A comprehensive background of Reckitt Benckiser containing its History and Origins, Early Evolution, Modern Business, Global Expansion, Company Structure, Recent Efforts and Company DNA. As one of the chapters of the book FMCG: The Power of Fast-Moving Consumer Goods by authors Greg Thain and John Bradley. For more details on their success story and that of other leading FMCG companies, check www.fmcgbook.com or Amazon http://amzn.to/1jRyd20.
3. Jeremiah Colman, a miller by training, who man-aged a mill in Norfolk,
England before buying his own mill in 1803
In 1814, he bought a mustard business and added the crushing of
mustard seeds to that of wheat kernels
By 1829, he had extended his reach to London
By 1854, three years after Jeremiah’s death, Colman’s had
constructed Britain’s first mill dedicated entirely to mustard.
Jeremiah’s nephew James (Jeremiah being childless) had taken over
the firm
Having been co-opted as a partner in 1823 and, clearly sharing his
uncle’s partiality for asset-driven expansion into new categories, he
took the firm into the manufacture of starch, laundry blue and corn
flour, all leveraging the company’s investment and expertise in milling.
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4. Entry into the starch category brought Colman’s into competition with
another trained miller, Isaac Reckitt
Isaac Reckitt’s mill, after twenty years of unsuccessfully running a series
of flour milling businesses and losing all his capital, borrowed enough
from his obviously loving relatives to rent a starch works in the north of
England
There he yet again failed to make his mark, until his four sons,
including a chemist and a salesman, took over the key roles
For the first seven years, the business lost money and it was only when
the product range was extended beyond starch that the business
became viable
It took the business a full eighteen years to pay back Isaac’s relatives,
whom he only outlived by four years.
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5. The third 19th-century industrialist involved in the genesis of Reckitt
Benckiser was Johann Adam Benckiser, who founded an industrial
chemicals manufacturing business in Pforzheim, Germany in 1823
In 1851, Johann co-founded a chemical plant with chemist Ludwig
Reimann
Seven years later relocating the business to Ludwigshafen, where it
also began the production of phosphates, citric acid and other
commodity chemicals.
This unlikely trio of mustard cook, household products manufacturer
and chemical industrialist would bring something different to the
Reckitt Benckiser party
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6. 6
The mustard maker’s great nephew would be one of 19th-century
Britain’s most innovative advertisers, building leading-edge
marketing skills in selling a product half of which was scraped off
plates uneaten at the end of meals.
The household products maker’s sons recognised that a huge
business could be built on the insight of making the homemaker’s
life easier, and embarked on a late-19th-century acquisition spree
of all kinds of household goods brands while internationalising the
business as early as 1864
The German industrialist’s descendants, who would spend well
over a century in the commodity chemicals sector, were
exceptionally astute business strategists who knew how to
revolutionize a business
7. The two firms finally buried the hatchet in 1913 when they formed a
joint company
The two companies combined all their overseas businesses in order to
generate the critical mass to run manufacturing operations in
Australia, Canada and South Africa
Dettol had begun as a project in 1929, to develop an antiseptic
disinfectant that could be safely applied to open cuts and wounds
The deal catapulted Reckitt & Colman into the top four globally, but
to fund it the company had to sell off the bulk of the food side of the
business
The iconic Colman’s mustard brand itself, sold to Unilever in 1995 for
£250 million
The Benckiser was now a relative minnow with annual sales of only
$250 million
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8. Benckiser continued to acquire strong local brands, such as Italy’s
Mira Lanza and Panigel together with Spain’s leading detergent
company, S.A. Camp Group
Benckiser competed with the multinational giants such as Unilever
and P&G
The company significantly increased its US presence with the
acquisition of SmithKline Beecham’s North American household
products division for $106 million in 1990
The company buy the Margaret Astor and Lancaster cosmetics
business from Smithkline
The Benckiser set about expanding its new cosmetics arm picking up
Jovan, Germaine Monteil, Bogner Cosmetics and Joop! Perfumes
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9. 9
Benckiser became US market leader in mass-market cosmetics with
the $400 million purchase from Pfizer of the Coty business
Exclamation, Lady Stetson, L’Effleur, Sand & Sable and Wild Musk; this
pushed the share of total company sales of $3.4 billion coming from
cosmetics and fragrances
The Benckiser now has over $3 billion annual sales
Benckiser organized all its businesses into one single holding company
called Coty Inc.
10. Reckitt was selling its products in some 180 countries and had
operation in 60 countries
In 2003 sales were split by region
Western Europe – 47%
North America – 27%
Asia-Pacific – 12 %
Latin America – 4%
Rest of world – 10%
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11. On the 27th July 1999 the merger of Reckitt & Colman and Benckiser
created a business with sales of more than £3 billion
The world’s fourth-biggest manufacturer of household cleaning and
personal care products
Reckitt Benckiser had three overriding priorities: To focus the brand
portfolio and to reduce costs
Deploying the Benckiser strategy and operating style on the Reckitt &
Colman brand portfolio
The remit of Squeeze was to look at the detailed design of products
and find ways to squeeze out costs without adversely affecting the
utility or efficacy
The X-trim team focused on saving costs elsewhere in the business
A disproportionate focus on brands that were either number one or
two in categories with above-average growth prospects
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12. Grow categories and brand share via an unrelenting program of
incremental improvement innovations, executed with great speed,
and above-average marketing spends
Focus was mainly on organic growth
Acquisitions, as had been the case soon after the merger, would only
be considered if targets had a great strategic fit
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13. Reckitt Benckiser began life in 1999 with a regional management
structure in which country managers reported into regions or sub-regions
In 2003, the company got a handle on the different issues in the
different markets, it moved to a hybrid regional/market development
structure
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14. 14
2004
Reckitt Benckiser celebrated five years of unbroken success since its
formation with 10% growth in the year at constant exchange rates
The growth was fairly evenly spread around the world with Europe
growing by 8%, North America & Australia by 9% and Developing
Markets by 16%
Operating margins expanded a full 1.3 percentage points up to 19.6%
The company having almost tripled its annual operating profit since
1999
The increase in margins came from increases in gross margin, up from
an industry-trailing 46.4% in 1999 to an industry-leading 54.8%
15. 2005
Reckitt Benckiser’s sales grew by 8% but only by 6% at constant
exchange rates
New to the elite club was Bang, sold under the Cillit brand in Europe
and Easy Off in the rest of the world.
