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GCPL Diversification into

CosmeticsBy :

Shivraj Chavan

Abhinav Mishra

Tanya ShindeAnuja Deshpande

Ankita Jalla

Kushal D Sankhe

Ankit Jodawat

Ankit Sharma

Harshada Khopkar

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Corporate DNA

Mission statement: Striving for excellence by nourishing

developing and empowering employees and suppliers

Vision statement: Strengthen our leadership positions in

India and rapidly globalize our business

Values: Heritage Transparency and Trust

Competencies:Strong distribution network

Efficient marketing has enabled GCPL to achieve high

penetration or high market share

Expertise in R&D and manufacturing

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Market Analysis Current cosmetics industry

size - US$950m, Expectedindustry size - US$1.4 Bn (By2015)

Cosmetics market growthrate - 15-20% (for the lastfive years)

Contribution by medium andlow priced category - 90%

Colour cosmetics market size US$60m

Wallet share for personal

care products-2.1%

37 38 31 38 38

28 2531

28 28

24 26 2425 23

11 11 14 9 11

0

20

40

60

80

100

120

All North South East West

Hair Care Personal Care Skin Care Oral Care

Share of spends on Personal Care products

Sources: Technopak , McKinsey Global Institute

Expected Per capita income by

2025 =7100 USD

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Competitor Analysis

Major Players:

Lakme, Emami, Marico, Himalaya, Maybelline, Synergie, LOral, Shahnaz

Hussain, Amway, Cavin care,Chambor, Revlon

Premium Players: MAC, Christian Dior, Estee lauder, Vichy

Future Players: Color Bar, Dabur

Brands classified as per the pricing of their offerings:

Mass market category- Rs 45 to Rs 200

Middle market - 200 up to Rs 800

High End market - Rs 800 to about Rs 5000

Premium Range - up to Rs 35,000 Lakme leads the overall cosmetics market with share 32%

Revlon leads the high end market with 70 % market share

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Consumer Analysis No. of people under the age of 35

830 Million (70% of population)

20 to 49 years-old age group predictedto grow by 7.1% over the next 10years.

Every year, the 20 to 24 age group

increases by 3 million. This particularage group is the one enjoying thehighest buying power increase

Middle class households with anannual income of 2-10 lakhs perannum which accounts to 8.3% of thepopulation

By 2016, more than half of householdsin selected 20* cities will be middleclass, while the high income segmentcould more than triple. Meanwhile theshare of low income households couldhalve

3225 21 19

8

48

46

4034

22

1724

3138

55

3 5 8 915

0

20

40

60

80

100

120

98-99 01-02 04-05 07-08 15-16

Low income Aspirants Middle class High Income

Source: NCAER/FCR

* THE 20 SELECTED CITIES ARE DIVIDED INTO 3 CATEGORIES VIZ- MEGA CITIES, BOOM TOWNS AND NICHE CITIES

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Consumer Analysis

Target group for international brands Women aged 23-50 yrs (Middle

and Upper income group) accounting to 10M in number

Expenditure on Skin Care products as a %age of total personal care

spending 25%

Percent share of all india make up sales by women aged 15-24 29.8%

Indian male cosmetics industry remains a nascent niche with a growth rate

of 6%

SEC A spends the highest in value on personal care products with Hair care

and Skin care attracting the largest chunk

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Buying Behaviour

Who? Predominantly females(Age 15-50yrs) across SECs A,B and

C

When? Buying is irregular and differs across product ranges. Make

up products bought on an irregular basis while other cosmetic

products are frequently bought

What? More inclined towards cosmetics which are easy to

remove and contain Natural Ingredients

What Influences? Recommendations by friends and beauticians

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Insights from Survey

Godrej as a brand stands for trust and experience

Customers prefer to buy Godrej products where highlevel of trust is required. Ex: Personal careproducts, safety equipments etc

Possible areas for product line extension for GCPL-Cosmetics, Food and beverages, Baby care productsetc.

