What Hollywood is to California, what Bollywood is to Mumbai, Sandalwood is to Karnataka. The state's thriving film industry calls itself Sandalwood, partly in jest, mostly to cash in on Mysore's trademark aromatic woods, but make no mistake, the humble tree has been the de facto brand ambassador for the state for over a century now.
For the rest of the country, that entire Karnataka legacy can be found in your bath tub: that scent of sandal, to be precise, Mysore Sandalwood Soap. The oval-shaped, earthy soap cake, often depicted as a status badge for sophisticated men in yesteryear south Indian films.
Well, it's not a south Indian phenomenon anymore; it has bagged a prized position on the shopping lists of visiting non-resident Indians for years.
GI Soap
Karnataka Soaps & Detergents (KSDL), the state-run firm that holds a GI right, geographical indicator trademark, which means anyone can market a sandalwood soap, but only KSDL can claim a 'Mysore Sandalwood' soap, does not want to be boxed into a south Indian brand. Not anymore.
The government-owned personal-care company has its sights trained on more than doubling sales: S Shekar, managing director of KSDL, plans to reach Rs 500 crore in revenue by 2015-16. Shekar plans to do this by expanding presence to western India first by tackling retail vends in Maharashtra and Gujarat.
"Sandal equity exists across the country. It is possible for Mysore Sandal to grow into a pan-India brand," says Vineet Agrawal, president of Wipro Consumer Care and Lighting (WCCL), adding that they do not see the brand as competition as they address different price segments. The around Rs 2,726-crore WCCL owns sandalwood soap Santoor, the third largest-selling soap brand after Hindustan Unilever's Lifebuoy and Lux.
For KSDL, export markets of the US, West Asia, Malaysia and Singapore are equally important. It plans to go beyond "India stores" by appointing dealers in the US and Europe to target natives in those markets. It will also dip into its coffers for a proposed Rs 25-crore plant modernisation next fiscal, as it seeks to meet environmental obligations by shifting from a coal to gas-based fuel.
For the rest of the country, that entire Karnataka legacy can be found in your bath tub: that scent of sandal, to be precise, Mysore Sandalwood Soap. The oval-shaped, earthy soap cake, often depicted as a status badge for sophisticated men in yesteryear south Indian films.
Well, it's not a south Indian phenomenon anymore; it has bagged a prized position on the shopping lists of visiting non-resident Indians for years.
GI Soap
Karnataka Soaps & Detergents (KSDL), the state-run firm that holds a GI right, geographical indicator trademark, which means anyone can market a sandalwood soap, but only KSDL can claim a 'Mysore Sandalwood' soap, does not want to be boxed into a south Indian brand. Not anymore.
The government-owned personal-care company has its sights trained on more than doubling sales: S Shekar, managing director of KSDL, plans to reach Rs 500 crore in revenue by 2015-16. Shekar plans to do this by expanding presence to western India first by tackling retail vends in Maharashtra and Gujarat.
"Sandal equity exists across the country. It is possible for Mysore Sandal to grow into a pan-India brand," says Vineet Agrawal, president of Wipro Consumer Care and Lighting (WCCL), adding that they do not see the brand as competition as they address different price segments. The around Rs 2,726-crore WCCL owns sandalwood soap Santoor, the third largest-selling soap brand after Hindustan Unilever's Lifebuoy and Lux.
For KSDL, export markets of the US, West Asia, Malaysia and Singapore are equally important. It plans to go beyond "India stores" by appointing dealers in the US and Europe to target natives in those markets. It will also dip into its coffers for a proposed Rs 25-crore plant modernisation next fiscal, as it seeks to meet environmental obligations by shifting from a coal to gas-based fuel.
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Millennium Mysore
Last month, KSDL launched the most expensive Indian soap called Millennium Mysore Sandal. At Rs 720 for a 150-g piece, the company says French company Hermes, which markets luxury soaps, inspired it. Millennium is being positioned as a brand for spas, boutiques and five-star hotels.
"In fact, an MLA recently bought two boxes of Millennium soap with 36 pieces in each," Shekar says. KSDL claims to have sold 80% of the 14,000 pieces manufactured in the first batch. If people can pay Rs 1,001 at a restaurant in Bangalore that doles out dosas with gold leaves, there exists a market for super-premium soap, KSDL's general manager (marketing), DN Vasanth Kumar says.
