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Potential for growth in ecommerce, pharmacy: Reckitt Benckiser global CEO

NEW DELHI: Ecommerce and pharmacy channels are clear growth channels in India and similar markets, according to UK healthcare and consumer goods maker Reckitt Benckiser.

At a post-earnings analyst call on Friday, RB global chief executive Laxman Narasimhan said, “We have created a clear roadmap of growth for each space that leads up to a company that grows in midsingle digits… for example, in urbanising and developing India.”

Referring to its mainstay hygiene brands in India such as Dettol and Harpic, the chief executive said, “Penetration rates in urban environments have gone up by 20% and in rural communities by over 10%. But both brands still have lots of headroom.”

India is a top-five market for the healthcare and consumer products maker. Apart from Dettol antiseptic and soaps, its brands include Harpic and Lizol household disinfectants. Dettol and Harpic have grown together over the years in terms of market presence and now with focused businesses in channels like pharmacies, Narasimhan said.

Banega Swachh India, Reckitt Benckiser’s strategic move aligned with the government’s Swachh India cleanliness drive, was started in 2014 with an investment of Rs 100 crore, using actor Amitabh Bachchan as the face of the campaign. The company has since leveraged the programme to education for our consumers and for the communities in which they live,” said Narasimhan, who moved to RB from beverages and snacks maker PepsiCo. drive penetration and distribution across brands.

“Dettol in India drives availability of high-quality products and provide access to information and He said Reckitt Benckiser will take its digital and ecommerce learnings across its portfolio to build activation and delivery.

“What we’ve been able to create with digital, consumer relationship marketing, science and crossborder platforms are the foundations for growth in new spaces,” he said. “We can use these in markets such as India, addressing the needs of new cohorts and expand to digital health, all of which are important elements of the future of this company.”

Citing condom brand Durex as a vast opportunity, he said the challenge was to ensure the brand’s availability. “If you look at India, Durex is available in 75,000 points of distribution. Some of the competitors are at 600,000, at much lower price points. Scaling distribution in India for Durex is one example of the kind of things that we believe are opportunities for us to drive topline growth,” Narasimhan said.

The global chief also expressed concern about the Covid-19 outbreak’s impact. Calling Reckitt Benckiser’s problems “operational,” he said fixing them won’t be straightforward, particularly with any coronavirus-related disruption to consumption and supply chains. “Given the economic context, the new growth and operating margin targets look a stretch,” he added.

Reckitt to sell China baby-formula business for $2.2 billion

Reckitt Benckiser Group Plc agreed to sell its Chinese baby-formula business to Primavera Capital Group for $2.2 billion as the company seeks to exit from the struggling sector.

Reckitt will retain an 8% stake in the unit and sees net cash proceeds of about $1.3 billion, which it plans to use to reduce debt, the company said in a statement on Saturday. The household-products maker, based in Slough in the UK, expects to record a net loss of about £2.5 billion ($3.5 billion) related to the sale, primarily on the remeasurement of goodwill and intangible assets.

The deal includes manufacturing plants in Nijmegen in the Netherlands, and Guangzhou, China, and exclusive licence of the Mead Johnson and Enfa family of brands in China. Reckitt will continue its global ownership, operating the brands in the rest of the world. The transaction is expected to be completed in the second half of 2021.

The sale marks the end of Reckitt’s venture into the baby-formula business started just four years ago. The sector has struggled since the UK-based firm bought US baby-milk group Mead Johnson in 2017.

Reckitt put its infant-nutrition business in Greater China under strategic review earlier this year as part of CEO Laxman Narasimhan‘s biggest portfolio revamp since taking the helm of the company in late 2019. While Reckitt’s overall sales grew a record 12% in 2020 amid surging demand for Lysol and hygiene products, the China baby-milk business has been a drag on performance.

Shares in the company are little changed this year, versus a 9.4% advance in the UK’s benchmark FTSE 100 Index.