragrant dishwashing liquid from Godrej or a Malaysian competitor at the same price.

Equally, Lipton Green Label has long been banished in favour of Earl Grey. Nescafe - which earned coffee the endearing generic title of "Nescoffee" in Bengal - has been replaced by Dark Forest, a single-estate coffee from the Café Coffee Day chain. Britannia's Nice, a childhood favourite, is occasionally rotated with McVities Digestives. Binaca went through several confusing name changes before bowing out.

After some patriotic attempts to defend butter from Amul, India's cooperative movement showcase, the battle was lost to low-cal variants. Surprisingly, Bengal Chemical's unfashionably packaged and pungent Phenyl held its own for years - till Reckitt Benckiser's sweet-smelling variant made an appearance.

As for Tata's Eau De Cologne and Moti Soap, the irritatingly long-lasting soap that was occasionally inflicted on us as a measure of household economy, both vanished when Tomco was acquired by Hindustan Lever in the early nineties. That was the first big-ticket acquisition in the Indian corporate world that presaged the M&A fever of the last nineties and early twenty-first century.

Today, at least a third of the current monthly shopping list comprises domestic brands. Not all of them are cheaper than competition from multinationals.

There is an irony in this. When economic liberalisation began, many predicted the imminent demise of Indian brands at the hands of aggressive foreign products with their sophisticated products and a readymade market in India's predilection for all things foreign.

Yet, it is Cavincare, a Chennai-based arriviste that grabbed number two spot in shampoos. Himalaya, better known as a purveyor of the liver tonic Liv 52, retails face washes, shampoos and toothpaste both in India and south-east Asia, and is doing reasonably well from them.

Electricals company Anchor proved an unlikely challenger in toothpaste, worrying the Big Two Colgate and Lever with a "vegetarian" variant. The company has now sold its original business - itself a household brand name - to Matsushita, the better to focus on its consumer products.

And who would think Marico, maker of the humble hair oil, would be one of eight Indian companies in Standard and Poor's of future global challengers.

Perhaps the irony of the emergence of these domestic competitors is that they have emerged and flourished in an era of open, including foreign, competition. Ironically, it is precisely in defence of domestic business that the early protests against liberalisation arose.

It is also worth noting that the emerging domestic success stories - and they represent plenty more in other industries - are never heard demanding protection from global competition.

As importantly, their presence alongside those of foreign and entrenched domestic competitors highlights the fact that open competition benefits the consumer more than any of the older government watchdogs (MRTP being one example) ever did.

To be sure, access to wide choice alone may not hugely benefit a consumer's life. Does it really, truly matter, for instance, if floors are swabbed with Phenyl or Lysol? Certainly the benefit that accrues from paying a small premium for a more pleasant-smelling home cannot be monetised.

All the same, competition acts as a natural price control device - witness the fall in the cost of consumer durables and airfares over the past decade.

As importantly perhaps is how much the proliferation of choice has added to consumer awareness. It is possible now to choose between a brand of instant noodles that contains mono-sodium glutamate and one that doesn't; to buy (or not) a product that is not tested on animals or one that is packaged in glass rather than plastic.

These may seem irrelevant but in the long run, competition-induced consumer awareness creates a virtuous circle of greater corporate responsibility to the consumer and, ultimately, better products.
Kanika Datta