May 18, 1999|
- Reckitt & Colman of India Limited (RCIL) - a 51% subsidiary of Reckitt &
Colman Plc., UK, is a major player in the household cleaning and
pharmaceutical products segment of the FMCG market. It manufactures antiseptics
and soap (Dettol), anti-cold (Disprin), shoe polish (Cherry Blossom), house
cleaners (Lizol, Harpic), insect repellantS (Mortein) and fabric whiteners
- In March 1998, RCIL set up Reckitt Piramal - a 3-party JV between
RCIL (20% stake), Nicholas Piramal (40%) and Reckitt & Colman, UK (40%)
to lend marketing thrust to its over the counter (OTC) pharmaceutical products.
It transferred the marketing and distribution of its most established brands,
Dettol and Disprin range of products to this JV.
- Though RCIL forgoes the marketing margins on the above products, it will
earn distribution fees on products distributed through its 400,000 plus
retail outlets. Also, higher volume growth will materialise since the JV
can tap on Nicholas Piramal's better doctor detailing and a distribution
network that is better geared to distribute OTC drugs.
- Household care is currently RCIL's fastest growing business (36% per annum).
RCIL offers a broad range of products in house cleaning, lavatory care,
floor/shoe polishes, fabric care and insect repellant as part of its
household care segment.
- Competition is intense in the specialised household cleaner (surface care)
segment where RCIL's Lizol (internationally called Lysol) controls 41%
market. Lizol competes directly with Lever Johnson's Domex, which controls
the remaining 59% market.
- Though RCIL's Harpic dominates the toilet cleaners segment with a 75% market
share, it contributed only 5% to FY97 turnover. The company's Cherry Blossom
range of shoe polishes also controls the market with a 75% share.
- In the insect repellant category, RCIL's Mortien corners a 16% market share
and is growing annually at 40%. Mortien competes directly with Johnson
Lever's Raid and Bayer's Hit. Godrej has recently surfaced in this category
by acquiring the Goodknight brand.
- The new products category (i.e. products that are less than 4 years old)
contributed 20% to RCIL's turnover and will further consolidate with brand
- Reckitt is increasing its distribution reach from the current level of
400,000 retail outlets to 600,000 outlets with greater emphasis on rural
penetration. RCIL has also invested in information technology and networking
to boost its supply chain management.
- Focus on household products business with new product launches under Lizol
and Mortien brand names, supported by higher advertising spends and retail
visibility to gain volumes.
- Franchise extensions of strong brand names like Dettol, Lizol into shaving
creams, glass cleaners, car cleaners, air-fresheners will boost brand
recognition and strengthen the bottomline.
Intense competition in household products with Johnson Lever's will put
pressure on margins in this price sensitive segment. The pressure will be
on Reckitt to match Lever's huge advertising budgets to sustain customer
- The company's claim that higher volumes and dividend income from the
Reckitt Piramal JV will compensate loss of marketing margins is yet
to take shape.
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