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With Savlon, ITC targets wider presence in the hygiene space

ITC is working on extending the brand into all possible categories of hygiene products

New Delhi: Savlon, now an ITC Ltd brand, will no longer be just a liquid antiseptic.

ITC, which acquired Savlon from Johnson and Johnson (J&J) in February this year for an undisclosed amount, is working on extending the brand into all possible categories of hygiene products, including hand wash and sanitizer, according to a person familiar with the development.

The aim is to take on Reckitt Benckiser Group Plc’s Dettol, which dominates the branded antiseptics market with about 85% share (according to research reports by brokerage firms) and Hindustan Unilever Ltd’s (HUL) Lifebuoy, which is present both in the hand-wash and hand-sanitizer categories.

ITC, a Kolkata-based firm with interests in cigarettes, packaged food, personal care, apparel, hotels and information technology (IT), believes that Savlon’s former owner J&J could not exploit the potential of the Savlon brand. With its deep-rooted distribution and retail network, ITC will be able to “fast leverage" Savlon as a hygiene brand, goes the thinking.

“Acquisition of Savlon augments ITC’s personal-care portfolio and provides new opportunities in the health and hygiene segments. Savlon enjoys great equity in India, and the opportunities it affords us are manifold. We’ll be concentrating on developing and reinforcing a set of core brand values and establishing key brand equity platforms," said Sandeep Kaul, chief executive officer (personal care products business) with ITC.

He did not comment on brand extensions. “A lot of development work has been initiated focused on understanding consumers better and to reinforce equity," he said.

“ITC can obviously leverage its distribution to push Savlon, and it will do so. The extension of the brand is a natural and logical move. ITC could also look at extending the brand beyond personal hygiene and look at the entire cleanliness space," said Abneesh Roy, associate director (institutional equities research), Edelweiss Securities.

ITC has one of the most extensive distribution networks in the country. Its products are available at 4.3 million of the estimated eight million retail outlets (not all can be called stores) in India. In the past, ITC had used its deep-rooted distribution network to good effect while entering new categories—it did this in personal care with soaps, shower gels, shampoos, and in foods with biscuits and chips.

In comparison, ITC’s rival and India’s largest packaged-goods company HUL reaches 6.3 million outlets, of which it touches three million directly.

Swiss food maker Nestle India Ltd’s total reach is about 4.5 million outlets of which it reaches one million directly.

According to a senior marketing executive at a rival consumer packaged-goods company, who did not wish to be named, ITC could launch bodywash, shaving creams, medicated plasters and kitchen gels, besides antiseptic liquid and soap, under the Savlon brand.

Still, it is a competitive market, admitted Roy.

“It will not be easy for ITC to eat into Dettol’s market share. During the first few months, Savlon may gain market share, but to reach to the level where it was about two-three years back, it would take time for ITC. However, considering ITC’s long-term views, it will leverage the brand’s potential in a much better way than its former owners."

The Dettol brand has sales of about 700-800 crore every year, according to industry estimates. To retain its leadership position, Reckitt is also gearing up to penetrate further into tier-II and tier-III towns and is hoping to ride on the government’s cleanliness campaign—Swachh Bharat. It has also started a 100-crore marketing campaign “Dettol—Banega Swachh India".

Reckitt declined to comment.

HUL’s Lifebuoy has a significant presence in the bar soap, liquid soap and hand-sanitizer space. Like Reckitt, HUL is also running a rural marketing campaign to promote its brand Lifebuoy, which is positioned as a “soap that gives 100% more germ protection".

In the April-June 2015 quarter, ITC’s personal-care business posted healthy revenue growth on increased volumes and new launches in the personal wash and deodorant categories.

“The recently acquired trademarks—Savlon and Shower to Shower— have been fully integrated with the existing operations of the business," ITC said in its statement. Savlon was a 65 crore (in revenue) brand when ITC acquired it, according to an estimate by brokerage firm Religare Capital Markets Ltd.

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