1-3-18 2:47 AM EST | Email Article

More recently, though, it hasn't been able to keep up. One strategy it and other big companies have used to strike back: buy the upstarts. After rebuffing Kraft Heinz, Mr. Polman has made a string of acquisitions and investments, including Brazilian organic packaged-foods maker Mãe Terra; Carver Korea, a Seoul-based maker of toners and moisturizers; Beauty Bakerie, a six-year-old San Diego-based online makeup brand aimed at millennials; and Pukka Herbal, a British herbal-tea brand.

Unilever executives, however, believe the only way to win the war is to take the fight behind enemy lines.

Take shampoo. In recent years, a handful of small high-end brands in the U.S. have turned the decades-old shampoo wars between P&G-owned Pantene and Unilever's TreSemmé into a free-for-all. Online subscription beauty services like Birchbox and specialty stores like Sephora provide new avenues for pricey niche brands that cultivate a more personal link to consumers.

Jen Atkin, the hairdresser for the Kardashians, uses Instagram to boost sales for her new brand, Ouai, which sells on Birchbox for $28 for a 10-ounce bottle. Ms. Atkin says she crowdsources to unearth concerns about hair health and hair-color preferences, calling the feedback "invaluable."

"Bigger brands that aren't having that same conversation really stand to lose out," said Dana Aidekman, merchandising head for Birchbox's hair division.

Unilever has tried to turn the tables. In poring over data gleaned from social media, Jennifer Bremner, marketing director for Unilever's lower-priced Suave shampoo brand, was struck by one conclusion: Women tended to be skeptical of quality if prices were low. At Wal-Mart Stores Inc., Suave sells for under $3 for a 30-ounce bottle.

Trying to blow up that perception, Ms. Bremner and a team of three fell back on a tried-and-true, big-brand gimmick: an internet-era version of the grocery-aisle blind-taste test. They repackaged Suave in squat, understated white-and- peach bottles, labeled it evaus -- Suave spelled backward -- and sent it out to beauty bloggers.

Fashion blogger Kathleen Harper recalls getting evaus shampoo, conditioner and hair serum last year. She thought they were "boutique and high-end," the 25-year-old said.

After trying evaus, Ms. Harper was invited to a studio in Manhattan to be part of what she was told was a casting call to advertise the new brand. Halfway through an on-camera discussion, a producer let her in on the prank. Unilever made a video of her surprise reaction, along with those of other bloggers, and used it as part of an online campaign for Suave. Subsequent market research showed "a significant improvement in quality perception" among millennials, according to a spokeswoman.

In India, the insurgent is Patanjali Ayurved Ltd., founded by Baba Ramdev, known across the country for his TV yoga sessions. Eleven years ago, he started selling a line of soaps, creams, jams and juices based on Ayurveda, an ancient Indian system of medicine rooted in complex herb and mineral therapies. Patanjali now sells about 450 products, including a soap containing dung and urine from cows.

"They're natural products, Indian products," said Bangalore retiree Kusumprasad as she left a Patanjali megastore, where customers are greeted by a life-size image of Baba Ramdev dressed in saffron robes.

"Multinationals look at the market size and then plan; we look at how can we help people and propagate Ayurveda," said Acharya Balkrishna, the CEO of Patanjali, who started the company in 2006 with fellow yogi Baba Ramdev and doesn't take a salary.

Hindustan Unilever Ltd. is by far India's biggest consumer-goods seller, but its grip is slipping. Its market share for beauty and personal care is now 25%, down from 27.8% six years ago, according to Euromonitor. Patanjali, meanwhile, has built up a 1% share -- enough to make it a top-20 player in the country in just over a decade.

Unilever has long sold tweaked, "natural" versions of its big global brands like Dove, Sunsilk and Clinic Plus in India. After Patanjali exploded onto the scene, executives decided "we need to play a much more comprehensive role in the natural space," said Sandeep Kohli, head of personal care at Hindustan Unilever. "We said, OK, now we go for it, and we go for it big time."

In 2016, Unilever bought Ayurvedic hair-oil brand Indulekha. Separately it joined with one of India's best known Ayurvedic pharmacies to create a new line of personal-care products under its little-known Ayush brand. Unilever executives contributed know-how about the smells and textures Indian consumers liked, based on decades of traditional market research. Ayurvedic doctors at a 74-year-old pharmacy in Coimbatore, in the south Indian state of Tamil Nadu, meshed that with recipes dating back thousands of years.

They concocted a face wash made from turmeric and other ingredients, boiled together for days. For a new soap, they used clarified butter treated with water more than 100 times to soften the emulsion. The marketing spiel: a 5,000-year-old Ayurvedic solution to modern beauty problems.

Unilever has rolled out 36 new Ayurvedic shampoos, soaps, moisturizers and other products in a little over a year. It eschewed market research ahead of time, relying instead on customer feedback. After what the company said was a good reception in southern India, it is now introducing the line nationwide.

"Unilever was never mindlessly global, but we've realized that we need to get much more fast, much more agile," Mr. Pitkethly said. "There's nothing that Patanjali does, or any local competitor does, that's not replicable."

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com


(END) Dow Jones Newswires

January 03, 2018 02:47 ET (07:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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