Reckitt Divests Dermicool To India's Emami
Executive Summary
Reckitt will divest heat rash treatment Dermicool to India's Emami as it continues to reshape its portfolio around brands with higher growth potential.
Reckitt Benckiser Group is set to offload its Dermicool heat rash treatment to India’s Emami Limited for INR4.32bn ($56.8m).
The divestment of Dermicool follows the sale of brands such as the Scholl foot-care line and E45 skin-care range and represents another step forward in Reckitt’s plan to “actively manage its portfolio for higher growth,” according to the UK-based company. (Also see "Reckitt Sells Skin-Care Brand E45 To Karo In £200m Deal" - HBW Insight, 5 Jan, 2022.)
Emami said the acquisition would give it the leading position in India’s heat rash – or prickly heat – category by enhancing its existing offering under the Navratna Cool Talc brand and creating opportunities for synergies and cost optimization. Dermicool is the third largest brand in the category while Navratna is the second largest behind Zydus Wellness’ Nycil.
Market Share Of 20%
One of the leading brands in the “high growth and low penetrated” prickly heat category, Dermicool commanded a market share of around 20%, Emami noted. Positioned as proprietary ayurvedic medicine, the main products in the range are the Dermicool Menthol Regular Prickly Heat Powder and the Dermicool Soothing Lavender Prickly Heat Powder. Ayurvedic treatments are based on ancient Indian remedies.
According to a report by Indian financial services firm Prabhudas Lilladher, Dermicool generates annual sales of around INR1.1bn, with an EBITDA margin of 36%. The report gives the sales value of India’s prickly heat powder and cool talc category at around INR7.5-8.0bn.
Commenting on the deal, Emami director Harsha V Agarwal, said Dermicool offered “great synergy with our existing businesses and is a perfect strategic fit.”
“It will strengthen our presence to make us number one in the prickly heat powder and cool talc category,” Agarwal noted. “With increasing global warming and soaring summer temperatures, such problem solution niche products are poised for strong growth in future.”
Operating in the consumer health and personal care markets, Emami boasts a portfolio of over 300 products based on ayurvedic formulations, with its leading brands including the BoroPlus skin-care line, Zandu Balm topical analgesic the Kesh King range of hair and scalp treatments.
With operations in 60 countries across Asia, Africa and Europe, Emami generated sales of INR28.8bn in the 12 months to 31 March 2021.