FMCG giants Unilever and Procter & Gamble (P&G), which last year commanded a respective 31.8 and 23.7 percent share of the Thai haircare market, according to Euromonitor, are engaged in protracted channel warfare to protect their rival mid-market brands, Sunsilk and Pantene Pro-V.
In urban Thailand the duo have deployed every weapon in the modern retail arsenal, including bulk and mini package sizes, bundling and cross-promotions, all supported by heavy advertising. And now the battle is spreading to rural areas.
This struggle for share goes back before the current downturn, says Martin Choi, account manager, Worldpanel Thailand, and largely revolves around price. “The price that consumers pay for Pantene has fallen, making it more affordable at a time when Sunsilk was raising its price,” he says. “Pantene is still more expensive, but the gap has narrowed.”
Early last year, P&G downsized the package and unit price of Pantene in the mom-and-pop - or provisional - retail channel, which accounts for one-third of all shampoo sales in Thailand.
“Rural consumers can purchase a new, small pack of Pantene Pro-V which has been heavily promoted,” says Choi. “This is quite interesting because the provisional store channel is where Unilever has been traditionally stronger.”
This initiative is believed to have helped P&G to gain market share in the countryside, where two-thirds of Thailand’s 65.9 million people live.
Thailand has no ‘indigenous’ haircare giant, and only a handful of small local brands, so haircare products are overwhelmingly foreign. Even the colourants used to create the wildly popular dark or light brown hairstyles inspired by Japanese and Korean pop stars bear Western rather than Asian brands.
Unilever and P&G own half of the haircare market, according to Euromonitor. Unilever’s Sunsilk tops the list with a 16.5 per cent share. Other top 20 brands include Henkel’s Schwarzkopf, Kao Corp’s Fasa, and L’Oréal’s Professionnel, Excellence and Kerastase brands.
“This is certainly an active segment for advertising,” says Tony Prehn, CEO, Lowe Thailand, whose agency handles the Clear anti-dandruff shampoo.
For the first eight months of the year, Nielsen tallied media spend of 2.1 billion bhat (US$62.5 million), an 18 per cent increase compared to 1.7 billion bhat for the equivalent period of 2008.
Yet consumers remain unmoved. Despite the double-digit jump in adspend, haircare sales have grown only three per cent by volume, according to Nielsen.
“Haircare sales are stagnant,” says Nithinart Athikhomkulchai, director, Nielsen Thailand. “But, given the economy, the fact that growth is not negative is itself quite good. Based on a review of past recessions, Thai FMCG sales hang on for a year before dropping. We are already seeing a decline in impulse buys, alcohol and non-essentials.”
Thailand’s haircare market is mature, and single-digit growth has long been the norm, says Athikhomkulchai.
Euromonitor valued the haircare market at 17.5 billion bhat for 2008, showing a 5.1 per cent compound annual growth from 2003. The top categories were shampoo (7.6 billion bhat), conditioners (3.6 billion bhat), salon haircare (2.9 billion bhat) and colourants (2.1 billion bhat).
Of these, the fastest-growing category was salon haircare (7.8 per cent annual growth). Two-in-one products, however, fell steeply between 2003 and 2008, at an average of 26 per cent a year.
“Today, people want a separate shampoo and conditioner,” says Synovate’s Kulpradith. “Because of the dyes and styling agents used to create Japanese and Korean hairstyles, people think they need to take better care of their hair.”
Asked what changes she has seen in consumer attitudes toward haircare, Kulpradith replies: “The surprising thing is that haircare has become emotional. It is not just about having hair that is clean and unfrizzy. Now consumers see hair more as ‘part of me’.”
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This article was originally published in 8 October 2009 issue of Media.
