Reckitt Benckiser

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Reckitt Benckiser Group plc
Public limited company
Traded as
ISIN GB00B24CGK77
Industry Consumer goods
Founded 1814 (J&J Colman)
1823 (Benckiser)
1840 (Reckitt & Sons)
1938 (merger of Reckitt & Sons and J&J Colman)
1999 (merger of Reckitt & Colman and Benckiser)
Founder Johann Benckiser
Isaac Reckitt
Headquarters Slough, England, UK
Key people
Adrian Bellamy (Chairman)
Rakesh Kapoor (CEO)[1]
Products Cleaning products
Consumer healthcare products
Condiments
Personal care products
Revenue £9.891 billion (2016)[2]
£2.410 billion (2016)[2]
£1.836 billion (2016)[2]
Number of employees
35,000 (2017)[3]
Website www.rb.com

Reckitt Benckiser Group plc (RB) (LSERB) (About this sound listen ) is a British multinational consumer goods company headquartered in Slough, England. It is a producer of health, hygiene and home products.[4] It was formed in 1999 by the merger of the UK-based Reckitt & Colman plc and the Netherlands-based Benckiser NV.

RB's brands include French's Mustard, the antiseptic brand Dettol, the sore throat medicine Strepsils, the hair removal brand Veet, the immune support supplement Airborne,[5] the air freshener Air Wick, Calgon, Clearasil, Cillit Bang, Durex, Lysol, Mycil and Vanish.[6]

RB is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

History[edit]

Origins[edit]

Main articles: Reckitt and Sons and Colman's
Stoke Holy Cross Mill, in Norwich, England, the home of Colman's mustard from 1814 to 1862

Johann Benckiser founded a business in Pforzheim, Germany in 1823.[7] Its main products were industrial and consumer goods industrial chemicals.[8] Ludwig Reimann, a chemist, joined the business in 1828 and married Benckiser's daughter.[9] Benckiser died in 1851[10] and the business came under Reimann's ownership.[9] Reimann opened a new chemical plant and, in 1858, moved it to Ludwigshafen.[9] Under Reimann's descendants the business grew rapidly in the latter half of the 20th century: it acquired Coty, Inc., a North American beauty products manufacturer, in 1992.[11] Benckiser's other products included Vanish and Cillit Bang.[7] It went public in 1997.[12][13]

Reckitt and Sons started in 1840 when Isaac Reckitt rented a starch mill in Hull, England.[8] He diversified into other household products and after his death in 1862, the business passed to his three sons.[14] In 1886, Reckitt opened its first overseas business in Australia.[14] The firm was first listed on the London Stock Exchange in 1888.[8] Harpic Lavatory Cleaners was acquired in 1932, and that same year, Dettol was launched.[14]

In 1938 Reckitt & Sons merged with J. & J. Colman, which had been founded in 1814 when Jeremiah Colman began milling flour and mustard in Norwich, England,[8] to become Reckitt & Colman Ltd.[8] The company made several acquisitions, including the Airwick and Carpet Fresh brands (1985),[15] the Boyle-Midway division of American Home Products (1990),[16] and the Lehn & Fink division of Sterling Drug (1994).[17] It acquired several brands from DowBrands in 1998.[18]

Reckitt & Colman sold the Colman's food business in 1995.[8]

1999 to present[edit]

The company was formed by a merger between Britain's Reckitt & Colman plc and the Dutch company Benckiser NV in December 1999. Bart Becht became CEO of the new company and has been credited for its transformation, focusing on core brands and improving efficiency in the supply chain. The new management team's strategy of "innovation marketing".[19] – a combination of increased marketing spend and product innovation, focusing on consumer needs – has been linked to the company's ongoing success. For example, in 2008, the company's "rapid succession of well publicised new product variants" were credited for helping them "to capture shoppers' imagination".[20] Business Week has also noted that "40% of Reckitt Benckiser's $10.5 billion in 2007 revenues came from products launched within the previous three years."[21]

In October 2005, RB agreed to purchase the over-the-counter drugs manufacturing business of Boots Group, Boots Healthcare International, for £1.9 billion. The three main brands acquired were Nurofen's analgesics, Strepsils sore throat lozenges, and Clearasil anti-acne treatments.[22] In January 2008, RB acquired Adams Respiratory Therapeutics, Inc., a pharmaceutical company, for $2.3 billion; one of the major brands acquired was Mucinex.[23] In July 2010, RB agreed to buy SSL International, the makers of Durex condoms and Scholl's footcare products, in a £2.5 billion deal.[24]

