Flower power

SHUCHI VYAS

TIMES NEWS NETWORK [WEDNESDAY, JANUARY 31, 2007 12:00:00 AM]

Twelve years ago, when Kamal Passi started Lotus Herbals, the beauty market in India was still in its most vestigial stage; what went in the name of beauty products was an assortment of bleaches, cold creams and fairness creams, and a handful of colour cosmetics.

And Ayurveda hadn’t quite emerged as the magical master key to beauty either. It’s only natural then that Passi chose to cater to the overseas market, positioning Lotus’ portfolio of skin-, body-, hair-care and sun-protection products on the ‘contemporary Ayurvedic beauty’ plank.

Twelve years later, the wheel has come full circle for the Delhi-based company. Buoyed by the dramatic surge in the Indian beauty market, Lotus has shifted priorities, choosing to focus increasingly on the domestic market. “We realised the potential in the Indian market three years ago and started activation last year,” says Nitin Passi, director, marketing and sales, Lotus Herbals.

“This year, we are likely to see 50% of our turnover coming from the domestic market.” In fact, the Indian market accounted for 45% of the company’s Rs 70-crore-plus turnover in 2005 — the remaining 55% was a mix of Lotus’ export business and its contract manufacturing deals with overseas companies. It’s not just the boom in the Indian beauty market that’s acted as a catalyst for Lotus — a steady decline in growth of the export business has played a part too.

Passi reveals that growth from the export and contract manufacturing businesses has dropped to just 10% and 15%, respectively (from a CAGR of 30-40% four years ago), on account of the gradual saturation of developed markets like the US and Italy.

Lotus Herbals began operations by exporting to West Asia and the US in partnership with Prestige Household Products, an India-based trading organisation — in its initial years, Prestige also served as seed capitalist for Lotus. While the company currently has contract manufacturing deals with overseas clients, it exports the Lotus brands to 16 countries in tie-ups with retailers and distributors.

Passi clarifies that the overseas target audience for Lotus is not NRIs but consumers who are interested in Ayurveda and natural products. Interestingly enough, the company is currently engaged in a litigation involving another contract manufacturer that uses the ‘Lotus’ brand name.

The push into the domestic market began some three years ago, and based on consumer feedback, Lotus revamped its brand image, packaging and positioning. Over the past two years, it has upped advertising spends by 40-50%, of which more than 75% is spent on below-the-line — on beauty advisors, point-of-purchase and training. The company’s efforts seem to be working well.

Link - http://economictimes.indiatimes.com/articleshow/1539686.cms