It seems that giant Reckitt Benckiser is on a winning streak. Having turned in consistently encouraging results over the past year, quarter by quarter, the UK-based company, with total sales in excess of $12.4 billion and brands ranging from Lysol to Clearasil, is in the process of acquiring UK-based healthcare company, SSL International (which had sales of $1.27 billion last year) for $3.8 billion. The main attraction of SSL is the company’s Durex brand of prophylactics—a leader in many world markets but not (yet) in the States—together with its ownership of the Scholl foot care franchise outside the U.S.
No surprise that the acquisition has been well received by the financial community. As one wag put it, sex and walking are unlikely to go out of fashion! Actually, we think the most strategic implication may be for Church & Dwight (C&D) and its Trojan brand, since rival Durex will now be owned by a much stronger competitor, who could potentially give C&D a much harder run for its money in domestic U.S. markets.
Also, Princeton, NJ-based Church & Dwight has never managed to develop any real international capability, whereas Reckitt Benckiser is truly global in its reach.
Another segment to watch will be Reckitt Benckiser’s development of Scholl foot care toiletries, where SSL has owned the brand in Europe (Merck owns the brand in the U.S.), and where competition has generally been limited to small, local companies. RB is likely to put its significant muscle to work, driving this under-developed category. All in all, this is a shrewd move for Reckitt Benckiser, and a classic case of acquiring brands with significant development potential against generally weaker competition.
Sara Lee Deal Not Done
We have commented before about some of the apparent contradictions of Unilever wanting to acquire the rump of Sara Lee’s European toiletry business (see Happi Nov. 2009). Why, having cut a lot of its own local tail-end-Charlies, should Unilever want to acquire a whole lot of someone else’s? But that seems to be Unilever’s intent, having agreed to a €1.275 billion acquisition price. But the deal has run into some problems under the European Commission’s competition rules. In its analysis of the acquisition, the EC says it needs more time to determine the full implications of the deal from a competition perspective in certain European markets.
While Unilever does not seem unduly concerned about the eventual outcome—the deal is apparently on track to be completed in the fourth quarter of 2010—one cannot help but wonder what may be going on at the fixture level. Normally, as soon as a brand is known to be up for sale, national account managers from the competition are quick to get into buyers and remind them that the brand is now a potential orphan, and “is it really worth the shelf space any longer,” etc. etc? So it’s a fair bet that when Unilever does finally get the Sara Lee business, there will be quite a lot of distribution to win back.
L’Oréal’s Keen on China
The vice president of L’Oréal China, Lan Zhenzhen, is quoted as saying that China is expected to be L’Oréal’s third largest market after the U.S. and France by 2011. Currently, 17 of L’Oréal’s 26 international brands have entered China, and more introductions are planned as the market develops…food for thought!
Fragrance, a bridge too far for Beiersdorf?
Much is often said in marketing circles about the need for critical mass, so it is curious to see Beiersdorf-owned La Prairie braving the vagaries of the prestige fragrance category. It is currently adding new variants to its new Life Threads fragrance brand, following on from the company’s first fragrance venture, Silver Rain.
We cannot help wondering about the wisdom of this whole fine fragrance adventure, given La Prairie’s struggle to even achieve critical mass for its existing skin care business. If Beiersdorf can get La Prairie to be profitable at the top end of the corporation’s core category, skin care, it will surely have done well. But to let the relatively small prestige division wander into totally new territory with prestige fragrance, against the L’Oréals and LVMHs of the world, seems at best high risk and at worst, a waste of scarce resources.
Indian Company Buys into Turkey
India-based consumer goods company Dabur India has acquired Hobi Kozmetik, a Turkish manufacturer
Hobby is a strategic acquisition for Dabur India.
Secondly, Hobi Kozmetik is one of the few local manufacturers that remain independent. It has also been relatively single-minded in building its brand, Hobby, unlike some of its less impressive local competitors, which have tended to adopt a more scattergun approach to brands and brand names.
And lastly, the acquisition may give Dabur a useful platform to expand further West.
A Return for Alberto Culver
It seems Alberto Culver is re-establishing momentum in its business.
Will success bring suitors?
“We recorded exceptionally strong growth in the third quarter,” said James Marino, Alberto’s chief executive officer. “U.S. sales were strong and, due to the performance of TreSemme in every region, international sales were up.”
So it’s a tad ironic, then, that this improved performance under Marino's leadership, would seem likely to bring the Melrose Park, IL-based company further into the cross -hairs of potential acquirers…Kao? Unilever? Henkel?
Aldi Quits Greece
It seems everyone is worried about Greece...and now German discounter, Aldi, has confirmed that it is shutting down its operations in Greece, making this the first time the hard discounter has exited a market. The chain employs 700 workers in the country and has said that the stores will gradually shut down by the end of 2010. Aldi said that it would focus more strongly on expansion in the other nine countries in which the company is successful, with more than 4,200 outlets.
Watsons Trial Fragrance
Last month, Chinese group Watsons began using its UK fragrance chain, The Perfume Shop, to create mini fragrance stores within its sister company, Superdrug. This is to rival specialist fragrance counters in Boots and other department stores; further evidence of Watsons’ strategic operation of its large portfolio of beauty stores.
Boots into Sweden
Boots is continuing its international expansion strategy by opening stores in Sweden through a JV with a local pharmacy group, Farmacevforetagama. Despite the name, this is likely to add further success to the Boots brand.