Branded agarbatti companies rework models amid slump

BENGALURU: Marigold and red hibiscus, offered at Mumbai's Siddhivinayak temple, are being dried, crushed and mixed with agarbatti masala. At the Kashi Vishwanath temple in Varanasi, floral waste — dhatura and lotus — is getting converted to perfume. It is no different at the Puri Jagannath temple, as diversified conglomerate ITC attempts to make temples ‘go green’ and bring innovation into the incense stick segment.At stake is a market that breached $1 billion (Rs 7,278 crore) in the previous calendar year.Yet, the segment grew by just 4% last year, from a 14% expansion rate in 2018, indicating that austerity has even knocked on the doors of products for religious use and suggesting perhaps that the sector could use a bit of divine intervention.73717755 Agarbattis, typically used in ritual prayer, are among the oldest and one of the highest selling fast moving consumer goods in the country. Both Hindu as well as Muslim households light agarbattis during prayer.It is this supposedly recession-proof market that companies such as ITC, Cycle Pure Agarbathies — the largest player in the segment — and Moksh Agarbatti Company are eyeing. “We have focused on superior fragrance appeal and launched differentiated fragrances,” said Ravi Rayavaram, chief executive, Agarbatti and Matches business at ITC.ITC’s incense stick brand Mangaldeep has increased its reach among households and gained volume share, he added, without disclosing specific numbers.Cycle Pure Agarbathies and Moksh Agarbatti Company, too, are expanding their portfolio beyond devotion or popular variants such as sandal and jasmine.Agarbatti companies recently introduced fragrances such as apple and pineapple, neem-based mosquito repellants and no-smoke ones for asthmatic patients that also act as air purifiers.These special agarbattis retail at 50 paise to Rs 4 a stick, as companies go premium to earn higher margins. “Religion and faith have immense significance in India. People have not stopped praying because of an economic slump. Large players have sustained the pain and survived,” said Anand Kumar Ashiya, CEO of Moksh Agarbatti Co.Agarbatti makers used to clock growth rates of 15-25% pre-demonetisation and GST, but price tags have reduced by 8-10% since then, impacting value growth, experts said.So, what really led to the tepid growth in sales last year?Unbranded products and cheaper imports, marketers said.In August, the government restricted the import of agarbattis, reclassifying the segment from ‘free’ to ‘restricted’, significantly impacting the domestic industry. Cycle Pure Agarbathies said floods and a muted Diwali season also proved to be dampeners last year.“The coming monsoon is critical, and the market will positively recover in 2020,” said Arjun Ranga, managing director of N. Ranga Rao & Sons, which owns the Cycle brand and manufactures 12 billion incense sticks a year.Currently, the branded incense stick sector has close to 600 players, although more than half of the market is in the hands of small, unorganised firms.

from Economic Times https://ift.tt/2uIjKBa