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The Chennai-headquartered and privately owned Cholayil group has for long been known for a single product; its bars of a green-coloured soap, Medimix. The soap is well known in Southern markets but in the rest of the country, it is seen as a permanent fixture in government-run hotels and tourist homes.
Now, driven by a split in the family business and a rapidly changing business environment, the group wants tospread its reach. A range of personal care products including talcum powders, shampoos and body washes is to be launched, riding on the herbal-natural positioning of Medimix, which currently accounts for 80 per cent of group revenues. It has also acquired the talcum powder brand Cuticura and Krishna Thulasi ayurvedic soap in the hope that a larger portfolio will help break into newer markets and new regions. However the low penetration of Medimix in markets outside South India, a division in the family assets and the close association of the brand with medicinal purposes could break its big leap into the world of big brands.
The group has an ambitious target of Rs 500 crore turnover in the next three years, a more than 200 per cent jump over its present numbers. “We realised we cannot depend on soap alone, as the next generation is moving away from bar soaps,” said Pradeep Cholayil, the son of the founder of Cholayil group, that has the rights for the brand for all of India (except the Southern market which is the domain of AVA group, a faction headed by the founder’s son-in-law) and export markets. Pradeep says the major challenge is funding the brand building efforts. Today, around 25 per cent of the total revenue goes into marketing, with five percent into R&D.
Medimix currently has three variants of soaps and a face wash. Way back in 1969, Medimix it was founded by V P Sidhan, a physician who used oils which his ancestors had used to treat skin diseases to make the soap. And this is the legacy that has stayed with the brand. It continues to be seen as a solution for skin disorders but not as a regular soap, which is one of the big hurdles that the brand has to cross.
Harish Bijoor, CEO of Harish Bijoor Consults Inc, said Medimix has strong brand equity but it is better for the brand to restrict itself to skin care, as going beyond that may dilute the brand.
Another challenge is dealing with the aftermath of the family split of 2007 when the Cholayil group was split into two – AVA Cholayil Health Care that has the marketing rights for Medimix for the southern markets and Cholayil Pvt. Ltd that has the rights for rest of India and export markets. Establishing the brand outside the southern markets is an uphill task.
“It was almost like starting a new company,” says Pradeep adding that product, distribution and marketing play a key role. The group has focused on building capacities. It has set up a plant in Hardwar that can produce over 1000 tonnes of soap per month and established a network of 1,700 distributors that reach out to four lakh retail outlets across 65 districts in the Northern, Eastern and Western markets.
The soap market in 2015 in India according to an A C Nielsen report is estimated at Rs 14,093 crore, of which the North, West and East Zones together account for around Rs 9,950 crore. While the herbal and medicinal soap market is unorganised and fragmented, HUL’s Hamam is a leader with 2 per cent, followed by Jyothy Laboratories’ Margo with 0.9 per cent and then Cholayil’s Medimix with 0.4 per cent of the market share.
A third hurdle would be positioning the brand as a regular soap with medicinal qualities instead of the way it is perceived currently – a soap for skin ailments. The company says that the brand stands on a strong plank. Pradeep says more and more people are going in for green products, Ayurveda is not a region specific and with the government also promoting it and herbal products through Ayush, the company will find a market for its new range of products.
The company plans to increase its points of sales from the current four lakh by over 50 per cent, with a specific focus on Tier-II and Tier-III regions. And over the last three months it has tied up with leading e-commerce companies to reach out to remote towns and villages.