How Fevicol became a monopoly, and dominates the adhesives industry

In 63 years, Pidilite with the help of its STAR product Fevicol built a monopoly in the adhesive industry. Here's their innovative strategy to get ~70% market share!

17th August 2022
3 min read

In a nutshell

Pidilite, Fevicol's parent company, was founded in 1959 by Balvantray Kalyanji Parekh. Its STAR product Fevicol is extremely popular in India, with a whopping ~70% market share!

But, how did Pidilite hit it out of the park with Fevicol? Well, it's pretty simple. You see, in 1950, carpenters used fat-based glue which was inconvenient, clumsy and required heating before using it.

Now, generally, in the adhesive market, ~60% of the revenue comes from the industrial segment, while ~40% comes from the consumer segment.

Fevicol, on the contrary, makes ~80% of its revenue from consumers, while ~20% from industrial sales.

So, Pidilite packaged ready to use, Fevicol adhesive into smaller containers and sold them directly to consumers and carpenters to target a wider market.

If we do some quick math, we can figure out how much Fevicol makes from households and consumers.

- Total households = 25 crore
Suppose 80% of households use about 5 small tubes of Fevicol, so total revenue generated = 80% x 25 Cr x 20 x 5 = INR 2000 crores

Total carpenters = ~10 lakh
Suppose 50% of them use Fevicol, total number of carpenters using Fevicol = 500,00
If each carpenter uses ~200 kg of Fevicol in a year, then we get = INR 40,000
Total revenue generated = 40,000 x 500,000 = ~INR 2000 crores

Totally, Fevicol makes INR 4000 crores from households and carpenters! Now, Fevicol does a lot to keep these carpenters loyal to the product. Plus, you can't deny the fact that it solves a real pain point for consumers (remember the green bottle gum?).

So, Fevicol's monopoly is 100% intact and it'll be tough for competitors to beat "Fevicol ka mazboot jod"!

Fevicol is a wildly popular name in India! You’ll hardly see anyone go to a shop and ask for a bottle of adhesive. No matter what adhesive they end up purchasing, they always ask for Fevicol.

Of course, our love for Fevicol as a brand also reflects in its market share. It captures a whopping ~70% market share in the domestic market[1]!

Fevicol is a clear monopoly in the adhesive industry, and we love breaking down successful monopoly businesses.

So let’s dive right in!

Firstly, a bit of backstory on Fevicol

Pidilite, the parent company of Fevicol, was founded by Balvantray Kalyanji Parekh in 1959.

Pidilite is known for making adhesives, sealants, and construction chemicals. Fevicol was their flagship product and it quickly became a household name.

Back in the 1950s, carpenters used fat-based glue which was inconvenient, clumsy and required heating before use.

Fevicol was introduced as an alternative to this and it addressed all these shortcomings. It was ready-to-use, did not create a mess and was super efficient.

The product was an instant hit and Fevicol soon became the go-to adhesive for carpenters. With time, the product line was expanded to include different types of adhesives for different purposes.

Today, Fevicol is used in a variety of applications like woodworking, carpentry, automobile, leather, etc.

So, what exactly did Fevicol do differently?

Now, a key thing about the adhesives market in India is that ~60% of revenue comes from industrial segments, and the remaining ~40% from consumer segments[2].

Contrary to this trend, Fevicol puts its maximum effort to reach out to the consumer segment. In fact, ~80% of its revenue comes from this segment, while the remaining ~20% is through industrial sales[3].

Now, Pidlite’s real masterstroke was to take Fevicol, an industrial-grade adhesive, re-package it in smaller sizes and introduce it for household use[4]. This single step tremendously improved its familiarity with Indian consumers and made it the iconic brand it is today.

But, do the numbers make sense for Fevicol?

Let’s do some quick math to figure out how much of a revenue advantage Pidilite gains by targeting the consumer segment.

Firstly, Fevicol has two different types of users in the consumer segment:

  1. Households, and
  2. Carpenters

In 1970, Fevicol launched its first small size pack of 30 grams. Due to the convenient size and usability, it was adopted by families across the country. 

Present day, there would hardly be any household in the country which does not stock at least one Fevicol tube in the house. In fact, it is considered a good practice by families to keep Fevicol handy for any emergency situation!

Revenue from households

  1. There are about 25 crore households in India[5]. Let’s say that ~80% keep at least one small pack of Fevicol in their house regularly.

    Then, the total number of households using Fevicol is 80% of 25 crores = 20 crores

  2. Also, say, one household uses about 5 small tubes of Fevicol (for instance, a 23-gram tube whose price is INR 20) in a year.

