Every one of the 100,000 Medimix soap bars that are churned out per-day, has ‘World’s largest selling hand-made soap’ embossed on its packaging.
“It’s true,” says AV Anoop, managing director of the AVA Group, which makes the soap for distribution across Tamil Nadu, Kerala, Karnataka, Andhra Pradesh and Telangana, "The art of making soaps by hand is dying. Right about now, the only competitor we have is Chandrika, and their sphere of influence is the Kerala market, while we cater to South India."
Medimix traces its origins to 1969 to Chennai, when a doctor with the Indian Railways, Dr VP Sidhan, began making soap to treat skin ailments in railway workers. As years went by the soap grew in popularity, buoyed by its mention on prescriptions written by doctors treating skin conditions.
As decades went by, the company bifurcated into Cholayil Private Limited (headed by Dr Sidhan's son, Pradeep Cholayil) which distributes the product in North India, and the AVA Group (run by Dr Sidhan’s son-in-law, AV Anoop) which oversees distribution in the South.
Inside the Medimix soap factory.
Both companies manufacture a variety of toiletries. The humble soap bar, however, continues to remain the mainstay under the ‘Medimix’ brand. But that could soon change, as the AVA Group wants to foray into other herbal cosmetic segments.
"Till the end of the 1990s, we only had one product: Medimix Classic,” says Anoop speaking exclusively to CNBC-TV18, “We now have other products. Our immediate plan is to launch a Medimix Hair Oil, a Medimix Shampoo and also a body wash, which is an important product that is going to capture the market soon.”
CNBC-TV18 learns that these products have already been developed by the AVA Group's R&D division and are being prepped for launch. “We already launched a hand wash and face wash in the market,” says Anoop, “Very soon — within two years — I want to launch a body-wash, which is developed and ready.”
For a brand that has thrived for half-a-century, Medimix’s growth has been moderate at best. Anoop, however, has no complaints. “The market is registering a slow-and-steady growth,” he says, “It hasn’t been phenomenal in the last ten years, largely because customers are also adopting other segments like hand-wash, a face-wash and a body wash.” That could perhaps explain why the brand is looking beyond soap-making.
Today, the AVA Group makes Medimix soap bars at six plants across South India. Each plant accounts for approximately 100,000 bars of soap, every day. “But that number varies depending on the size of the bar we make on a given day," says Anoop, “Medimix comes in 35-gram, 75-gram and 125-gram variants."
As on date, Medimix’s 75-gram and 125-gram Medimix Ayurvedic soaps are modestly priced at Rs 26 and Rs 40 respectively. In stark contrast, focusing on product categories like a hand wash means a maximum retail price (MRP) of Rs 190 for every unit sold. In fact, Medimix’s most expensive product is its five-litre hand wash, priced at Rs 700 per unit. That is perhaps another reason why AVA’s product diversification strategy could make sense in terms of sales volumes.
Analysts agree with the company’s approach. “It is a fact that the soap industry is slowing down, and diversification would certainly help,” says Abneesh Roy, senior vice president (research), Edelweiss Securities, "AVA should focus on niche segments, although competition in these areas is huge.”
Competition is another reason why although Medimix’s foray into other toiletries segments is interesting and might come across as aggressive, it would probably fall short of being a game-changer. “It won’t be easy since there are already competitive, entrenched players selling the same products,” Roy adds.Meanwhile, Medimix in South India alone accounts for 850 tonne of soap bars per month. “The company will cross the 10,000-tonne production mark for the year, for the first time, by the end of FY19,” Anoop says, signing off. But the question remains: will Medimix and its diversified cousins keep winning the toiletries market? The next couple of years could have all the answers.