Reckitt gets brand muscle to explore new frontiers

Reckitt gets brand muscle to explore new frontiers

Author | Source: The Economic Times | Wednesday, Oct 11,2006 9:15 AM

Reckitt gets brand muscle to explore new frontiers

Reckitt Benckiser India's engagement with new, niche and far-from-mature FMCG categories seems to be on the rise.

The company's focus on new launches in niche categories in the past one year or so - Veet, Vanish, Finish and Easy-Off Bang - has just got a shot in the arm with global acquisition of Boots Healthcare International by its Anglo-Dutch parent.

The acquisition has brought three new brands into its stable - Strepsils, Clearasil and Sweetex. However, the company's brand portfolio suddenly looks crowded.

Reckitt Benckiser had acquired Boots Healthcare International (BHI) at an estimated £1.93bn in cash late last year, making its one of the most talked out buyouts in the healthcare segment. In India, however, it's only now that Boots brands, marketed through Boots Pirmal joint venture, have come into the Reckitt Benckiser fold.

While analysts say Reckitt is filling fresh niches in the market, the company's MD, Chander Sethi, doesn't agree. He calls it a strategy of spotting need gaps, filling them with relevant products and communicating well with consumers.

“We have entered categories which others have ignored. We believe they have great prospects which has already begun showing,” he told ET. “It's not without reason that we are the leading household products company in the world.” This will form the basis for the company's rapid growth in India in the coming days, Mr Sethi added.

The moot question remains how much of marketing support can Reckitt give to the acquired brands from the Boots stable. During the last two years, the company has added four new brands - Veet, Vanish, Finish and Easy-Off Bang - and has committed substantial marketing spends on them.

The company's advertising spend as a percentage of sales is in double digits which makes it third largest ad spender in the FMCG space.

Three more brands in the portfolio means marketing resources will either be spread thin or more funds may need to be earmarked for the acquired brands. Boots brands are small, but have huge growth potential.

Even as Reckitt expects to cross Rs 1,000 crore in revenues, analysts said, it will have to prioritise its brand building efforts and decide which of these brands are to be treated as power brands, much like HLL, and exactly which ones needs to play in the niche market.

“With the addition of too many small brands in a short duration and high entry costs, the choice will have to be made ultimately,” said Sukanya Kripalu, a Mumbai-based strategic marketing consultant.

Take for instance, Clearasil. According to Kripalu, Reckitt will have to first decide whether to focus the brand merely as an anti-pimple product, albeit with virtually no real competition, or reposition it in a highly competitive skin care segment.

“Clearasil has equity in the consumer mind and the company will have to build that quickly to get the younger generation hooked. It can't wait for mothers to pass that brand as a legacy to their daughters since the generation of mother itself is changing,” said Kripalu.

Nevertheless, erstwhile Boots brands will buttress Reckitt's OTC portfolio. With sore throat lozenge brand Strepsils and artificial sweetner brand Sweetex, the company will make a big bang entry into rapidly growing non-therapeutic healthcare space.

Reckitt Benckiser already has strong OTC brands such as Disprin, Colsprin, Fybogel and Gelora in India. Anti-acne cream Clearasil will strengthen its skin care segment, which has an epilatory cream brand in Veet.

“This is in line with our global strategy to span household and OTC segments and the new brands we are getting will strengthen our OTC portfolio,” said Mr Sethi.

Reckitt Benckiser India is one of the fastest growing FMCG companies in India. The company has successfully leveraged its flagship brand Dettol.

Dettol Handwash Soap commands a over 50% share in its segment. Amongst new launches, Veet epilatory cream and surface-care Easy-Off Bang have logged a share of 15% and 20%, respectively.

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