    This means that one household uses Fevicol worth INR 100 (INR 20 X 5) in a year.

  3. Total revenue generated by selling Fevicol to households = INR 100 X 20 crores = INR 2000 crores

Voila! By selling just INR 100 worth of Fevicol to each household in a year, Pidilite is generating a whopping INR 2000 crores of revenue!

Revenue from carpenters

Now, let’s see how much money Fevicol makes by selling to carpenters.

  1. Let’s assume there are ~10 lakh carpenters in India[6,7]. Let’s say ~50% of them use Fevicol exclusively (conservative estimate based on their current market share of 70%).

    So, total number of carpenters using Fevicol =  50% of 10,00,000 = 500,000

  2. Now, let’s say that each carpenter uses ~200 kg of Fevicol in a year (conservative estimate of 1 kg of fevicol/day x 200 working days).The cost of a 1 kg bottle of Fevicol is ~INR 200.

    Total cost of 200 kg Fevicol would be INR 200 X 200 = INR 40,000.

  3. Revenue generated by selling Fevicol to the carpenters would be INR 40,000 X 500,000 = ~INR 2000 crores

    So, by selling to the consumer segment i.e. households and carpenters, Fevicol gets a total revenue of INR 2000 crores + INR 2000 crores = INR 4000 crores!

The herculean task of reaching to consumers

It’s one thing to buildd an innovative product, and another to make it reach your target market.

Before Fevicol, the general practice for adhesive companies was to stock their product with hardware shops and get done. There was no attempt to reach out to the actual users i.e. carpenters to buildd a rapport with them.

In its initial years, Pidilite started reaching out to carpenters directly. This strategy, implemented diligently over years, has given them their most loyal user base.

Educating carpenters

Before Fevicol, the glue was made from animal fat and had 2 major problems:

  1. It had to be heated in fire for hours
  2. It smelled very bad

Fevicol solved both these problems for carpenters and gave them these couple of benefits:

  1. Fevicol was super easy to apply unlike the cumbersome animal fat glue
  2. It saved a day’s work for carpenters ⇒ ~INR 500-1000 savings assuming a labourer’s typical daily wages

So, Pidilite targeted carpenters directly and organized workshops & training sessions to create awareness about the product and its various uses.

These programs also helped carpenters learn about the latest technology & techniques in the industry, and also made them aware of the importance of using good quality adhesives.

Fevicol Champions Club (FCC)

But, Pidilite did not stop at just educating carpenters.

They went a step ahead and worked on buildd-ing a community of their power users i.e. carpenters. This community, called the Fevicol Champions Club or FCC, helped carpenters to grow professionally and also in personal life.

The idea was to make the best carpenters in the country feel like rockstars. The members of the FCC were given a platform to showcase their skills and were also felicitated at an annual event called the Fevicol Champions Show.

This created a sense of belongingness and pride amongst the members and helped Pidilite to create a community of passionate users.

FCC now has 40,000 carpenters spread over 300 clubs in 145 cities, and has helped Pidilite forge a lifelong relationship with carpenters. In essence, Pidilite created influencers out of its power users!

Closing thoughts

Overall, Pidilite built a winner in Fevicol by creating an innovative product and marketing it to the end consumers through their power users.

It will be tough for competitors to beat this monopoly because, “yeh Fevicol ka mazboot jod hai, tutega nahi” 😉


You'll love these articles too!
How Asian Paints became a monopoly, acing inventory and supply chain!
How Asian Paints became a monopoly, acing inventory and supply chain!
How HUL powers rural growth by empowering women
How HUL powers rural growth by empowering women
The IKEA Food Effect: How a Swedish restaurant made IKEA even more successful
The IKEA Food Effect: How a Swedish restaurant made IKEA even more successful

How Asian Paints became a monopoly, acing inventory and supply chain!

Asian Paints is a business monopoly for 55 years!
Berger Paints, the 2nd largest paint company in India after Asian Paints, earned ~INR 7800 crores in revenue in FY 21-22, and a profit of ~INR 750 crores.
During the same period, Asian Paints earned ~INR 25,000 crores in revenue (>3x), and a profit of ~INR 3200 crores (>4x)!

How is Asian Paints able to get these amazing results and is so far ahead of its competitors?
Well, it's because of their commitment to perfecting their inventory management and supply chain.

A) Inventory Management
- For any manufacturing company, excess inventory can be a headache. So, the goal is always to sell off all inventory as quickly as you can.

You measure this using a ratio called "Inventory turnover ratio". Inventory turnover ratio is simply the number of times you can sell off your inventory in a year.
So, if you can sell your inventory every 60 days, so in a year you'll be able to sell off all your inventory 6 times.
So the inventory turnover ratio is 6.