On 27 August 2011, RB recalled all remaining stock of its major analgesic product, Nurofen Plus, after packs were found to contain an antipsychotic drug.[25] It turned out that this was the work of a codeine addict who had been stealing the pills and replacing them with his anti psychotic medication.[26]

In April 2011, Bart Becht announced he was to retire as CEO of Reckitt Benckiser and would be replaced from September 2011 by executive vice president of Category Development, Rakesh Kapoor, who had played a key role in recent acquisitions.[27]

In November 2012, RB agreed to acquire Schiff Nutrition, a United States-based manufacturer of vitamins and nutritional supplements including Digestive Advantage, MegaRed, Airborne, and Move Free, for US$1.4 billion (£877 million).[28][29] In December 2014, RB spun off its specialty pharmaceuticals business, which produces Suboxone, into a separate company named Indivior.[30]

In 2014, Reckitt Benckiser announced it was dropping its full name in favour of RB.[31] According to the chief executive, Rakesh Kapoor, the old name was "a bit of a mouthful" and the name change would make life easier.'[32]

In February 2017, the company bid $16.7 billion for the American infant formula maker Mead Johnson.[33][34] On 10 February, 2017, Reckitt Benckiser Group announced it had agree to buy Mead Johnson for $16.6 billion.[35]

Operations[edit]

RB is headquartered in Slough, England , and has operations in around 60 countries. Its products are sold in nearly 200 countries.[36] RB organises the majority of its products into three main categories – health, hygiene and home – with other brands belonging to three further categories: food, pharmaceuticals and portfolio brands. The company's strategy is to have a highly focused portfolio concentrating on its 19 most profitable brands, which are responsible for 70% of net revenues.[37]

Reckitt Benckiser currently produces the following products:[38]

Corporate governance[edit]

As of 2016 RB's directors were: Rakesh Kapoor, Adrian Bellamy, Nicandro Durante, Mary Harris, Adrian Hennah, Ken Hydon, Dr. Pamela Kirby, André Lacroix, Christopher Sinclair, and Warren Tucker.[39] As of 2016 members of the executive committee were: Rob de Groot, Amedeo Fasano, Roberto Funari, Frederic Larmuseau, Darrell Stein, and Deborah Yates.[40]

From the company's creation in 1999 until he retired in 2011, Bart Becht was CEO. The Guardian called him "one of the most successful businessmen of his generation". Under him, the company focused on its core brands, and on improving efficiency in the supply chain. It also increased its marketing budget.[20] BusinessWeek noted that "40% of RB's $10.5 billion in 2007 revenues came from products launched within the previous three years".[21] Becht was Britain's highest-paid businessman, taking home more than £90 million in 2009.[41] In April 2011, he announced that he would step down in September of that year, to be replaced by Rakesh Kapoor, who had been with the company since 1987. Reckitt Benckiser shares fell by 6.6% on the news.[42]

Corporate social responsibility[edit]

The company supports Save the Children.[43] RB has also implemented an environmental initiative called Carbon 20.[44] The initiative, which was announced in November 2007, aimed to cut the total carbon footprint of its products—from creation to disposal by 20% by 2020. As part of the initiative the company has reduced by 70% the amount of plastic in the packaging of its Vanish cleaner.[45] In New York in February 2009, Earthjustice filed a lawsuit against RB and others. The petition seeks to compel the companies to identify all of the ingredients used in their products.[46] Earthjustice contacted several companies in September 2008 requesting that they comply with a 1971 law requiring them to disclose the ingredients in their products and make available any associated health or safety studies. RB and the other defendants ignored or refused the request.[47]

In June 2006, RB launched RB Trees (then known as Trees for Change), a major forestation project designed to offset the greenhouse gases created as a by-product of its manufacturing processes. The project aims to plant 10,000,000 trees, on land used or previously cleared for cultivation, to turn this back to forest.[48]

Controversies[edit]

Deaths caused by humidifier disinfectant[edit]

