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Marico cries foul over Cococare deal - Views on News from Equitymaster
 
 
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  • Sep 29, 1999

    Marico cries foul over Cococare deal

    Marico Industries has served a notice on Recon Oil over sale of its ‘Cococare’ brand to Hindustan Lever Limited (HLL).

    Marico Industries (FY99 turnover: Rs 5.5 bn ) is the market leader in branded coconut oil segment. Its brand, ‘Parachute’, commands 54% of the Rs 5 bn branded coconut oil market. It also has a major presence in edible oils segment with its brands ‘Saffola’ and ‘Sweekar’. Marico also owns the ‘Hair & Care’, 'Revive', 'Sil' brands. Marico has exploited its 600,000 outlets distribution reach to distribute products for other companies including Indo Nissin Foods, Procter & Gamble India and P&G Home Products.

    Marico has stated that it had an understanding with Recon Oil for 'Cococare' prior to HLL's buy out. Hence, it should have had the first right to buy out the brand from Recon. The acquisition of Cococare by Hindustan Lever is likely to get delayed because of this development.

    Marico has been fighting off competition from HLL to retain its market share in the coconut oil segment. It has increased its ad spend to ward of HLL's 'Nihar' challenge and was also considering the acquisition of the Cococare brand to consolidate its position. With both Marico and Hindustan Lever vying with each other for the same brand, such heartburn, on part of the loser, was natural.

    After the acquisition of 'Cococare' brand, HLL will command a sizeable 22% of the branded coconut oil market. It is now likely that coconut oil segment will see a fresh round of consolidation, with both the companies trying to beef up their product portfolio. The coming months are also likely to witness increased marketing warfare between both the companies.

     

     

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