Reckitt Benckiser has vowed to spend an additional £100m a year on advertising its key brands as part of a revamped strategy to improve performance.
Chief executive Rakesh Kapoor yesterday said Reckitt would up its focus on the higher-margin health and hygiene products among its designated ‘Power Brands’ – including Nurofen, Strepsils,Gaviscon, Durex and Dettol.
A new corporate structure will see its European and North American divisions merged into a single business for developed markets. The move is expected to generate annual savings of £30m from next year.
The emerging markets business will be split in two to place greater emphasis on high-growth locations. One arm will cover Asia, Australia and Latin America, while the other will cover Russia, Africa and the Middle East.
Reckitt also said it would discontinue its own-label manufacturing business, which generates sales of £200m a year.
News of the shake-up came as Reckitt unveiled double-digit hikes in sales and profits for 2011.
Sales were up 13% to £9.49bn, despite slowing in the fourth quarter to around 8% on a constant currency basis, while profits for the year surged by 11% to £2.4bn.
“Reckitt has delivered a decade of superior growth and shareholder value but with slower market growth and increased competition, we need to reshape our strategy to enable us to continue our track record of outperformance,” said Kapoor.
“We will be intensifying our investment behind our brands in the higher growth, higher margin categories of health and hygiene.
“In addition to our highly successful ‘Power Brand’ strategy, we have identified sixteen ‘Power Markets’ for increased focus and investment, most of which are in emerging markets. This will enable us to increase the speed, quality and consistency of our in-market execution and to drive cost savings.”