How large is the hand sanitiser market?

If we were to talk about one product category that has turned out to be the champion of the COVID era, it has to be home and personal hygiene. The mass germophobia drove awareness and adoption of products like hand sanitisers and disinfectants in Indian households across geographies. This mass adoption has turned a niche product like the hand sanitiser into a mass market commodity.

We took a deep dive into the hand sanitiser category to unearth how it has evolved over the last several (COVID) months. Almost all brands in the health and hygiene space launched hand sanitisers. Due to the high demand, even sugar mills decided to make a quick buck and were backed by lenient state licensing. This also paved the way for local/regional brands.

Prior to the COVID era, sugar companies were already producing ethanol (or ethyl alcohol) in their distilleries for fuel and pharmaceutical companies, as well as alcohol bottling plants. They did not have to spend on additional production infrastructure. Soon after (in April), sugar producing states like Maharashtra and Uttar Pradesh reported sanitisers in excess of 30 lakh litres, and had to look for markets beyond India.

While the segment has grown significantly, it is hard to put a pin on the growth numbers due to the large number of entries in the category as well as price fluctuations. Priti A Sureka, director, Emami, mentions that pre-COVID, the sanitiser segment was considered to be niche, with a turnover of around Rs 100 crore.

"The sanitiser market has grown by nearly 400 per cent with the entry of over 350 new brands. It is (approximately) Rs 400 crore in size and is aiming to be at Rs 700 crore by the end of the year."

Anuja Mishra, head of marketing for personal care and hygiene, Godrej Consumer Products (GCPL), says that the sanitiser category is likely to stabilise at 20-30 times of its pre-COVID size. Citing a Nielsen study, she mentions that the segment has grown by 53 per cent in India since the Coronavirus outbreak, as compared to last year.

A top executive of a leading hygiene brand, however, maintains that it would be unfair to put a number on the value of the sanitiser category due to significant price fluctuations and the impact on market research due to the COVID-induced lockdown. But the executive reveals that in terms of volume, the year-to-date consumption of sanitisers is at 5.5 million litres, a 10x growth as compared to last year. The category usually grows at a rate of 10-15 per cent. The value per litre was significantly higher last year.

In March, as the COVID hysteria set in, the government capped the prices of sanitisers at Rs 100 per 200 ml till June 30. So, the price of a 50 ml bottle of Godrej Protekt sanitiser was reduced to Rs 25 from Rs 75. Brands have stuck with the capped price so far and plan to continue with it.

With a 10x growth in volume consumption, if the average price remains the same (as it was before the government's limit), the market value would be at Rs 1,000 crore (considering the pre-COVID size of Rs 100 crore). Now, since the government cap and other factors have reduced prices of hand sanitisers by almost 65 per cent, the market value will be around Rs 350 crore.

Going by Mishra’s projection, the market could stabilise at 20-30x over the long-term. Since 10x growth puts the market size at Rs 350 crore, 20x and 30x growth means market size (by value) of Rs 700 crore and Rs 1,050 crore respectively. Hence, it should finally settle at around Rs 1,000 crore to Rs 1,100 crore.

Even though the cap has been removed, prices are unlikely to see a spike in the near future. Considering the price-sensitive mass market and low input cost, the players have decided to keep the prices low. This will leave little room for the competing local/regional players and eventually push the lesser known names out of the market. The overall market value (projected) may also rise in case the players decide to revert to the original prices, which were significantly higher than the capped price.

The market could stabilise at Rs 1,000 crore to Rs 1,500 crore if the prices are increased to 50 per cent of pre-COVID rates from the current 35 per cent.

Speaking on what influences purchase decisions, Rajeev John, VP marketing, Dabur India, says that germ-kill properties and fragrance are the key factors. "Lately, skin-friendliness has also emerged as a contributing factor. Consumers seek products that smell nice and are not clinical in nature."

Emami's Sureka maintains that apart from the brand, consumers also look out for the alcohol content in hand sanitisers. She agrees that fragrance, skin-friendliness as well as packaging are other factors influencing (consumers) choice.

Also, parents are wary of children using sanitisers frequently owing to the alcohol-based formulation. "The presence of natural ingredients – Neem and Tulsi, as well as moisturising ingredients – is a big draw for the BoroPlus hand sanitiser."

"Nearly 45-50 per cent of the sanitiser category turnover is generated from North India. Around 60 per cent of the consumption comes from adults in the 18-35 age group. Pre-COVID, the market was a bit skewed towards women, who comprised 65 per cent of the user base," Sureka adds.

Godrej's Mishra says that the consumption is skewed in favour of urban markets, where the consumption per capita may be higher due to higher disposable incomes.

While a large chunk of usage happens outdoors, inside homes, consumers keep sanitisers at the door for visitors. A lot of other indoor usage happens in enclosed spaces like offices, malls, etc.

Apart from online channels, the products are primarily sold via pharmacies and kirana stores. The SKUs vary from 1-2 ml sachets to five litre cans. Packs that are less than 100 ml are for mobile/on-the-go usage. The 200-500 ml bottles are stationed on tables and at entry/exit points for indoor usage. The 500 ml and one litre units are used at big establishments and for refilling purposes.

The hygiene quotient has expanded much beyond personal usage, and has led to several product formats aimed at sanitising the surroundings of consumers, both indoors and outdoors. The formats include sprays, anti-bacterial wipes, fruits and vegetable washes/cleaners, fabric disinfectants, etc.

For example, Godrej Protekt's hygiene portfolio currently has 14 products offering protection for home, kitchen, personal use and outdoor surfaces. Godrej offers three variants of disinfectant sprays alone.

Speaking on the competition from the large number of unorganised (local) players, Emami's Sureka says that there is a market for unbranded/local variants. Price-sensitive consumers prefer low prices. She, however, maintains that the majority of the consumers will always choose a known and trusted brand over local alternatives.