Procter & Gamble (P&G) has decided to break its three-year distribution alliance with Marico Industries for its Old Spice, a shaving cream and lotion, Pampers diapers and Ariel detergent cake. The disengagement will be effective from December 1, 2002.
The two had entered into a distribution alliance in July 1999 after P&G broke its joint venture with Godrej Soaps for marketing, distribution and sale of its products such as Camay and Old Spice. P&G held 51 per cent in the venture.
Procter & Gamble Hygiene and Health Care has now decided to license Old Spice trademark and business to the Goa-based Menezes Cosmetics, for an undisclosed sum. Pampers will be distributed by the P&GHH and Ariel by P&G Home Products.
As per the arrangement, Menezes would use the Old Spice for 10 years and it covers after shave lotion, shaving cream and talcum powders.
Menezes Cosmetics is part of the 92-year-old CMM group of companies, which had introduced Old Spice in India in 1969 and marketed it till October 1993. Currently, Menezes markets body sprays, after shave lotions and shaving creams under the XM brand in India. Old Spice is thus a strategic fit for Menezes owing to its business-focus on the fragrances category.
The decision will marginally impact P&G sales to the tune of 3 per cent (Rs 16 crore annually), but will not impact its profitability as estimated license fee revenues are expected to be higher than the profits generated by P&G on the Old Spice business. The arrangement with Menezes will be effective from December 1.