Reckitt Benckiser had been looking for a major acquisition within OTC
healthcare, which conformed to the specification for outstanding
long-term growth prospects in an ageing populations
The largest acquisition in the company is that of Boots Healthcare
International for £1.9B
2006
In eleven months of BHI sales in 2006 Overall revenues grew by 18% to
a shade under £5 billion
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16. Reckitt Benckiser owned and had the US distribution rights for, and its
related drug Subutex, which grew by 30% in to £165
The European bias of BHI further increased the area percentage of
Reckitt Benckiser sales up to 53%
2007
Seven percent increase in reported revenues whilst 10% on a like-for-like
basis gave the eighth consecutive year of above-average
industry growth
The product sales grew by 10% in the first full year of Reckitt Benckiser
ownership
The excellent start in a year when all but one of the eighteen Power
brands gained market share
The new improved Reckitt Benckiser now had 75% of its revenues from
brands that were number one or two in their markets
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17. 17
The company was now worldwide number one or two in several
categories
Reckitt Benckiser had substantially increased its sales infrastructure
and received an immediate payback sales rising by 42%, delivering a
staggering 56% margin the area average for all other products was
just 21%
2008
The Adams acquisition not only added to the top line but grew by 12%
in the eleven months
The company posted a 25% increase in sales to £6.5 billion, its core
business having grown by 13% and its power brands by 17%
The company yet again increased its gross margin by a full
percentage point to 59.3%
18. This increase is driven by better-than-average performances by the
higher-margin categories, continued ‘Squeeze’ cost savings.
The continued explosive growth of the now renamed
Pharmaceuticals Unit, whose sales increased another 45% up to £341
million, delivering an eye-watering £193 million operating profit which
added nearly two whole percentage points to the entire company’s
operating profit margin
2009
With over 80% of sales coming from developed markets, the company
was more vulnerable than many to the slowdown
The company grew by an impressive 18%, 8% at constant exchange
rates, to reach £7.8 billion – a top-class performance in the economic
circumstances
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19. 19
The company had deliberately added some areas of the portfolio in
recent years specifically to protect against economic downturn as
well as to make money in healthier times
Savings had pushed the gross margin over 60% for the first time in the
company’s 10-year history, an increase of almost fifteen percentage
points over the period
2010
Another 9% on the top line took sales to nearly £8.5 billion, like-for-like
growth of 6% and still a respectable 5%, excluding pharmaceuticals
Once again, Health & Personal Care performed strongly, helped by a
good piece of cross-category innovation with the Surface Care
brands Dettol and Lysol each launching the No-Touch Hand Soap
System
Coming a year after the H1N1 scare Home Care increased by 8%
20. 20
RB Pharmaceuticals sale rise to £737 million
The RB Pharmaceuticals sales had also been boosted by the
company’s £100 million re-purchase of the European distribution rights
Reckitt Benckiser was now most definitely in pharmaceuticals; business
the unit contributed 9% of the year’s total sales
The addition of SSL would increase the size of the Health & Personal
Care category by 36% and add two new brands to the power brand
list
2011
The Reckitt Benckiser’s M&A strategy had got the company into
higher-margin categories
Reckitt Benckiser had been far more focused on taking more power
brands into existing markets than in opening up new markets for all
the company’s brands
21. 21
2012
The machine they’re using had adjusted well to its new settings.
Top-line sales were up by barely 1% to £9.6 billion – all coming from RB
Pharmaceuticals – this masked a more robust like-for-like increase of
4% when exchange rates were factored out
Health grew by 6%, helped by the Durex brand increasing its reach in
China, a growth rate matched by Hygiene in which Dettol Daily Care,
Lysol No-Touch Kitchen System and the Quantum brand all made
significant gains
RB Pharmaceuticals put on an additional 10% revenue with strong
volume growth in the key US market, tempered by the switch from
Suboxone tablets to lower-margin film
RUMEA was up by 8% primarily because of Russia and the rest of the
CIS
22. Reckitt Benckiser had been the most consistently managed of all
the world’s major packaged goods companies
Reckitt Benckiser strategy is to focus on the brands that were
advantaged in both profitability and growth prospects
The key elements of the company’s DNA are Consumer Focus,
Speed and Creative Tension
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23. Reckitt Benckiser has been one of the biggest consumer goods
success stories of the early 21st century
During their first twelve years its share price increased five times more
than Unilever’s
The company has been the subject of countless case studies in its
approach to innovation, not surprising, as it has set new benchmarks
for the level of innovation sustainable by a large packaged goods
company
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