Sanitaryware is part of Rs 27,000 crore ceramics industry which is poised for an interesting turn of events. Despite the recent outbreak of Covid-19 and the resultant prolonged nationwide lockdown in India, Rs 4,200 crore sanitaryware sector has been able to post single digit growth during 2019-20. However, growth rate last year was comparatively lower than the one achieved in FY19, thanks to COVID-19 led closure of business in March.
Battle for top slot
In last few years, the sanitaryware industry is seeing an intense battle for the top slot. This has happened particularly after the entry of Jaquar into the fray. Though the Jaquar brand is 60years old, all these years faucets have been its mainstay. In fact, it entered sanitaryware segment only ten years ago in 2010. Thus, in a span of 10 years emerging from nowhere to become one of the leading players in the industry is a commendable achievement.
Indeed, Jaquar is making fullest use of deep-rooted pan-India distribution network and its strong brand equity in the faucet segment to give the established players like HSIL and CERA a run for their money.
Increased emphasis on mid segment
The company has impressively scaled through particularly in its premium/luxury segment (with brands Jaquar and Artize) over the last decade. Further with its intensified focus on midsegment brand ‘Essco’ over the last 2-3 years, the company has been able to become one of the leading brands in sanitaryware sector. Further, the company has been able to achieve double digit growth in 2019-20 against all odds.
Poor strategy of opponents
However, part of Jaquar’s success is attributable to its opponents’ some of the wrong strategies which were, in last few years, aimless and directionless. Thus, one can safely attribute Jaquar’s success in recent years to fast growing brand equity and aggressive new product launches in sanitaryware and its opponents’ lack of intent and inconsistent policies in the trade.
Good year for Parryware Roca
The year just gone by was good to Parryware Roca too who has not only been able to arrest the slide but also moved on to the growth path. The brand has done, in the just concluded financial year, relatively better than the previous year. Acquisition of Parryware by Roca has made all the difference. Earlier, the brand was not giving the much needed attention to its mid-segment brand and as a result it was losing market share in last 2-3 years. Also, there were some labour issues which were sorted out in due course. Aggressive pricing, after the takeover, has helped the company to be back on growth path despite the industry facing several headwinds.
MNCs stranglehold in luxury segment
Luxury segment has always been the stronghold of MNC brands like Kohler and Roca and over the past few years, these brands have been expanding their presence in the premium space. In FY20, though luxury segment of these brands witnessed volume pressures, they managed to increase penetration in the premium segment.
Unorganised sector losing ground
Another interesting development in recent years is the weakening position of unorganised sector who have been losing market share to the players in the organised sector. Unorganised players who are largely based in and around Morbi, Wankaner and Thagadh regions, account for 25-30% of the overall sanitaryware industry. Aggressive pricing, longer working capital cycle and above all muted demand environment, have made the life of unorganised sector players miserable and many of them have already downed their shutters. The trend continued in FY20 also.
Intensified competition expected
Changing face of Indian sanitaryware market is expected to intensify competition in the industry in the coming years. The industry has also suffered due to lockdown and the slowdown in real estate sector. Sanitaryware products are more dependent on real estate market than the home renovation demand which contributes just 8-10% of the total demand of the industry. Thus, revival of the real estate market is key to the growth of the industry. When the demand condition is poor efforts to keep market share will increase which will only intensify the competition.
Further, HSIL, now Brilloca – the distribution and marketing company which owns the sanitaryware brands post the demerger, and CERA have been there in the market for quite a long period of time and may not sit idle and give up the fight. In fact, Brilloca has been the pioneer and one of the strongest brands in the premium sanitaryware segment and CERA has been a strong mass market play over the years. So, these brands are likely to take some corrective steps to arrest the slide and the sanitaryware market is expected to see intensified competition in the coming months.