Monday, April 24, 2006

Why did Godrej bought Keyline Brands?


Reasons

1. GCPL the ownership of several international brands and trademarks including Cuticura, Erasmic and Nulon in many countries
2. This acquisition represents the commencement of building a global presence in the international FMCG market
3. Access to a strong customer base that includes Boots, Sainsbury and Tesco. Supermarkets have long-term relationships with
local companies. Without this, it is difficult to penetrate markets such as the UK
4. Widen its geographical presence and access trade channels in developed markets including Europe, Jordan, Australia and
Canada
5. Keyline Brands, which has a personal care range that complements Godrej's (hair colour, talcum powder, shaving cream)
6. Learning: Dealing with modern trade, they will learn how to do business with supermarkets - the levels of discounts to offer, what to expect in return in terms of shelf space etc. GCPL also hopes to pick up important insights on planning and meeting global delivery schedules, apart from developing skill sets to introduce new products internationally

About Keyline: One of UK’s admired FMCG companies engaged in the manufacture, marketing, sales and distribution of cosmetics
and toiletries. It has a strong portfolio of brands and a well-developed customer base in numerous supermarket chains.
But why are they targeting West?
1. Bigger Market: The size of the hair colour market in India is just around Rs 500 crore (Rs 5 billion) at present. In the UK, the market is five times bigger. And hair colours as a category is special for GCPL. It contributes 35 per cent of GCPL's revenues and 65 per cent of profits.
2. While hardly 5 per cent of the FMCG offtake in India happens through this channel, the share of sales through organised retail chains is growing rapidly. To hone its skills, GCPL plans to send executives abroad to train and bring home the best practices. This also means that GCPL gains an opportunity to catch up with the multinational competition (Hindustan Lever,
Procter & Gamble), when organised retail takes off in India.

Strategy
1. GCPL is hoping to cash in on the current craze for "ethnic Indian" by introducing sandalwood and ayurvedic variants of Godrej No. 1 in British supermarkets. And it believes there will be enough takers for the hair care range: powders will be positioned at the lower end and creams at the higher end.
2. Targeting Indian Market: Indian customers are familiar with two brands from the Keyline portfolio - Erasmic shaving products and Cuticura talcum powder. But the rights for marketing Cuticura in India is with a south India-based group. If the Medimix group is willing to sell the rights for Cuticura and the price is right, GCPL is definately gonna buy it. GCPL will launch the Erasmic range for men - shaving cream and after-shave lotions. Other products will follow later.
3. At present Keyline outsources about half of its manufacturing to various units in the UK. GCPL's manufacturing costs, points out Press, are "30-40 per cent lower than those in the UK. Given these cost advantages, GCPL proposes to shift some of Keyline's production to its Vikhroli, Mumbai plant.

Any comments guys!!

4 Comments:

Blogger Anil Agarwal said...

AFTER GOING THROUGH THE WEBSITE AND THE ARTICLE WHAT I FELT IS THIS COMPANY CAN GIVE A STRONG COMPETION TO COMPANIES LIKE REKITT AND BENKISTER, HLL AND P&G, IF THEY MARKET THEIR GOODS PROPERLY KEEPING IN MIND ABOUT THE PRICING FACTOR AND THE QUALITY OF GOODS.

April 25, 2006 6:19 PM  
Blogger Anil Agarwal said...

AFTER GOING THROUGH THE WEBSITE AND THE ARTICLE WHAT I FELT IS THIS COMPANY CAN GIVE A STRONG COMPETION TO COMPANIES LIKE REKITT AND BENKISTER, HLL AND P&G, IF THEY MARKET THEIR GOODS PROPERLY KEEPING IN MIND ABOUT THE PRICING FACTOR AND THE QUALITY OF GOODS.

April 25, 2006 6:20 PM  
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