Nepali Times
Business
Made in Nepal


JESSE PESTA


A battle for soap customers in Nepal is being shaped by multinationals, including Unilever Group and Colgate-Palmolive, heralding a rise in consumerism in Nepal. Both companies have factories in Nepal. In fact, toothpaste is now Nepal's fourth-biggest export, behind carpets, garments, and vegetable fat called vanaspati. Local and foreign companies are bringing out new soaps with features such as antibacterial properties and citrus scents, which are particularly popular.

Street prices have gone down by as much as 20 percent in some categories in the past few years, largely because of competition. Selling personal-care products can be tricky in a place where consumers commonly use inexpensive laundry soap to wash everything from kitchen utensils to their hair. As companies ramped up production of foreign brands in Nepal, they also encountered a strong consumer bias against the made-in-Nepal label. "We no longer get the real Indian soaps," complains a shopkeeper in Kathmandu, holding up as evidence a bar of Lux that was manufactured in Nepal by Nepal Lever, a unit of Hindustan Lever of India.
The soap wars reflect Nepal's larger experimentation with consumerism.

Democracy arrived in the early 1990s, and was followed by a media boom, exposing people to international television shows and ads. Until the mid-1990s, Nepal had only one TV station and no cable TV. Commerce in general has flowered. Nepal now has almost 10 domestic airlines, up from just a couple in the mid-1990s. There is a boom, too, in finance companies.

"People are coming out of the closet," says Suman Shakya, marketing manager of Space Time Network, which is starting a Nepali-language satellite-TV service. "Earlier they may have wanted to fly, to shop in a department store, to use a good brand of soap. Now they are expressing their thoughts more freely." Nepal's per capita gross domestic product of $150 to $200 means it is one of the poorest countries in the world, and market analysis is in its infancy. One analyst views the country as two roughly equal markets: Kathmandu, and the rest. For example, if you can sell 1,500 motorcycles a month in Kathmandu, he says, you will sell the same number in the rest of the country. Kathmandu has about 10 percent of the nation's 24 million people, and its per capita GDP is about three times the national average.

Soap, however, isn't the same as motorcycles, and soap marketers view the rural market as a key growth area. Aarti Soap & Chemical Industries, whose brands include D-Max and Preeti, goes into villages with videos demonstrating how to use its products. Lever sponsors oral-health campaigns in partnership with nongovernmental organisations and is trying to build a distribution network that reaches into the countryside-as are rival companies.

Competition is fierce for shelf space. At the Laxman Cold Store in Kathmandu, an open-front shop looking out on a curbside temple, proprietor Laxman Das Shrestha says his distributor is offering him Rs 600 a month for two months if he will build a small display case at the front of his store. Nearby, at a tiny spice shop, the shopkeeper says he gets Rs 300 a month for carrying only Colgate dental-care products-an amount that doubles his monthly profit from toothpaste and toothbrush sales.

TV ads are getting more sophisticated. Aarti is moving away from religious imagery, opting instead to explain a product's attributes. Aarti executive Varun Lohia pops a video compact disc into his laptop and plays a coming ad. Aarti previously ran ads for five to 10 years without changing them, says Lohia. "Now we change them every six months." Aarti's ads for laundry soap Diyo used to play up the fact that diyo, which means bright, is also the name of a votive lamp used in temples. A new campaign stresses the addition of modern ingredients to the product and the fact that it doesn't scratch the skin like some cheap, coarse Nepali soaps do.

Lever is widely considered the leader in redefining the Nepali soap market. The company says it found the market starkly divided between low-cost laundry soaps at one end, and high-cost imported soaps and shampoos on the other. Lever has tried to introduce midrange products, marketing Lux for women, Liril for young people and playing up Lifebuoy's hygiene benefits. In fact, managing director Sandip Ghose says Lever was surprised to discover that Liril, which is Nepal's biggest-selling soap brand, was commonly used for hair-washing and as a face bar for special occasions, due to its lemon scent. Lever adjusted its Liril marketing to capitalise on the soap's perceived freshness.

Unilever also launched a campaign around Fair & Lovely skin cream to try to change people's impression of Nepali-made goods as inferior. As recently as two years ago, consumers were willing to pay 10- 20 percent more for Indian-made Fair & Lovely, and the Indian version would outsell the local version 3-to-1. "We had a very odd situation," Ghose says. The ratio was reversed after a campaign featuring stylish young women being asked a series of questions: Is everything you're wearing imported-shoes, watch? Yes, she replies. But what about the radiance on your face? No, she says, that's made in Nepal.


LATEST ISSUE
638
(11 JAN 2013 - 17 JAN 2013)


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