Analysis of Deodorant Industry

Antiperspirant/deodorants are used to reduce underarm wetness and control body odor. These products are made by blending active ingredients with waxes, oils, and silicones and molding the mixture into stick form.

Body odor is primarily generated in the area under the arms where there is a high concentration of sweat glands. While sweat from these glands is initially odorless, it contains natural oils, called lipids that provide a growth medium for bacteria living on the skin. These bacteria interact with the lipids, converting them into compounds that have a characteristic sweaty odor. Isovaleric acid, for example, is one chemical compound that gives sweat its smell.

There are two primary types of products used to control body odor. The first, deodorants, reduce body odor by killing the odor-causing bacteria. These products do not affect the amount of perspiration the body produces. Antiperspirants, on the other hand, inhibit the activity of sweat glands so less moisture is produced. In addition to avoiding unpleasant wetness, these products also decrease odor because there is less sweat for the bacteria to act upon. While deodorants are considered to be cosmetic products because they only control odor, antiperspirants are actually drugs because they affect the physiology of the body. Although the exact mechanism of this physiological interaction is not fully understood, theory has it that antiperspirant salts form temporary plugs in some of the sweat gland openings so that moisture is not secreted. While this moisture reduction is not severe enough to interfere with normal body metabolism, it does noticeably lessen underarm wetness.

2. EVOLUTION OF DEODORANTS

Products to control body odor and wetness have been used for centuries. Before bathing became commonplace, people used heavy colognes to mask body odor. In the late nineteenth century, chemists developed products that were able to prevent the formation of these odors. Early antiperspirants were pastes that were applied to the underarm area; the first such product to be trademarked in the United States was Mum in 1888. It was a waxy cream that was difficult to apply and extremely messy. A few years later, Ever dry, the first antiperspirant to use aluminum chloride was developed. Within 15 years, a variety of products were marketed in a number of different forms including creams, solids, pads, dabbers, roll-ons, and powders.

In the late 1950s, manufacturers began using aerosol technology to dispense personal care products such as perfumes and shaving creams. In the early 1960s, Gillette introduced Right Guard, the first aerosol antiperspirant. Aerosols became a popular way to dispense antiperspirants because they allowed the user to apply without having to touch the underarm area. By 1967, half the antiperspirants sold in the United States were in aerosol form, and by the early 1970s, they accounted for 82% of all sales.

However, later that decade two technical issues arose which greatly impacted the popularity of these products. First, in 1977, the Food and Drug Administration (FDA) banned the primary active ingredient used in aerosols, aluminum zirconium complexes, due to concerns about long term inhalation safety. (This ingredient remains safe for use in stick form.) Next, the Environmental Protection Agency (EPA) strictly limited the use of chlorofluorocarbon (CFC) propellants used in aerosols due to growing concerns that these gases may contribute to the depletion of the ozone layer. CFCs were preferred as propellants for antiperspirants because they gave a soft dry spray. Although the industry reformulated their products to be safe and efficacious, it was too late. Consumers had lost confidence in aerosol antiperspirants. By 1977, sales of the reformulated versions dropped to only 50% of the market, and by 1982, they dipped below 32%. While some brands still offer antiperspirants in aerosol form, today these account for a very small percentage of the total market.

As the popularity of aerosols waned, antiperspirants in stick form became increasingly popular. In 1974, sticks held only about 4% of the market and they were considered to be wet and aesthetically unpleasing. Such products were generally associated with deodorants for men. Because of breakthroughs in ingredient technology that allowed for drier, more efficacious products, sticks gained acceptance between 1974-1978. Consumers embraced sticks as an alternative to aerosols and their market share swelled to over 35% by the mid 1980s. Today, sticks are the single most popular antiperspirant form.

3. COSMETICS AND TOILETRIES IN INDIA

India’s deodorant and antiperspirant industry is part of the cosmetics and toiletries market, which was worth about Rs 140 billion in 2002. The market grew at almost 6% in current value terms over 2001. Sun care and deodorants posted the strongest growth during this period. Marketing and educational initiatives by leading players such as Henkel SPIC and Hindustan Lever assisted the growth in the deodorants market. Changes in consumer behavior also fueled the demand.

The Indian cosmetics and toiletries market is fragmented, with many manufacturers.

Top five cosmetics and toiletries companies are:

- Hindustan Lever

- Colgate-Palmolive

- Nirma

- Godrej Consumer Products

- Dabur India.

4. MAJOR BRANDS IN DEODORANT INDUSTRY

Although new players entered cosmetics and toiletries, and existing players added to their offerings, Hindustan Lever Ltd remained well ahead of the competition. In a highly-fragmented market, Hindustan Lever Ltd was the only player to hold a double-digit value share in 2006, with Colgate-Palmolive India Ltd a distant second. Hindustan Lever Ltd’s success was on account of its breadth of presence across various cosmetics and toiletries products, coupled with the best distribution system nationally and continued investment in product promotion. Domestic companies also looked at the buyout of brands and companies as a means of improving value growth, with players like Dabur India Ltd, Godrej Consumer Products Ltd and Marico Ltd all on the prowl for companies and brands that not only add to the top line but also bring in intangible benefits.

The leader, Hindustan Lever, with its large portfolio of brands