INDIA – Hindustan Unilever Ltd and healthcare firm GlaxoSmithKline (GSK) have come to a mutual agreement of terminating their partnership for selling Over-the-Counter (OTC) and oral care products by November 2023, nearly two years before the agreed period.
The products that were encompassed in the strategic partnership include Iodex, Eno, Crocin, and Sensodyne.
Before the partnership came in, these products owned by GSK were distributed by the GSK Consumer unit in India.
In December 2018, reports indicated GSK Consumer Healthcare had plans to merge with HUL in an all-stock deal, valuing the Indian unit of GSK at Rs 31,700 crore.
The food company, along with malted beverage brands like Horlicks, Boost, Viva, and Maltova were subsequently merged with HUL’s portfolio in 2020.
As part of the mega-merger, HUL also got into a consignment selling agreement with GlaxoSmithKline Asia Private Limited (GSKAPL) and GlaxoSmithKline Consumer Private Limited (GSKCPL) in 2020 for the over-the-counter and oral care products.
It also gained access to pharmacies, a channel that accounts for nearly 10% of total FMCG sales, at par with modern trade.
In a statement, HUL said: “The company and GSKAPL, GSKCPL companies have mutually agreed and expressed their intention to terminate the agreement with effect from 8th November 2023 and the one-year notice period of termination shall commence from 9th November 2022. This shall not have any material effect on the operations of the company.”
Abneesh Roy, Executive Director, Nuvama Institutional Equities commented that considering only one-and-a-half years would be left in the distribution agreement, there could be some impact on margins since the company was getting ₹300 crores gross income, but for a company of the size of HUL, it won’t be significant.
Recently, reports from India have speculated that the FMCG company is in talks to acquire majority stakes in direct-to-consumer brands Wellbeing Nutrition and Conscious Food to strengthen in-house product categories.
Founded in 2019, Wellbeing Nutrition is a plant-based nutrition company offering products across daily wellness, functional nutrition, children’s organic nutrition, and natural Nutri-cosmetics.
It is reported that the Wellbeing Nutrition transaction will be around $20 million, while the size of the Conscious Food deal couldn’t be ascertained.
The conglomerate is keen to ramp up its Annapurna brand, which primarily offers Atta and salt, and house Conscious Food under the same vertical if the deal materializes.
Conscious Food, established in 1990, offers products such as sprouted wheat Dalia, sprouted ragi flour, semolina, digestive mix, spirulina power, Gir cow ghee, herbs, and energizing tea.
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