How local brands selling coconut oil in tins lose market to plastic bottles

Infographic: TBS

It was all about coconut hair oil sold in tins by local entrepreneurs for more than six decades before a foreign brand, Parachute, with plastic packaging forayed into the market in 2000 and in no time became a household name. 

In 1935, Henna Chemicals pioneered its coconut oil packaged in tins. Later, Lalbagh Chemicals and Perfumery Works Ltd with its "Hash Marka" coconut hair oil followed suit. In post-liberation times, Mousumi Industries entered the market with Cute coconut oil. 

In the face of growing demand for coconut oil, Square Group came into the scene with its brand Jui in 1988. 

Between 1995 and 2005, many other brands, such as Lily Coconut Oil, Tibet Coconut Oil, Keya Coconut Oil, Aromatic Coconut Oil and Millat Coconut Oil, emerged on the scene and grabbed a large market share, led by Hash Marka Coconut Oil. During this period, they all sold coconut hair oil in tins.

But the Indian company Marico Limited began to take over Bangladesh's coconut oil market following its shift from tin to plastic for packaging its Parachute coconut oil. Gradually, it has become the market leader with an 80% share.

The brand and non-brand coconut oil market is now worth Tk2,000 crore.

What drew end consumers to choose Parachute were not costlier than tins, more convenient to pour and more attractive to keep on the shelf, industry people say. 

From tins to plastic 

Initially it was not easy to convince consumers to buy Parachute packaged in plastic bottles. Plastics cost half the tin cost. They put all that money back into advertising, talking about the benefits of oil in plastic bottles. Soon the company started gaining ground with consumers beginning to prefer plastic bottles to tins.

The rise of Marico led to a fall in the dominance of local companies.

Local brands that now stay in business are Hash Marka coconut hair oil, Square Group's Jui and Mousumi Industries' Cute. The rest have pulled out, failing to compete with the foreign company.

Talking to The Business Standard, several officials of local coconut oil producing companies said local companies also marketed coconut oil in plastic bottles following the path shown by Marico. But after a few days, it was found that the oil in the bottles went rancid before it reached the expiration date. Then the companies had to withdraw the oil from the market. 

But there has been no such problem with Marico's oil. The companies then realised that the plastic bottles used by Marico were specially manufactured, they noted. 

It took four-five years for domestic companies to get hold of this technology for making that kind of plastic bottles. During this time, Marico captured the country's market with value-added coconut oil as per consumer demand.

According to Marico's financial report, the company's oil sales rose to Tk800 crore in FY22 from only Tk80 crore in 2005-06, with a 900% growth. 

"Parachute Advanced" was recognised as the most loved hair oil brand in the country by Bangladesh Brand Forum and Nielsen and is amongst the top 10 most loved brands in the country, notes Saugata Gupta, chairman of Marico Bangladesh, in the company's annual report of FY22.

In the annual report, Marico's Managing Director Ashish Goupal also notes, "Creating world-class quality products for Bangladeshi consumers, building our brands and our strong distribution network are the key strategic pillars underlying our business growth."

Why local companies fall behind

Local companies have fallen way behind Marico with hardly any assessment on market and consumer sentiments, say industry insiders.

An official of a local coconut oil manufacturer told TBS that three factors, such as right time, right place and right decision, have given Marico the upper hand over local companies.  

The Indian company did a study on Bangladesh's market and was well aware of its growth potential, he noted.

Marico capitalised on local companies' lack of market research, especially on consumer sentiment, he also said, noting that even Square could not think up the strategy that Marico did, which was required in order to gain a foothold in the market.

Local entrepreneurs, though starting off with coconut oil, focused more on cosmetics, he continued, adding that it did not occur to them that it was possible to make a profit of Tk300 crore by selling coconut oil, and Marico made that happen.

Kazi Moin Uddin Ahmed, managing director of Mousumi Industries Limited (Cute brand), told TBS, "Foreign companies are leading the coconut oil market because of negligence on the part of domestic entrepreneurs."

They could not create the skilled manpower required to advance this market, which the foreign company did.

Even so, many companies are going to invest in the coconut oil business. For example, City Group has bought out a company named Rahima Foods and started the process of producing coconut oil.