MUMBAI, India — Godrej Consumer Products Ltd., a strong player in the Indian personal care market has just enlarged its global footprint.
Godrej, a leader in the Indian hair market, has ramped up its regional influence by acquiring Frika Hair (Pty), a South African hair extensions company.
In addition to hair care, the company also has a strong foothold in the mass hair color market. It also has a strong position in skin care. Over the last year, the company has ramped up its 60-year-old personal care brand Cinthol, adding to its beauty soap category with launches in new segments, such as face wash.
With international sales being a little more than half of its Rs 75 billion ($1.2 billion at current exchange) turnover in 2013-14 — the financial year ends on March 31 in India— Godrej has been building up its footprint in the Middle East, Asia and Africa.
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Africa has been an important market for the company, with an estimated $200 million revenue coming from the continent. Godrej has enlarged its presence there with acquisitions. This has been strengthened with acquisitions of local African companies.
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“We remain very excited by the tremendous potential of the African market and look forward to further building our business,” said Vivek Gambhir, managing director of Godrej, referring to the acquisition of Frika.
South Africa has been a favorite hunting ground for Godrej. The Indian company acquired 51 percent stake in Darling Group Holdings in 2011 (another hair extension company), the Kinky Group in 2008 (producer of a variety of hair products) and Rapidol (mostly hair color) in September 2006 – all located in South Africa.
“Frika only helps us consolidate our hair extension business in South Africa,” said Adi Godrej, chairman of Godrej Group.
Acquisitions in other parts of Africa have included Darling in Mozambique in 2011 and Tura, a personal care brand, in Nigeria in 2010. Tura skin-care products include moisturizing lotions, creams and soaps.
“Overseas acquisitions have helped Indian companies such as Godrej, Marico and Dabur maintain growth momentum during times when growth in the domestic market slowed,” observed Devangshu Dutta, chief executive officer, Third Eyesight, a consulting firm focused on retail and consumer products sectors. “Also, when multinationals are creating serious competition within India, the international acquisitions allow the Indian companies to get off to a running start in other growth markets.”
He said that Indian companies are able to manage the diversification because of their extensive experience in managing a diverse and fragmented market within the country. “The Indian FMCG [fast moving consumer goods] sector also has a deep and wide talent pool that has exposure across markets, serving as a source of strength for Indian companies,” he added.
But Godrej is not discounting the Indian market and has plans to double sales in the next five years.
Growth is being clearly targeted through new launches and innovation — and scaling up the existing personal care segments. The traditional powder hair color segment now competes with cream hair color, and along with accelerating skin-care growth, the company has also launched in the fast growing deodorant market.
Analysts observe that the aggressive growth plan has been kept up for the last five years, with more than 25 percent growth year-on-year, and an advantage of a strong distribution base — with more than 4.5 million doors across India.
Consumer goods companies in India have been aggressively pursuing global acquisitions. In January, Emami Ltd., a consumer goods company based in Kolkata acquired a 66.67 percent controlling stake in Australia-based Fravin Pty, an organic personal-care company.