As Reckitt Benckiser’s India business heads towards contributing more than 5% to global revenues, B&E highlights the possible opportunities and imperatives for the company.
Reckitt Benckiser India’s turnover is just over Rs.20 billion (of which Dettol alone makes over Rs.10 billion). With the assimilation of Paras Pharma, which has a turnover of around Rs.5 billion, and Reckitt’s own CAGR of around 40% should see it rise the Indian FMCG ladder and soon match the likes of GCPL and Dabur (revenues of around Rs.40 billion), in near future. Moreover, Reckitt’s India division is well on its way to cross the 5% contribution (to global turnover) benchmark, even before HUL & P&G.
Reckitt is investing over Rs.2 billion in a Paras manufacturing facility near Badii to further strengthen its OTC offerings. Chander Mohan Sethi, MD, Reckitt Benckiser India informs, “Currently, OTC comprises 15-20% of business, and is one of our strategic growth pillars.” With Reckitt’s track record for innovation – 40% of its sales comes from products developed over the last three years better times are expected. Besides, it gives Reckitt the opportunity to enter hitherto unknown categories like haircare/body care (Set-Wet deodorants & hair gels), hair oil (Livon). Reckitt has already moved up to the third spot in the Rs.75 billion soap market with its Dettol variants.
But one of Reckitt’s biggest weaknesses has been that its brands are more popular than the company itself unlike the Unilevers and P&Gs. While individual product brands & extensions have worked since ages, the aura of a strong parent brand does lend a great degree of credibility and preference. Heritage brands like Dettol, and high performing brands like Harpic and Lizol are doing well, but since Reckitt banks too much on new innovations, and has to invest heavily on marketing each of these products (it spends 12% of revenues on marketing, highest among top FMCG players), it would do well to ensure that corporate branding initiatives get stronger. To be fair, it has started the process in two markets Germany (developed) and Brazil (emerging) to gauge the results. Ramping up these initiatives across countries is critical. Akshay Bhalla, MD, Protiviti Consulting comments, “Reckitt has lagged in bringing some of its brands in time unlike HUL and P&G. It has to ensure that it comes up with more homogenous products in tune with changing consumer habits and preference in India.” Also, as the company gets more aggressive in rural areas, it has to fix its relatively low penetration. The company has distributors across 3000 towns via a hub & spoke model compared to 5500 for HUL and 4000 for Godrej Consumer Products Ltd. Finally, its flagship Dettol has a very strong presence in the health segment; but beauty still leads the FMCG space, where Reckitt still lacks as much as a foothold. It would be risky to let Dettol do the honours as it would interfere with its traditional positioning. Perhaps the situation calls for another big brand acquisition!
Reckitt is investing over Rs.2 billion in a Paras manufacturing facility near Badii to further strengthen its OTC offerings. Chander Mohan Sethi, MD, Reckitt Benckiser India informs, “Currently, OTC comprises 15-20% of business, and is one of our strategic growth pillars.” With Reckitt’s track record for innovation – 40% of its sales comes from products developed over the last three years better times are expected. Besides, it gives Reckitt the opportunity to enter hitherto unknown categories like haircare/body care (Set-Wet deodorants & hair gels), hair oil (Livon). Reckitt has already moved up to the third spot in the Rs.75 billion soap market with its Dettol variants.
But one of Reckitt’s biggest weaknesses has been that its brands are more popular than the company itself unlike the Unilevers and P&Gs. While individual product brands & extensions have worked since ages, the aura of a strong parent brand does lend a great degree of credibility and preference. Heritage brands like Dettol, and high performing brands like Harpic and Lizol are doing well, but since Reckitt banks too much on new innovations, and has to invest heavily on marketing each of these products (it spends 12% of revenues on marketing, highest among top FMCG players), it would do well to ensure that corporate branding initiatives get stronger. To be fair, it has started the process in two markets Germany (developed) and Brazil (emerging) to gauge the results. Ramping up these initiatives across countries is critical. Akshay Bhalla, MD, Protiviti Consulting comments, “Reckitt has lagged in bringing some of its brands in time unlike HUL and P&G. It has to ensure that it comes up with more homogenous products in tune with changing consumer habits and preference in India.” Also, as the company gets more aggressive in rural areas, it has to fix its relatively low penetration. The company has distributors across 3000 towns via a hub & spoke model compared to 5500 for HUL and 4000 for Godrej Consumer Products Ltd. Finally, its flagship Dettol has a very strong presence in the health segment; but beauty still leads the FMCG space, where Reckitt still lacks as much as a foothold. It would be risky to let Dettol do the honours as it would interfere with its traditional positioning. Perhaps the situation calls for another big brand acquisition!
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