But brand experts are not convinced by the strategy. "It is easier for a higher-priced brand to introduce lower-priced alternatives," says Sujata Keshavan, chairman of WPP-owned Ray+Keshavan, referring to luxury brand Armani which later launched Emporio Armani. "It is very rare and difficult to do the reverse," she adds. These moves are particularly ambitious for a 94-year-old company that returned to profits only a few years ago.
King & State
Kumar, who has worked at KSDL for 25 years, points to wall paintings of the maharaja of Mysore and M Visvesvaraya who were the founding fathers of the company. He recounts the tale of how Nalwadi Krishnaraja Wodeyar, the maharaja, chanced upon a heap of sandalwood trees on a visit to the forest department in 1916.
The king prodded diwan M Visvesvaraya to devise a plan to extract sandalwood oil from the trees with help from the Indian Institute of Science. This oil was called Mysore Sandal. He popularised it and it was counted among the silk, spices and coffee exported from the State of Mysore at the time.
It was only two years later, when a foreigner gifted him a soap made of sandalwood oil did the maharaja consider manufacturing soap. It was then indigenously developed at the Government Soap Factory in Bangalore. By the early '70s sandal soap was being exported and it had tied up with state-owned marketing organisation Mysore Sales International (MSIL) for its soaps and detergents.
In the '80s, however, KSDL slumped into losses because of a mismatch between MSIL's sales and KSDL's production. Low demand had increased the cost of operations and once India was liberalised, KSDL got further dragged down by multinational competition.
It was referred to the Board for Industrial and Financial Reconstruction (BIFR) as a sick unit. It shed that tag after repaying debts in 2003. By then the company had streamlined its focus to Mysore Sandal against a portfolio of soaps, including jasmine and rose, taken marketing into its own hands and focused on south India.
Price Challenges
KSDL can dream bigger today because it is projecting 30% revenue increase to Rs 260 crore this fiscal. Last year, its sales only inched up to Rs 205 crore and profits halved. It was forced to take a 8-9% price increase but still was not able to accommodate the 40% increase in palm oil prices, a key raw material.
The company is also wrestling against limited availability of sandalwood, which led to prices shooting up 10 times to Rs 40-50 lakh a tonne in 10 years. Earlier, any sandalwood tree in the state was regarded as state property. This was amended a few years ago to encourage farmers to grow sandalwood and enable private tree owners to sell although mandatorily to either KSDL or Karnataka Handicrafts Development Corporation.
But excitement from big-ticket plans is palpable this year as Kumar says it remains a zero-debt company and ticks off what he calls "assured sales" and promotions. The state government picked up nearly Rs 15 crore worth of product from KSDL for its student hostels and as health kits for expecting mothers in Karnataka this fiscal.
It was also helped along by 'soap santhes' or dedicated soap exhibitions where it rediscovered a market in small cities. For instance, in Tumkur, adjacent to Bangalore district, KSDL generates sales of Rs 78 lakh a month. It made Rs 41 lakh in seven days as people bought detergent cakes and handwashes, categories they were unaware existed as part of brand Mysore Sandal.
Price Challenges
KSDL can dream bigger today because it is projecting 30% revenue increase to Rs 260 crore this fiscal. Last year, its sales only inched up to Rs 205 crore and profits halved. It was forced to take a 8-9% price increase but still was not able to accommodate the 40% increase in palm oil prices, a key raw material.
The company is also wrestling against limited availability of sandalwood, which led to prices shooting up 10 times to Rs 40-50 lakh a tonne in 10 years. Earlier, any sandalwood tree in the state was regarded as state property. This was amended a few years ago to encourage farmers to grow sandalwood and enable private tree owners to sell although mandatorily to either KSDL or Karnataka Handicrafts Development Corporation.
But excitement from big-ticket plans is palpable this year as Kumar says it remains a zero-debt company and ticks off what he calls "assured sales" and promotions. The state government picked up nearly Rs 15 crore worth of product from KSDL for its student hostels and as health kits for expecting mothers in Karnataka this fiscal.
