Flashback to the future

Last month, two corporate announcements within weeks of each other offered a flashback to another era in Indian consumer markets. On May 5 came the announcement that Tata Consumer Products was planning a re-entry into the “non-foods” fast moving consumer goods or personal care products. On May 25, reports mentioned that the joint venture between Hindustan Motors and Peugeot would roll out an updated version of the Ambassador in two years.

At the very least, both companies must be considered plucky and ambitious. Their businesses flourished when consumer markets were relatively small and protected by high tariff barriers. Both markets have evolved visibly since.

The details of the next generation Ambassador are unclear. We know it will be manufactured at the Hindustan Motors’ Tamil Nadu plant which is now owned by an associate company of the C K Birla group. This project is separate from Hindustan Motors’ plans to produce electric vehicles (two- and four-wheelers) from its Uttarpara (West Bengal) plant for which the company is scouting for a foreign partner.

The clunky petrol-guzzling version built on 1950s technology had an unexpectedly long run that ended in 2014 when Hindustan Motors sold the brand to Peugeot, one of the earliest foreign entrants to India’s car market. The Ambassador’s twin USPs: Robust body-work and innards fixable by informal car repair networks were overtaken by the introduction of SUVs and the rapid learning skills of the Indian roadside mechanic.

The sturdy Ambassador flourished at a time when the only other competitor was the Premier Padmini, made with Fiat technology. That was another dated, boxy number, considered superior only because it was smaller and the gears required less muscle power to manoeuvre. With long waiting lists, premiums for early deliveries, and some hectic lobbying against the entry of competition such as Tata group’s tie-up with Honda for the Accord, both companies were extremely profitable. In its heyday, Hindustan Motors was a stock market blue chip — even after Maruti made its high-profile debut in the early eighties and ate into Ambassador’s market share.

Gradually, with upwards of 20 brands of vastly more sophisticated performance, the Ambassador lost its perch. You could spot the decline as soon as the government started buying other car models. With this bulk buying option dwindling, the white Ambassador with a revolving light on top — that enduring image of brute state power — lost its cachet. Efforts to market the car for its antique value in the UK and Europe didn’t yield the kind of volumes that could keep both plants going.

Given this history, the new avatar of the Ambassador would be interesting. Who knows, it may well be a great hit. Didn’t Eicher take a hoary old fading brand in Royal Enfield and turn it around? The key difference is that Enfield was a good product that suffered from poor management. The Ambassador was a poor performer by any metric, even at the height of its monopoly and it flourished only because it operated in a closed market. Reorienting those brand values, that too by a foreign car maker that has had only modest success in India, will be no small challenge.

Tata Consumer Products has the advantage of sensibly exiting its personal care business within the early days of liberalisation as the Revlons and Oriflames started entering, selling Tata Oil Mill Company or Tomco, and later its Lakme cosmetic brand to Hindustan Unilever. Its pre-liberalisation products were typical of a time when giving someone a bar of (imported) Camay soap as a gift was considered extremely generous.

Tomco soaps such as Hamam and Moti were stolid, value-for-money products in functional packaging. There was a great coconut hair oil that came in a thick glass bottle as did Tata eau-de-cologne, which doubled as a deodorant at a time when they were hard to get in India, and antiseptic for nicks and cuts. Moti, a quaint “luxury” brand, was a dream for the budget-watching housewife but a frustrating soap to use if you were a child or a teenager. Large, round and available, if memory serves correctly, in three fragrances, it took ages to get used up. Lakme was the brand with which eighties’ Indian teenagers grew up and it still holds its own as a decent mid-range product against the flood of upscale foreign brands.

Tata Consumer Products, which retails salt and tea, has not delineated its personal care strategy. We do know that it’s banking on the Tata brand name to sell. That’s a safe bet, unless you produce something equivalent to the disastrous Nano.

Like the Chetak scooter, which made a comeback in an EV avatar, this return to roots from two of yesterday’s monopolists make you wonder whether we’re about to see a retro revival from brands that lost out to economic reform. With high tariff barriers and autarky back in vogue as a reigning economic philosophy that could well be a possibility.