Reckitt Benckiser India, the maker of Dettol antiseptic soap and Cherry Blossom shoe polish, has served a legal notice to Bharti Walmart demanding that the cash-and-carry joint company withdraw its Great Value toilet cleaner, as it infringes upon the ‘bottle design and cap’ of Reckitt’s Harpic brand, the domestic market leader in this category.
Though in the past consumer goods companies and big retailers have been involved in spats over trade margins, this is possibly the first time in India that an FMCG company has taken the legal route against a private label brand of a retailer or a cash-and-carry company.
“This is a statement that private brands of organized retailers are increasingly challenging national ones,” said Anand Mour, vice-president-FMCG and retail, at brokerage firm Indiabulls Securities.
Great Value is Walmart’s top-selling Private Brand, with estimated global annual sales of close to $11 billion — that’s bigger than fast-food giant McDonald’s $8.1 billion revenues from the US market. The brand was launched 17 years ago, to offer price-sensitive consumers cheaper products compared to national brands.
In India, it is sold in the three Bharti Walmart cash-and-carry stores and is a Private Brand for categories such as packaged foods and household cleaners. In addition, Bharti Retail runs 59 Easy Day supermarket stores. Both formats stock Wal-Mart’s Private Brand.
A Bharti Walmart spokeswoman confirmed receiving a notice from Reckitt Benckiser and said the company is in the process of evaluating its response. Two persons directly involved with the development said Bharti Walmart has sought Walmart Stores’ advice on how to deal with the matter. Reckitt Benckiser declined comment on ET’s email query on the subject.
Rodney Ryder, a Delhi-based advocate associated with international law firm ANM Global and Scriboard Advocates, which specializes in intellectual property (IP) rights consultancy, said: “In such cases, the muscle power, or advantage, is always with the IP rights holder. But the IP rights have to be relevant to specific jurisdictions.”
Harpic leads the `60-crore toilet cleaner segment with 75%-plus share, but like most national brands, it too is increasingly under pressure from private labels.
Future Group, for example, says that in the toilet cleaner segment, its Clean Mate brand is now neck-to-neck in market share across its 135 Big Bazaar stores with Harpic.
Devendra Chawla, business head, Private Brands, Future Group, said: “We are going aggressive on our private brands and have a strong presence in household cleaning. We are leading in the glass cleaning segment and are a very close second to Harpic in the toilet cleaning category in our stores.”
All modern retailers, including Future Group, Reliance Retail, Spencer and Aditya Birla’s More as well and cash-and-carry chains such as Bharti Walmart are relying on Private Brands to prop up sales and margins.
Retailers manage to sell Private Brands, to consumers at prices 10-20% lower than national brands because they don’t incur overheads like marketing and advertising costs.
Bharti Walmart, the 50:50 joint venture between Sunil Mittal-owned Bharti Enterprises and Bentonville-based Walmart, the world’s largest retailer, can not sell directly to consumers as the Indian government does not allow foreign investment in retail.
The company operates three cash-and-carry stores called Best Price Modern Wholesale stores and these outlets are allowed to sell only to retail outlets and institutional buyers.
Article: The Economic Times