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India key to Reckitt Benckiser’s growth

India key to Reckitt Benckiser’s growth

Mumbai: Home products maker Reckitt Benckiser India Ltd is expanding its reach to cover about 60% more outlets in semi-urban and rural areas as it plans to launch new products and back them with increased ad spending.

Chairman and managing director Chander Mohan Sethi said India is “absolutely top priority" for the firm’s UK-based parent, Reckitt Benckiser Group Plc. “India was not in top 10 key markets few years ago. It is now among the top six-seven important countries for growth," he said.

Reckitt Benckiser is trying to expand its reach in India and penetrate its hinterland, which accounts for 35% of the Rs1.4 trillion packaged consumer goods industry and grew by an estimated 16.9% in calendar year 2009. In comparison, urban markets expanded 9.2%, according to market research firm Nielsen.

Competition is rising as consumer goods makers such as Hindustan Unilever Ltd (HUL) and Procter and Gamble Co. are also trying to drive growth in the country of one billion-plus people.

Reckitt Benckiser is known in India for its range of germ killers and insecticides. Dettol, a 75-year-old antiseptic brand, earns yearly revenue of Rs1,000 crore for the company in India, according to Nielsen. Toilet bowl cleaner Harpic, glass cleaner Colin, and pest and mosquito repellant Mortein have 75%, 88% and 60% market share, respectively, in their market segments.

In some products, Reckitt’s market share in India has slipped because of growing competition from multinational, national and regional consumer products makers that are selling cheaper products or dangling promotional offers before consumers.

Competitive pressure can only rise. Shirish Pardeshi, industry specialist at securities house Anand Rathi, said Mortein is facing competition in the mosquito coils market from cheaper brands such as Maxo from Jyothy Laboratories Ltd.

Over the last nine months, Reckitt Benckiser has implemented an initiative trying to reach smaller towns and gain higher visibility there.

According to research firm TAM, the firm was the second largest advertiser on television in the packaged consumer products industry after HUL in 2009. Globally, it spends 12-12.5% of its revenue on advertising and promotions.

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