Consumers switch brands based on

recommendations by friends and beauticians Godrej hair dye has the highest recall value amongst

its various product offerings

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Insights from Primary Survey-II

Consumers do not like push strategy and rather want to getattracted by the product

They buy make up products on an irregular basis as andwhen the need arises while other cosmetic products are

frequently bought Packaging is an important factor influencing the purchase

decision. Subtle colors are more appealing

People are more of category loyal than being brand loyalist

Brand switching is caused mostly by word of mouth

recommendations Customers like cosmetics which are easy to remove and

contain Natural Ingredients

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Thank You

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GCPL Overview

Promoted by Godrej & Boyce ManufacturingCompany, GCPL was formed in November 2000

GCPL is a major player in the Indian (FMCG) market with

presence in soap, hair dye and hair colour, liquid

detergent and toiletries categories Through acquisitions like Keyline, Rapidol, Kinky Group

and Godrej Global Mideast FZE; GCPL has also established

presence in the hair and hair colour, personal care and

toiletries markets of the UK, South Africa and middle east.

It has three state-of-the-art manufacturing facilities

across the country located at Malanpur (M.P) Guwahati

(Assam) and Baddi (H.P)

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STRENGTHS

Expertisein making value for money

products for masses

Strong distributionnetwork

Decades ofexperience and unparalleledunderstanding of consumerpreferences

inpersonal care

Companyis financiallysound and

continuesto operate onnegativeworking

capital

WEAKNESSES

"Me-too products,whichillegally mimic the

labels oftheestablished brands.These

productsnarrowthescope of FMCG products

inrural and semi-urban market

OPPORTUNITIES

Untapped rural market

Rising income levels, i.e. increase in

purchasing power of consumers

Large domestic market- a population of overone billion.

Export potential

High consumer goods spending

THREATS

The grey channel makes up about 60% of the

Indian cosmetics market

Limited product portfolio in categories that

are either highly penetrated or enjoy a highmarket share

Acute competition from players like LOreal

and Garnier at the premium end of the hair

colour market

Sales have remained stagnant in the liquid

detergent segment with the category itself

stagnating

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DIVERSIFICATION into COSMETICS

GCPL has vast knowledge of the consumer

preferences so we suggest GCPL to foray into

the growing Cosmetic market

Following products will be made available to

the customers1. Lipstick, lip gloss, lip liner, lip plumper, lip balm, lip conditioner and lip

boosters2. Foundation, Powder, Rouge, Concealer and Blush

3. Mascara, Eye Liner, Eye Shadow and Shimmer

4. Nail Polish and Nail Polish remover

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Why Cosmetics ??

India's per capita consumption of cosmetics and toiletries stands at US$0.68as against US$10 in Malaysia and Taiwan, US$12 in Japan and US$1.5 of

China thus showing a vast scope of growth

With increased awakening about cosmetics brands in rural India, the industry

size will grow to around US$1.4 billion from current level of US$950m

The cosmetics market has been growing at the rate of 15-20% for the last

five years Growth mainly from medium and low priced category that accounts for 90%

of the cosmetic market

GCPL has vast experience and understanding of customer preferences in

Personal Care category

GCPL has been catering to Indian masses for years with its products like

Godrej No.1 and Godrej Hair Dye

Godrej in its rebranding spree emphasizes on a modern approach and

feel, this makes Cosmetics a possible area of diversification

Lower penetration of branded cosmetics in Semi urban and rural markets

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Major Players - Cosmetics

Indian brands: HUL, P&G, Emami, Godrej, Himalaya and Dabur.

Foreign brands: L'Oral, Este Lauder, MAC, Revlon, Avon

Lakme is the current industry leader which primarily caters to

the lower middle class segment. Brands like L'Oral, Este

Lauder, Olay etc mainly target the high end consumers

GCPL has its presence in personal care products like soaps, talc

and hair colors. In sync with its vision and values, Godrej can

foray into skin care and beauty products for masses

Cosmetics market is on rise and players like Dabur and Colorbarare entering with a range of skin care products

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TargetSegment

Semi Urban and Rural emerging

markets

Women from the segments SEC

B and C Middle class households with

an annual income of 2-10 lakhs

per annum which accounts to

8.3% of the population

By 2016, more than half ofhouseholds in selected 20*

cities will be middle class, while

the high income segment could

more than triple. Meanwhile

the share of low income

households could halve

ssss

3225 21 19

8

48

46

4034

22

1724

31 38

55

3 5 8 915

0

20

40

60

80

100

120

98-99 01-02 04-05 07-08 15-16

Low income Aspirants Middle class High Income

Source: Marketing White Book 2009-10

* THE 20 SELECTED CITIES ARE DIVIDED INTO 3 CATEGORIES VIZ- MEGA CITIES, BOOM TOWNS AND NICHE CITIES