In recent years, the hair care industry in India has experienced significant growth due to an increase in the usage of high-quality branded hair care products by a large portion of the Indian population. According to the Nielsen Retail Audit Report, hair care products account for approximately 8% (Rs. 91.5 billion) of the estimated Rs. 1,611 billion Fast Moving Consumer Goods (FMCG) market in India. The growth rate for the hair care industry is at 14%, slightly higher than the overall industry average of 13.4%. Key components within this segment include shampoo and hair oils, such as coconut oil.
The hair oil manufacturers and dealers have successfully expanded the reach of hair oil products into rural areas by adopting marketing strategies focused on rural distribution campaigns. According to the Nielsen Retail Audit Report, the average prices for hair oil products have increased from Rs. 22.25 per 100 ml in 2008 to Rs. 23.74 per 100 ml in 2009. In India, there are three main categories of hair oil: light hair oil, which has seen significant growth due to consumer preference for lighter and more contemporary options.
According to the Nielsen Retail Audit Report, the sales of light hair oil in 2009 amounted to Rs. 6,828 million. This market is primarily dominated by urban areas, particularly in Punjab, Delhi, Uttar Pradesh, and Rajasthan in northern India. The concentration of sales in these regions can be attributed to the higher price of light hair oil and the willingness of consumers with higher incomes to experiment with new products. The northern states accounted for approximately 52% of sales volumes and experienced a volume growth rate of 10% during FY 2009-10 as reported by the Nielsen Retail Audit Report. Additionally, there has been notable growth observed in recent years within the heavy amla hair oil segment.
The urban areas, particularly in the northern parts of the country, are where the heavy amla hair oil market is primarily concentrated. As per the Nielsen Retail Audit Report, sales for this specific segment amounted to Rs. 7,370 million in FY 2009-10, showing a growth rate of 4.7% compared to FY 2008-09. Cooling Oils have become a notable category within the Indian hair oil market as they provide relief by cooling down the scalp during hot summer months. Over the past 5 years, this segment has experienced a Compound Annual Growth Rate (CAGR) of 20%.
Marico, a prominent Indian manufacturer in the FMCG industry, specializes in consumer products and services related to health and beauty. In the fiscal year ending March 31, 2010, the cooling oil category had a value of nearly Rs. 7,000 million. Additionally, Marico achieved a turnover of around Rs. 26.6 billion in the year 2009-10 through its various activities in food, hair care, and skin care. The company is known for brands such as Parachute, Saffola, Sweekar, Hair&Care, Nihar, Shanti Mediker, Revive Manjal Kaya Skin Clinic Aromatic Fiancee HairCode Caivil Code10 Black Chic.
The major brands of Marico that hold significant market share are Parachute and Saffola. Parachute is primarily coconut oil. The other sub-brands of Parachute, namely Nihar, Uttam, and Oil of Malabar, are also coconut oils. Marico has established a plant in Kanjikode, Palghat to manufacture Parachute Coconut Oil. In addition to coconut oil, Marico also manufactures hair care products such as Hair Oils, Anti Lice Treatment solution, marketed under the brand names of Parachute, Hair and Care, and Oil of Malabar. Out of all the products offered by Marico, ‘Parachute coconut oil’ is the most popular.
This unique product is made from high grade coconuts and helps users with all their hair-related issues. Bajaj Corp. – Bajaj Corp Ltd is a top FMCG company in India, specializing in hair care products. It is an esteemed business group and is affiliated with the Shishir Bajaj Group of companies. Brahmi Amla Hair oil, a brand with a long-standing heritage in India from the Bajaj family, has been a dominant player in the Amla market for over 75 years. With a highly trusted reputation and a devoted customer base, it currently ranks among the top 3 brands in its category.
Over the years, Bajaj Brahmi Amla has remained strong in the face of tough competition due to its superior quality. The company offers various hair oil products such as Almond drops, Brahmi Amla, Amla Shikakai, and Jasmine hair oil. Dabur India Limited is a leading brand that has achieved significant success in the market. Dabur Amla Hair Oil, which contains the natural goodness of Amla, is widely trusted in India and has become the largest hair oil brand with over 35 million consumers. Other popular hair oil brands from Dabur include Ayurvedic healthcare products and Vatika Premium hair care. Emami Ltd., the flagship company of the Group, is a prominent player in India’s personal and healthcare consumer products industry. They manufacture and market health, beauty, and personal care products based on ayurvedic formulation. With a portfolio of over 30 brands, Emami Ltd. has consistently outperformed the industry standard, maintaining a CAGR of 27% in recent years. Himani Navratna hair oil is one of Emami Ltd.’s flagship brands.
Navratna oil is a popular brand in India, known for its traditional ayurvedic formulation and cooling sensation. It offers multiple benefits for hair problems and is highly trusted in the cool oil category. It dominates the market with a 50% share and holds a monopoly in the southern states with a 98% market share. Unlike shampoos or hair colors, which are newer products in India, the use of hair oil is deeply ingrained in Indian consumers’ habits.
Despite the lack of financial or psychological obstacles to usage, being a well-known player in the hair oils market worth Rs1,300 crore is not necessarily simple. Hair oiling is a long-standing practice in India, believed to offer nourishment, hair strengthening, faster growth, and reduction of hair loss. Some individuals also believe that massaging hair oil has a cooling effect on the head. Additionally, hair oiling enhances the cosmetic appeal of hair styling by leaving the hair straight, soft, and shiny after application.
Both the south and north regions commonly use coconut oil. In the north, people also use rapeseed and sesame oils in addition to coconut oil. Hair oil can be used as a nourishing treatment before washing or as a conditioner after bathing. Segmenting the target market is essential before selling or marketing a product. This helps marketers understand what needs to be done and determine effective strategies. The main positioning platforms for hair oil are purity, hair nourishment, and achieving a non-greasy appearance.
Coconut oil makes up approximately 65% of the market volume, while perfumed oil accounts for about 35%. Hair oiling is a daily practice for half of India’s population and is popular in both urban and rural areas. The nationwide hair oil penetration rate is 87%, with similar distribution in urban and rural regions. Urban areas have a slightly higher penetration rate of 90.2%, compared to 85.8% in rural areas. Among urban areas, small towns have the highest penetration rate at 91%, while medium and large towns range from 89.5% to 89.9%. Both rural and urban areas have over 90% awareness about hair oil. Currently, the valued market size for coconut hair oil is Rs14bn, with branded sales accounting for 60%. The branded hair oil market is estimated at around 70000 tons. The volume growth rate of the market has been approximately 3-4% annually, with a value growth rate of 6-7%. Despite already high penetration, this growth rate has been maintained due to strong marketing efforts from leading players in the segment; however, it remains lower than that of the shampoo market.
Consumers in many regions, particularly in the south, prefer using coconut oil for cooking. However, other edible oils like castor oil are also used for hair care purposes within the category of cooking mediums. This has resulted in a larger oil market than initially estimated based on branded hair oils alone. Recently, there has been a growing popularity of different product variations such as non-sticky hair oil and value-added hair oil. These alternatives are experiencing rapid growth compared to pure coconut hair oil. The market size for these products is estimated to be Rs4.25bn with an annual growth rate of 20-25%.
