Godrej to swap technology, not brands, in emerging markets

Godrej Consumer Products Ltd is looking at exchange of technologies rather than brands across product categories in emerging markets.

Having positioned itself among the top players in these markets, GCPL wants to use this strategy in Indonesia, Argentina and Africa where it has acquired FMCG companies.

“There would be technology exchange but not necessarily brand exchange. This would be relevant to all the categories that we are already present in,'' said Mr A. Mahendran, Managing Director, GCPL.

So, for instance, when Godrej wanted to enter the hand-hygiene category under Godrej Protekt, technology for the category was transferred from the UK-based Keyline brands (it owns the Cuticura brand of hand sanitiser), the Godrej group's first acquisition in 2005.

On the other hand, with GCPL's strengths in the household insecticide category, it would take technology used in this category to new markets such as Argentina when Godrej Argentina (created from the acquisition of two companies – Issue group and Argencos) decides to enter the category.

“While Godrej Argentina has become the leader in the hair colour, it does not have household insecticide. We would transfer our strength, knowledge and technology in household insecticide when it decides to enter the category,” says Mr Mahendran.

Thus, bringing in some of the acquired brands into the Indian market is not an imminent possibility, as many of these brands have low equity in the Indian market in spite of being market leaders in their respective markets.

“Bringing in a new brand from any of these countries is as good as building the brand from scratch in India,'' he said.

In fact, in the past when the shaving cream brand Erasmic from the Keyline portfolio was test-marketed in India, the response was lukewarm. “We already have Godrej shaving cream so there is no need for a new brand like Erasmic to come in,'' added Mr Mahendran.

But in categories where there are no overlaps, there is a possibility of new international brands being introduced. For instance, GCPL has exited categories owned by Sara Lee such as air care, shoe care and hair care after buying out the remaining stake in the latter. In fact, Sara Lee brands (Ambi Pur, Kiwi and Brylcream) existing in these categories have already been sold to MNCs such as P&G and Unilever.

Fresh start

GCPL expects to make a fresh start in some of these categories in India. “We are serious about entering the air care and hair care categories and may consider brand transfer in these categories.'' Indonesia 's Megasari group has the Stella brand of air fresheners while in South America , there are brands such as Roby and 919 in the hair care segment.

However, GCPL is staying out of the shoe care category in spite of having had a brand such as Kiwi shoe polish. “Shoe care is a small category – not more than Rs 150 crore and is not growing. With usage of leather shoes coming down, it is unlikely that we would be looking at this category,'' said Mr Mahendran.

Global vision

Globally, GCPL is aspiring to become the number two player in the household insecticide business and would be competing with big MNCs such as SC Johnson and Reckitt Benckiser.

“Across our global portfolio today, it is household insecticides which is the largest category and our vision is to become the number two player after SC Johnson,'' said Mr Mahendran.

To achieve this vision, GCPL recently appointed aveteran, Mr Shashank Sinha, as its President, International Business.

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