Mumbai, Nov. 29: Procter & Gamble Hygiene and HealthCare Ltd (P&G) has discontinued a three-year distribution agreement with Marico Industries.
Under the arrangement, Marico distributed P&G products like Old Spice shaving cream and lotion, Pampers diapers and Ariel detergent cake.
In a separate announcement made to the stock exchanges today, P&G informed that it is licensing the Old Spice trademark and business for an undisclosed fee to Menezes Cosmetics Pvt Ltd (MCPL), Goa, from December 1. It added that the agreement, which is limited to the Old Spice business in India, is for 10 years and covers Old Spice after-shave lotion, Old Spice shaving cream and Old Spice talcum powders.
P&G admitted that the decision will marginally impact its sales to the tune 3 per cent (Rs 16 crore annually), but will not affect its profitability as estimated. “License fee revenues are expected to be higher than the profits currently generated by P&G on the Old Spice business,” it added.
“As a result of this arrangement with MCPL, the current arrangement with Marico Industries Ltd for distribution of all products including Old Spice will be terminated with effect from December 1, 2002. Old Spice will now be distributed, marketed and sold in India by MCPL,” the company added.
In a separate announcement, Marico, while detailing the discontinuation of the arrangement, said under the arrangement with P&G, it will receive the agreed amount for the disengagement. The company added that it has decided to expand the health foods market and foray into the non-oil categories.
“With successful refined oil blend extensions of Saffola and the low-absorb innovation in Sweekar, Marico has more or less fully exploited the range of product offerings in edible oils and is thus ready for a foray into non-oil categories. The Saffola-Sweekar franchises with strong health connotations provide a ready platform for entry in the healthy foods segment. One of the promising categories in this segment is extruded soya products,” it said.