When Hindustan Unilever's executive director HemantBakshi went for a 'complimentary' hair cut last week, he came out of the salon Rs 2,500 poorer. Though his hairdo didn't cost anything at all, he splurged on almost every product used during the half an hour process — from shampoo to hair wax. And he's excited about this unusual impulse buy, because it involves his firm's foray into super premium hair-care business.
The makeshift salon was Hindustan Unilever's training ground for its professional hair products brand TIGI, popularly known as Toni & Guy after its founders, which will be sold to consumers exclusively through top salons that use these products. "TIGI actually allows us to tick many boxes in our strategy," says Bakshi, who this month completes 24 years in HUL, exactly half his life. "It allows us to complete our portfolio, have a presence in the category of the future and a presence in the channel of the future," Bakshi says.
The company will enter hair colour segment in India through the new brand, and bring in other TIGI products including gel, shampoo, wax and mousse under Bed Head and S-Factor. Unilever, the Anglo-Dutch parent of HUL, acquired TIGI's professional hair product business for $411.5 million in 2009. They carry super premium price tags, though. TIGI's shampoo, at Rs 700-925 for 250 ml, costs almost eight times a normal one, and over four times the FMCG giant's premium brand Dove. And TIGI products are at least 40 per cent costlier than most products of L'Oreal, the French cosmetics giant that controls over three-fourths of the urban salon market in the country, and other competitors such as P&G's Wella and German brand Schwarzkopf.
"We don't want to leave any gap in our portfolio in terms of price-points and TIGI comes and play a very important part in completing our portfolio as far as beauty is concerned in hair," Bakshi says. "We would do the same thing across all our categories." The company will sell TIGI products through just over 40 salons in the country to start with, making its reach of 6.4 million retail outlets somewhat superfluous in this case.
In comparison, L'Oreal sells its products under Professional, Matrix and Kerastase brands through more than 30,000 salons. "Consumers go to a salon because they don't want to do colouring or other services at home. So, hairstylists can influence sales in a big way both during the service and also by advising post care products," Aseem Kaushik, director of professional products division at L'Oreal India, says.
Hindustan Unilever, which has virtually covered the mass end of the market in most categories, has been focusing on premium products to improve its margins. This shift in strategy in fact helped the firm post its highest operating margin in a decade at 20 per cent for the year ended March 2013 and also resulted in two premium brands—Pond's and Dove-—crossing the Rs 1,000-crore mark.
HUL's upscale drive is primarily reflected in personal products, which has seen faster rollouts of new brands or categories. Its recent launches include TRESemme hair care range and extending Lux into deodorant and Dove into hair oil. Emerging categories contribute almost 14 per cent, or more than Rs 1,000 crore, to HUL's personal care segment which, in turn, accounts for nearly half of the firm's profits but less than a third of its total sales.