rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » They acquire, they own but don't bring these home

They acquire, they own but don't bring these home

March 03, 2015 11:29 IST

Indian consumer product companies have shopped for brands across the world but have preferred not to bring the labels to India

UK-based Tetley Group, acquired in 2000 by the then Calcutta-based Tata Tea, in 2005 took over another American company, Good Earth. The next year, it bought US-based Eight O’Clock Coffee and Czech firm Jemca, and took a 33 per cent stake in South Africa’s Joekels Tea, which owned the Laagar brand. Later, in 2007, it acquired Polish tea brand Vitax. But the owner of these brands, Tata Global Beverages (TGB), formerly Tata Tea, is yet to bring these labels to India.

TGB is not the only top Indian fast-moving consumer goods (FMCG) company that has kept its foreign brand acquisitions off Indian shores. Over the past decade, almost all its major domestic peers — Godrej Consumer Products, Wipro Consumer Products, Marico, Dabur India and Kolkata-based Emami — have shopped abroad and acquired global consumer goods brands in different regions.

At a time when most companies are trying to tap India’s fast-growing consumer story, it might appear puzzling why Indian firms kept their acquired brands out of play. The reason, experts say, varies — either the foreign brands are not a natural fit for Indian needs, or they lack scope for localisation, or they carry too high a premium for the Indian market. There also are some cases where the brand rights do not belong to the Indian acquirers.

“Most Indian companies that made acquisitions abroad essentially took that route to enter foreign markets. In contrast, when you bring a global brand to India, it requires localisation. Customisation and integration take time. And, it it is a brand that does not have a mass global presence, it is like building it in India from scratch; that requires investment and time. This may not always be successful,” says Rachna Nath, leader (retail & consumer), PwC.

Of the many global brands that TGB has acquired since 2000, it has brought to India only Tetley, and it has been slow in unleashing the entire Tetley portfolio here. Its chief executive & managing director Ajoy Misra says: “We have taken some of our brands to other markets. The timing of taking a brand to a new market is a decision made on the basis of consumer demand, category trends and taste preferences. We ensure our products, blends and flavours are designed to suit the palate of target consumers.”

For example, Misra says, Tetley products in India are available in “flavours customised for Indians”. With Tetley, “we pioneered the green tea segment here and are now market leaders in that category. The recent launch of Tata Tea Acti Green, a new green tea variant in India, is leveraging Tata Tea’s strong brand equity, to reach a wider consumer base”, he adds.

Brand expert Harish Bijoor believes it is about “focus and approach”. “Most Indian companies acquiring foreign entities prefer to keep their portfolios separate and focused. The clear point is, the mother company might have existing brands in India that it might not want to undermine. In many cases, talking of the same category of products, there is always a risk of a more expensive foreign brand eating into the hard-earned market cobbled by the domestic entity,” says Bijoor.

PwC’s Nath explains some of the acquired brands are not suited for India because they are too premium for local consumers.

Godrej Consumer Products, Marico and Wipro Consumer Care have acquired a total of more than hundred brands outside India. But they either kept those labels specific to a country or region or decided against bringing those to the home country.

Godrej, primarily, used its acquisitions for technology transfer. “Our international acquisitions gave us access to some fantastic technologies and capabilities. Rather than bringing the acquired brands and launching them here, we focused on cross-pollinating ideas and technologies across regions. We believe consumers’ needs in different geographies are distinct. Therefore, we don’t follow a ‘copy and paste’ model,” says Godrej Consumer Products Managing Director Vivek Gambhir.

Godrej has leveraged the technology and capabilities from acquired brands and tailored those to suit Indian consumers, says Gambhir, adding: “Brand building is a time-heavy and investment-heavy exercise. Launching a new brand and ensuring success requires careful deliberation and sustained investment. Our strategy has been focusing on fewer brands and ensuring we invest adequately to increase market share and drive meaningful differentiation. We believe our existing brand portfolio has tremendous headroom for growth, and we do not want to fragment our focus. So, our innovation approach has been geared more on portfolio depth than portfolio breadth, and building extensions within our existing brand platforms.”

While Godrej launched Erasmic here, it could not launch Cuticura as it did not have the rights.

Wipro Consumer Care, which did not respond to queries from Business Standard, also refrained from launching the Unza labels in India. While it brought the Yardley brand, its exposure and distribution has so far been limited. Even if Yardley already had a brand recall here, the product did not capture the local market as expected. Wipro did not want to comment on its strategy.

Marico, on the other hand, has kept brands specific to regions. Its portfolio in India is different from what it sells in Egypt, Malaysia, West Asia, South Africa, Vietnam and Bangladesh. While it acquired Aromatic and Camelia in Bangladesh, and Haircode and Fiancee in Egypt, Marico, which did not respond to questions from Business Standard, did not bring the labels to India. It, however, took some of its Indian brands, such as Parachute, to other countries.

Dabur India tried taking its Indian brands to foreign markets, including Turkey and the US, where it entered through acquisitions. But, the approach was limited. It never explored the possibility of bringing acquired brands home.

Emami, which recently acquired Asutralia-based Fravin, is looking to leverage its research & development and manufacturing strengths for organic and natural products. “We will explore global markets to start with, especially the developed nations, with our organic products. It will offer us a ready consumer base that already has a high level of consumer acceptance for such products,” says Harsha V Agarwal, director Emami.

Sometime in the future, Agarwal adds, Emami will definitely “plan to introduce Fravin products in India as the local market matures”.

Sounak Mitra in New Delhi
Source: