In a bid to expand and establish its portfolio overseas, Godrej Consumer Products Ltd (GCPL) plans to take its Indian brands to Africa within the next one year. The decision comes within weeks of the company’s recent acquisition of the Nigerian personal care major, Tura.
GCPL is exploring the African continent as a potential stronghold, considering that three of its six acquisitions in the last five years have been from this region. Earlier, GCPL acquired the South African brands Rapidol and Kinky, which are said to have contributed significantly to the company’s overseas revenues, increasing it to around 25 per cent of the total turnover.
Expansion of the company’s Indian brands to Africa, according to GCPL’s Managing Director Dalip Sehgal, “is certainly a priority. We are looking forward to taking our soap, hair colour and household insecticide brands to Africa in another one year or so”.
GCPL is looking at a two-pronged strategy, wherein the company will first expand its three current acquisitions in Africa to areas that have not been tapped. Rapidol and Kinky, for instance, are now being taken to east and central Africa.
The second strategy is to leverage the 40 per cent share of the Indian hair colour market to expand into South Africa and to introduce a host of such new products as powder hair colour under the Godrej Renew and Colour Soft brands.
“With Tura, we plan to have a similar strategy, like what we did with Rapidol. For the latter, the research and development is done in India and there is common sourcing with the brand as well. Besides, in the hair extensions category alone, there is a $2-billion opportunity in Africa,” Sehgal noted.
Analysts say, as far as expansion is concerned, the three aspects of product, brand name and distribution network have to be kept in mind. They point out that, with an already existing distribution network covering 70 per cent of West Africa, GCPL has got a decent hold over the product overseas.
“The only thing left for Godrej is to leverage its brand name in India for the African market,” Technopak India’s senior analyst Purnendu Kumar says.
He admits there will be local competition and it is only a matter of time before other Indian companies in similar segments will look at acquisitions in Africa, as the penetration level is low, making it a high potential market.
For the recently acquired Tura, which already has a 12 per cent market share, GCPL plans to leverage its soap technology in India, where it is the market leader in the mass soap category with the Rs 250-crore Godrej No 1. The company is of the opinion that this will help in expansion and branding of Tura, considering that it is also a mass market brand.
Sehgal also pointed out that, though GCPL could look at the US and UK for expanding its brands further, that would come only in the second stage of the company’s plans.
