Look where technology has taken us. Condoms that glow in the dark. Musical condoms. Sheaths with printed designs and their closed end formed into funny shapes, say that of an elephant. Condoms with a pouch that is patented.
Well, ever since an 18th century Frenchman devised a sheath in a lambs intestine, the condom didnt undergo much major design change. The Japanese just made it thinner. And wanting to perk up their sales, condom manufacturers let their imagination run riot and gave value additions like reservoir tip, colour, flavour, odour, contour, dots, spermicidal, lubricated
Barring the condoms that glows in the dark and the musical ones, all other sheath variants are being manufactured in India. Incidentally, the condom with a pouch, Spiral, was invented by Dr A V K Reddy, chairman of the Chennai-based Redy Medtech Health Products. And the public sector company Hindustan Latex is planning to manufacture a female condom. Surely the land of Kamasutra, a treatise on the art of lovemaking, has come of age.
Today, India caters to the global needs, shipping out around 550 million condoms annually, mainly for international tenders and some percentage as branded exports. Though condom manufacturing is a simple technology, fishing out quality condoms out of the latex dip-line is what is complicated. This is the area where technical expertise is really required. And this is one of the reasons for several condom manufacturers to go limp within few months of operations. According to one estimate nearly 650 million pieces capacity is idle now.
Further possession of quality certification from various countries is a prerequisite to bid for international tenders. It is here that the 1 billion-capacity TTK LIG scores over its competitors hands down. The company has won accreditation from Commissioned European Norms (CEN) and approvals from French, German, South African and WHO quality-certifying agencies. This comes handy for the company to supply for international tenders.
Weird market structure
Unlike the product, the 2,500-million pieces domestic market would seem weird. The market is categorised into four segments: a) the privately-owned branded segment (like Kohinoor, Kamasutra, Durex, Moods and Adam); b) government-subsidised brands (Saajan, Masti and Zaroor); c) government-owned brands (Nirodh and Nirodh Deluxe) but manufactured by private or public sector units; d) for exports branded as well as international tenders; and (e) for imports.
Of the above, the government, with a budget of around Rs 170 crore, is a major buyer, sourcing nearly 1.2 billion annually about 900 million pieces are for free distribution and 350 million pieces are subsidised brands. Of this, Hindustan Latex gets a lions share, followed by Polar Latex, TTK LIG and JK Ansell.
Says JK Ansell executive director Aniruddha Deshmukh: "The Centre is now slowly shifting its purchases in favour of subsidised brands." About realisations, he says companies get Rs.1.15 per piece of Nirodh supplied in strips and Rs 1.40 per piece for Nirodh Deluxe. From NGOs that distribute the subsidised brands, condom manufacturers realise Rs 1.20 per piece with the cost of packing material borne by the former.
"Though ORG estimates OGL imports to be in the region of 40 million pieces, it is largely fake imports, mainly made by domestic players but marketed as foreign brands," he says.
The hot market
Apart from the dull government market, all the steamy television commercials and print campaign that we see are to gain market share in the private or commercial as well as government-subsidised branded condom market a segment estimated to be in the region of 600 million pieces: 350 million pieces government-subsidised brands and 250 million pieces in respect of privately-owned ones.
Of the two, it is the latter that witnesses fierce competition at the market place. The domestic commercial market is dominated by two global condom majors, SSL International plc, UK, and Ansells, Australia, through their Indian joint ventures TTK LIG and JK Ansells respectively, despite the presence of Hindustan Latex and Polar Latex.
While the Rs 105-crore turnover TTK LIG is a 49.6: 49.6 joint venture between the Chennai-based TTK group and SSL International (balance equity held by few individual shareholders) the Rs 38.5-crore JK Ansell is a 50:50 partnership between the Raymonds Group and Ansell.
Agreeing that his competitor TTK LIG leads the market with 37 per cent share, Deshmukh claims that his company follows the leader with 35 per cent and others fighting it out for the balance.
Though both the companies have matching product offerings, TTK LIG, with its premium brand Durex, is one step ahead of its close competitor. Reacting to this, Deshmukh reasons that Ansells premium brand Lifestyle is not so well known to risk an Indian launch though it manufactures and exports the same. In the same vein he adds that Durex, despite its four-year presence, hasnt notched up impressive market share.
"Value-wise, the brand gives us 5-6 per cent of our turnover," defends TTK LIG managing director J Srinivasan.
Selling branded condoms is not as easy as making love with ones wife. Many users look at the sheath as the villain that comes between their pleasurable union. In addition, pricing also plays a major part, as government brands like Nirodh, Nirodh Deluxe and other subsidised brands are available at a far lesser price than Kohinoor, Kamasutra or Durex.
Moreover, it should be remembered that supplies to government are affected as manufacturers sell their own brands in the retail market; as such the quality of government brands like Nirodh and Nirodh Deluxe may not be superior.
In order to overcome such constraints, both the companies have an impressive ad budget. While it is Rs 5 crore for TTK LIG, JK Ansell spends around Rs 3.5 crore per annum. With the competition going tough, even the staid TTK LIG has started following JK Ansells strategy of shocking the television viewers and magazine readers with its steamy commercials.
Success in marketing condoms depends on ground-level distribution. Gone are the days when condoms were available only at pharmacies. Today, it is made available with any grocer and with retail chains like Foodworld. In terms of market-reach, TTK LIGs brands like Kohinoor, Durex, and Fiesta are available at 5 lakh outlets spread across the country. This is enabled due to the vast distribution network of another group company TTK Healthcare.
Deshmukh says his brands reach 1.5 lakh retail outlets in the country. Curiuosly, Kamasutras major market is in the south, while the brand is weak in other markets.
In order to expand its product reach JK Ansell has put up a website, www.ksontheweb.com that details about the matters connected with the pleasure of sensual living. And here the company scores over the market leader. Apart from selling Kamasutra condoms the site also vends mens accessories like Park Avenue perfume and Gillette shaving kit.
The other area where the company is investing money is on implementing an ERP package. Speaking of financials, Deshmukh says the company is targetting a turnover of Rs 55 crore this fiscal. "The company will earn Rs10 crore from marketing gloves, manufactured by our Bangalore-based group company."