Now, Asian Paints has an inventory turnover ratio of 3.4, while Berger Paints has a turnover ratio of 2.58. So, they are able to sell off their inventory in 107 and 141 days respectively.
But, what impact will a small 0.82 difference in inventory turnover ratio have?

Well, if you consider:
Berger Paints yearly production capacity => 610,000 KL
Then they can produce and sell = 1671 KL in a day
Asian Paints, on the other hand, can sell = 2202 KL in a day

So, Asian Paints is able to sell 521KL more every day. The average price of 1 KL paint is INR 10 lakh. So, Asian Paints makes 53.1 CR more in revenue every day than Berger Paints.
Let's say the Asian Paints plant runs for 22 days a month. So, in a year, they make ~INR 14000 Cr extra revenue.

B) Supply Chain - Secondly, Asian Paints has adopted a direct-to-dealer strategy, where they remove all the middlemen and directly supply paint to dealers who sell to customers.
But, here the problem is that dealers have limited storage space. So, Asian Paints very cleverly restocks all dealers 3-4 times a day.

Compared to the traditional model with wholesalers, Asian Paints gets a margin (post-distributor) of 95% as opposed to the usual 75%. That is in spite of the added transportation cost. The 20% edge in margins saves Asian Paints INR 5000 crores!

How HUL powers rural growth by empowering women

Hindustan Unilever or HUL is a popular brand in India. You have probably used their very common products like Surf, Lifebuoy, Vaseline, etc! In FY22, this company clocked a turnover of 50,336 crores and survived for a whopping 90+ years!

Now, there are many interesting aspects to HUL's success. But, one of the most notable ones is their CSR initiative, Project Shakti! With Project Shakti, HUL not only empowers rural women but also creates a perfectly blend business model. Let's get into it.

Now, a company registered in India with,
1) > 500 crores net worth, OR
2) > 1000 crores turnover, OR
3) > 5 crores net profit
are required to spend at least 2% of their net profits in the past 3 years on CSR initiatives.

Now, what exactly is this Project Shakti initiative? Well, in a nutshell, this is how the program works:
1. HUL selects Shakti entrepreneurs or Shakti Ammas (SA) from villages and trains them on the basics of distribution networks.

2. These women are provided with credit facilities, so that they can purchase HUL products at wholesale prices and sell them at retail prices.
In short, rural women become micro-entrepreneurs, who use their personal networks to better their lives,

As of 2022, there are 1,60,000 SAs who work across ~50% of all villages in India!

By now, you’d be thinking that all of this sounds great, but how exactly does this help HUL’s business?

There are ~6 lakh villages in India with sizeable number of households. Shakti Ammas span across 50% of these villages, ie. 3 lakh villages.
Now, there are ~275 households in each village. And, Shakti entrepreneurs are able to reach 5% to 50% of these households directly. That is ~40 lakh to ~4 crore households in India.

Let's assume that a rural household spends ~INR 400 every month on HUL products.

Revenue generated by Shakti entrepreneurs across India in a year = Households reached by Project Shakti x Average monthly spend x 12

For ~40 lakh households reached,
Revenue generated = 4,000,000 x 400 x 12 = INR 1920 crores
For ~4 crore households reached,
Revenue generated = 40,000,000 x 400 x 12 = INR 19,200 crores
In essence, HUL is able to generate a revenue of INR 2000 to 20,000 crores due to Project Shakti!

Project Shakti is a boon for rural woman but this CSR initiative also put HUL on the rural India map! In fact, now HUL has built a very low-cost distribution network in rural areas while helping others. It's not a stretch to say that this is a win-win situation for the brand!

The IKEA Food Effect: How a Swedish restaurant made IKEA even more successful

IKEA's food business wasn't a random fluke but a deliberate strategy to drive their furniture sales.

You see, most IKEA stores are huge warehouses located on the city outskirts. These stores were naturally far away from any local restaurants or food chains.

So, the initial idea was to provide food to customers so they hang around in the store longer without having to go outside for a snack.

These food centers, in the beginning, weren't meant to be profit centers. Their main goal was to increase footfall and extend their customers' visits.

But, today, IKEA's food business makes $2.5 billion dollars in sales annually!

In the articles, we took the example of IKEA's Hyderabad store to figure out if IKEA's food business actually helps with their furniture sales.

1) Turns out, that ~32% of visitors came to IKEA to get food.
2) And, IKEA's food business is able to drive ~5-15% of its furniture sales!

So, IKEA's restaurants are an integral part of its business and definitely here to stay. Whether the company takes it to the next level of its promised potential - we will have to wait and watch.