>India Consumer: January 2010: Food category outpaces HPC category’s growthChart

Retail sales off-take down marginally in Jan-10:

•FMCG sales grew by 9.5% YoY in Jan-10, compared to 12.1% growth in YTDF2010, as per AC Nielsen data for Jan-10.

•Top 10 players continued to witness deceleration in sales growth, with sales in Jan-10 growing 4.9% vs. 7.4% in YTDF2010. Industry growth was down marginally to 9.5% in Jan-10, as against 10% in Dec-09. HUL, Dabur and Marico witnessed a decline in revenue growth for Jan-10.

■ Food’s category outpaces HPC category growth in Jan-10: Laundry volume growth continues to witness significant acceleration (16% growth in Jan-10), although value growth remained muted at 2%. In our view, strong volume growth in laundry is on account of higher fill levels being offered by the industry participants. The noodle (24%), skincare (18%), biscuit (18%), chocolate (15%) and tea (14%) categories grew much faster than the industry. Coffee and talcum powder volume remained negative, with volumes down 4.4% each in Jan-10 (YoY basis). Despite high ad-spend in shampoo, the category registered flat growth in Jan-10. Interestingly, P&G, ITC, Nestle and Britannia’s retail sales off-take have grown faster in Jan-10 as against the growth witnessed for YTDF2010.

■ HUL(-0.9% growth in Jan-10 vs. 4.6% YTDF2010) lost market share sequentially across most categories (viz. laundry, skincare, toothpaste and coffee). HUL improved market share sequentially, however, in soap, shampoo and tea. HUL’s soap market share seems to be stabilizing at lower levels, as HUL has been investing heavily in its brands. Amongst the brands, Lux (price hike in Jan-10) lost market share (-30bps) sequentially, while Lifebuoy gained 20bps during Jan-10. Surf and Wheel were able to maintain share sequentially, but Rinlost as much as 25bps market share in Jan-10. HUL has already taken a price cut in Rin to arrest the market share decline. Meanwhile, P&G’s Tide gained 60bps sequentially in Jan-10.

■ Dabur (4.5% growth in Jan-10 vs. 8.2% YTDF2010) saw a slowdown in retail sales off-take in Jan-10, but continued to gain market share in toothpaste (primarily driven by Babool). Dabur Hair oil revenues have declined the most in last four years (down 5.5% in Jan-10), and Dabur lost 250bps market share (YoY) in Hair Oils.

■ Colgate(9.6% in Jan-10 vs. 9.7% YTDF2010) –although it has been able to maintain its seven-year high market share in toothpaste, its Colgate Dental Cream market share saw a decline, whereas Cibaca gained market share sequentially. Colgate’s toothpowder volumes have continued to decline since April-09.

■ Nestle (14.8% in Jan-10 vs. 13.8% YTDF2010) witnessed a marginal decline in its noodles market share in Jan-10 (16bps YoY).All other categories –coffee, chocolate, milk powder and baby foods –saw a year-on-year improvement in market share (100-500bps). Nestle’s coffee market share continues to improve, reaching a new lifetime high of 51.7% in Jan-10.

■ GCPL (12.6% in Jan-10 vs. 16.1% YTDF2010) improved its soap market share (+112bp YoY and +16bp MoM), primarily driven by Godrej No. 1, while Cinthol maintained its share in Jan-10. Hair color growth has slowed down dramatically from about 12% in 9MF2010 to about 2% in Jan-10. 􀂾Marico’s (-2.9% in Jan-10 vs. 5.2% YTDF2010) muted revenue growth continued in Jan-10, as it lost market share in hair oil and coconut oil on a year-on-year basis, but both categories interestingly witnessed market share gains sequentially. Parachute coconut oil has now witnessed a volume decline in market share on a YoY basis for the last nine months in a row.

■ P&G (15.5% in Jan-10 vs. 14.8% YTDF2010) has witnessed an acceleration in growth rate, driven by improvement in market share in laundry and feminine hygiene. Head and Shoulders gained share (+20bps MoM), while Pantene lostshare (-12bps MoM). The skincare category gained 50bps YoY, albeit off alow base (1.5% market share in Jan-10), driven by the launch of the Olay skin care product portfolio in India.􀂾Britannia’s(4.9% in Jan-10 vs. 1% YTDF2010) brands mostly maintained market share sequentially; retail sales-off take saw a sharp improvement in Jan-10 (YoY).

■ ITC (11.2% in Jan-10 vs. 8.1% YTDF2010) gained 120bps YoY in soap market share, driven by Vivel (+60bps). ITC’s wheat flour lost as much as 500bps sequentially in Jan-10.

■ L’Oreal (19.7% growth in Jan-10 vs. 26.1% YTDF2010) witnessed acceleration in growth on the back of improvement in market share in hair color and skincare (YoY). The company now enjoys an lifetime-high market share in the hair color category.

To read the full report: INDIA CONSUMER