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After dominating the adhesives market, Fevicol maker Pidilite is facing a challenge from an unlikely contender.
Asian Paints has entered the retail segment of the adhesives category through a distribution arrangement with Germany’s Henkel Adhesive Technologies.
Under the arrangement, Henkel’s adhesive brand Loctite will be sold at the retail level through a co-branding initiative.
Asian Paints has a distribution network spanning 36,000 hardware shops.
Efforts have already begun to woo retail customers through an ad campaign.
“Currently we are selling Loctite in certain markets in western India,’’ said an official from Asian Paints.”
Tough terrain “Pidilite has been quite successful in warding off competition from global giants and local players due to its superior distribution. For Asian Paints, the diversification into non-paint categories is not going to be easy,” observes Abneesh Roy, analyst at Edelweiss Securities.
“We have had a B2B presence in the adhesives segment in India. We lacked a retail presence, which Asian Paints will help us overcome through the recently formed distribution arrangement. It will be the first time that we have engaged in a co-branded exercise in the adhesive segment,’’ said an official from Henkel Adhesives.
New plant Last year Germany-based Henkel AG’s subsidiary Henkel Adhesive Technologies had said that it would invest ₹220 crore (€30 million) to set up the country’s largest adhesives plant, with 80,000 tonnes annual capacity, at Kurkumbh near Pune.
“Loctite has been present primarily in industrial adhesives since 2000, but now, the new retail products will get manufactured at our plants based in the western region,’’ added the official.
Distribution challenge For Asian Paints, matching Pidilite’s distribution strengths will not be easy when it comes to reaching out to kirana outlets. As Edelweiss’s Roy says: “While Asian Paints can tap into the existing distribution of paint dealers, a lot of adhesives are also sold through kiranas, which will be a key challenge for Asian Paints; Pidilite has a strong presence in such outlets with a 70 per cent share in adhesives.’’
Incidentally, Bharat Puri, the current Managing Director of Pidilite began his career with Asian Paints, in the sales and marketing division, back in 1982.
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