ACI Limited, one of the leading conglomerates in Bangladesh recently announced the partnership with Singapore-based Colgate-Palmolive (Asia) Pte on 13th April 2023. According to the regulatory filing, ACI will hold 24% of the JOINT VENTURE(JV) by investing Tk 50 crore which will be named Colgate-Palmolive ACI Bangladesh Pvt Limited.
ACI has been a long-term partner of Colgate by importing and distributing its product in Bangladesh. However, the purpose of the Joint Venture is to set up a factory in Bangladesh. Colgate-Palmolive Asia will also invest Tk 200 crore for the entire project.
Read more: Colgate to Build a Factory in Bangladesh!
Colgate has presence for a long time in the Bangladeshi market, but its market share hasn’t seen the expected performance in the country. The international brand used to hold about 20% of the market share during the 2000s but now have about 9% of the total market share of the Tk 1,000 crore oral care market of Bangladesh.
What Will Colgate-Palmolive Get From This JV?
One of the reasons behind the gradual decrease in market share is the duties and taxes levied on the products of Colgate when they were imported.
ACI’s Executive Director of Finance and Planning Pradip Kar stated in TBS, “The local plant would allow the brand to reduce duties and taxes significantly and the cost-benefit would translate to price benefits for consumers”
Hence, it’s quite assumable that both the company believes that the manufacturing plant will allow the company to reduce costs which will put the brand in a competitive position as other competitors like Unilever (Pepsodent, Close Up) are manufacturing its products in Bangladesh.
The Bangladeshi oral care market has huge potential to grow as awareness about oral hygiene is expanding rapidly with the growing economy and disposable income of the population. So it makes sense for Colgate-Palmolive to enter the market to grab some market share from the dominant Unilever Bangladesh.
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Since ACI has been a long-time distribution partner of the company it made sense for the company to form a JOINT VENTURE as ACI has now expertise in the distribution of the products in the Bangladeshi market having strong logistics capabilities throughout the country.
What Will ACI Get From This JV?
ACI will get another strong international brand in its portfolio. Although ACI has its own brands, the company has shown strong capabilities in marketing and distributing international brands in the market.
ACI Motors Ltd, which is now the largest revenue contributor of ACI has grown immensely after the inclusion of the Yamaha brand in its portfolio. It has also added the Foton brand to capture the commercial vehicle market of the country.
Moreover, through JVs the company marketed international brands like Tetley and Dabur. Hence, the company sees potential in the oral care market as they have been marketing the Colgate brand in Bangladesh.
Leveraging the massive brand power of Colgate makes sense rather than creating a new brand which might have taken massive marketing and establishment spending.
So, we are hoping that ACI is willing to repeat the game with Colgate just like it did for ACI Motors through the integration of the Yamaha brand into its portfolio as a major revenue boost to the company.
What’s your thought? Let us know and for more updates, be with Markedium.