Home / Industry / Retail /  HUL-GSK Consumer terminate distribution agreement for OTC and oral care brands

NEW DELHI :

Hindustan Unilever Ltd., on Wednesday announced the mutual termination of a sales and distribution agreement with GSK Consumer to sell the latter’s over-the-counter and oral care products such as Sensodyne, Crocin, Otrivin and Eno brands in India, effective November 2023. On Wednesday the companies announced a mutual termination of the agreement that was firmed up in 2020 for an intial period of five years. In 2018, HUL announced the merger of GlaxoSmithKline Consumer Healthcare Limited (GSKCH) with itself in a 31,700 crore deal that gave HUL access to brands such Horlicks apart from Boost, Maltova and Viva. As part of the mega-merger, the latter also got into a consignment selling agreement with GlaxoSmithKline Asia Private Limited (GSKAPL) and GlaxoSmithKline Consumer Private Limited (GSKCPL) in 2020 for promotion, marketing, distribution and selling of the over-the-counter and oral care products. This included distribution of brands such as Sensodyne, Crocin, Otrivin and Eno, for GSK in India. However, the agreement is being mutually terminated over the next 12 months. The move is set to have no material impact on HUL, it said in its regulatory filing. “The company and GSKAPL, GSKCPL companies have mutually agreed and expressed their intention to terminate the agreement with effect from 8th November, 2023 and the one-year notice period of termination shall commence from 9th November, 2022. This shall not have any material effect on the operations of the company," HUL informed the exchanges on Wednesday. Analysts said this may have some impact on HUL's margins. “By the time contract ends, it will be three-an-a-half years out of the initial five years, so only one-and-a-half years would be left. HUL was getting 300 crore gross income but there were costs of sales, distribution. So, some impact on margins but for a company of size of HUL, it won't be significant," said Abneesh Roy, Executive Director, Nuvama Institutional Equities.

ABOUT THE AUTHOR

Suneera Tandon

Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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