It was also helped along by 'soap santhes' or dedicated soap exhibitions where it rediscovered a market in small cities. For instance, in Tumkur, adjacent to Bangalore district, KSDL generates sales of Rs 78 lakh a month. It made Rs 41 lakh in seven days as people bought detergent cakes and handwashes, categories they were unaware existed as part of brand Mysore Sandal.
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Small Ad Spend
The lack of awareness harks back to the shortfall of being a public sector enterprise. KSDL's advertising and sales promotion budget was a puny Rs 5 crore last fiscal compared to Hindustan Unilever's over Rs 2,700 crore annual spend.
"We cannot match multinationals in terms of advertising but what we have are loyal consumers, who know we are authentic in claims of using sandalwood oil," says Kumar, as the fragrance of Sandalwood wafts in from the plant within the Bangalore corporate premises.
KSDL bets on this loyalty by offering premium brands Mysore Gold, baby soaps and mass-end brands Rose and Carbolic. Two years ago, it extended the Mysore Sandal brand to talcum powder. It also launched a hand-wash brand called Herbal, and Kleenol, a liquid detergents for dishes, floor and cars.
Taking MSD to Court
What KSDL could not do with a limited advertising budget, it has attempted by innovating with marketing channels. It has created gift packs for pharmaceutical companies such as Sun Pharma, Lupin and Nicholas Piramal to present to doctors.
Kumar says his core consumer is a 35-year-old who has flirted with multiple brands at a younger age but settles for Mysore Sandal. KSDL believes it does not need to create a new product to appeal to the youth because they are turning to natural products.
"What we need to change is the advertising and the packaging," Kumar says. The company has roped in actors such as Dia Mirza and Mugdha Godse but it was its 2006 endorsement deal with MS Dhoni that added sparkle to the brand. It was a departure for the company to sign on a male brand ambassador. The deal with Dhoni was aimed at increasing youth connect and sales in north India.
But by 2008, KSDL had taken Dhoni to court alleging that he had not given the brand enough time as committed under the contract. It cancelled the contract and claimed damages worth Rs 41 lakh. "When a brand has a very small advertising budget, it is not about what is being communicated but the basic threshold of awareness which is important," Prateek Srivastava, group president at advertising agency Ogilvy and Mather, says. "Even breaking off with Dhoni would have helped," he says.
Taking MSD to Court
What KSDL could not do with a limited advertising budget, it has attempted by innovating with marketing channels. It has created gift packs for pharmaceutical companies such as Sun Pharma, Lupin and Nicholas Piramal to present to doctors.
Kumar says his core consumer is a 35-year-old who has flirted with multiple brands at a younger age but settles for Mysore Sandal. KSDL believes it does not need to create a new product to appeal to the youth because they are turning to natural products.
"What we need to change is the advertising and the packaging," Kumar says. The company has roped in actors such as Dia Mirza and Mugdha Godse but it was its 2006 endorsement deal with MS Dhoni that added sparkle to the brand. It was a departure for the company to sign on a male brand ambassador. The deal with Dhoni was aimed at increasing youth connect and sales in north India.
But by 2008, KSDL had taken Dhoni to court alleging that he had not given the brand enough time as committed under the contract. It cancelled the contract and claimed damages worth Rs 41 lakh. "When a brand has a very small advertising budget, it is not about what is being communicated but the basic threshold of awareness which is important," Prateek Srivastava, group president at advertising agency Ogilvy and Mather, says. "Even breaking off with Dhoni would have helped," he says.
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Everyone's Natural
Brand experts agree that Mysore Sandal has an old-world charm and a strong brand perception in India. But they say it has not kept pace with the new-age, 25-26 year-old consumer. "Mysore Sandal is holding on to its old customers. What it needs to do is contemporarise to be in sync while holding on to the allure of its sandalwood heritage," Prathish Nair, director, brand strategy and client development at Trancend Brand Consulting, says.
Nair adds that globally it may do well as it would be seen as brand India but there too it will need the marketing muscle to compete with Indian brands that use the ayurvedic pitches. Forest Essentials and Kama are good examples. But still, consider this: here's a sarkari soap FMCG biggies haven't been able to wash away. That's something to build on.
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