In 2001 Reckitt Benckiser acquired the Korean Oxy brand, which since 1996 had been using Polyhexamethylene guanidine (PHMG) in a humidifier steriliser product called Oxy Ssak Ssak. In 2011 the use of PHMG was dropped when the Korea Centers for Disease Control and Prevention (KCDC) published a report showing a link between the compound and lung damage and deaths.[49] Several other companies in South Korea made humidifier sterilisers with PHMG between 2001 and 2011.[50]

According to a BBC report in May 2016, about 500 people, many of them women and children, are reported to have died or been injured after inhaling PHMG.[50] According to a The Korea Herald report in April 2016, in 2015 750 disinfectant users had requested a test to determine if they had been harmed by the disinfectant and as of the date of that report, 221 had been confirmed and full results were expected to be released late in 2017.[51] A report on Sina.com in May 2016 said that PHMG was known to have caused 70 deaths and to harmed the lungs of 177 people, with the actual total of deaths and people injured unknown.[49]

Reckitt Benckiser Korea has been blamed for 103 deaths by a coalition of consumer groups in South Korea;[52] the April 2016 The Korea Herald report said that Reckitt Benckiser Korea had been blamed for 221 deaths.[51]

Sometime after the release of the KCDC report, prosecutors in South Korea opened an investigation into the companies selling the disinfectants, which increased its pace in January 2016.[51] Reckitt Benckiser Korea submitted a toxicity report on PHMG to prosecutors in January 2016; prosecutors were also investigating allegations that the company suppressed data showing PHMG to be toxic in the report it had submitted.[51] In April 2016 a coalition of consumer groups called for a boycott of the company.[52]

In May 2016 Korean division chief Ataur Safdar apologised to victims and families in a press conference and offered compensation to the families of those who died to those who were injured; it was the first time the company had acknowledged that its products containing PHMG were harmful.[50]

Anti-competitive behaviour[edit]

In 2008 the BBC's Newsnight accused Reckitt Benckiser of attempting to delay the introduction of a competitive, generic version of one of its most popular products, Gaviscon, a treatment for heartburn and gastroesophageal reflux disease. In his introduction, reporter Martin Shankleman said, "Gaviscon is hailed as a power brand by its owners, Reckitt Benckiser". He continued, "Reckitt Benckiser likes to claim that the profits flow from their expertise in marketing. But we know that there's another way in which they've been coining it in—-by ripping-off the NHS, as a whistle-blower has told us. The "whistle-blower" was shown in silhouette, and his words were spoken by an actor: "Reckitt's cheated the National Health Service. It could have saved the NHS millions of pounds. But not just the NHS, patients, doctors—they've cheated health professionals. I felt it had to be exposed". Newsnight claimed that RB had a "secret plan to ensure that it kept its stranglehold" after the Gaviscon patent expired in 1999, and that Newsnight had seen the plan. The Department of Health asked Newsnight to hand its documents to the NHS counter-fraud service.[53][54]

The investigation was widely reported in the British press. The Guardian quoted a leaked memo in which the product's manager explained that the company could use "the rationale of health and safety" to design a switched product to "muddy the waters."[55] The newspaper quoted RB as stating that the leaked memos were "inappropriate and did not reflect Reckitt's eventual actions".[55]

The Independent quoted Warwick Smith, director of the British Generic Manufacturers Association (BGMA): "The sort of evergreening alleged by Newsnight can cost the NHS tens of millions of pounds with no patient benefit."[56] It also quoted a statement issued by the company: "...RB is a responsible company and we have therefore instigated an immediate internal investigation and will take action. However, we do not accept much of what has been alleged."[56]

The Times noted that "Although Gaviscon has been out of patent for almost ten years, no other manufacturer has developed a cheap generic version. Such a drug could have saved the NHS up to £40 million."[57] It stated that the Office of Fair Trading was expected to examine whether Reckitt had acted illegally. It also printed verbatim extracts from several of the leaked memos.[58]

In response to the Newsnight report and the reports in the press, RB issued a statement that began:

We are shocked by the allegations made as Reckitt Benckiser is a responsible company in the way it conducts its business.

Nevertheless, we are deeply concerned by the inappropriate sentiment expressed in some of the historic internal correspondence reported. We take this very seriously and have instigated an immediate internal investigation, and will take action. We also refute much of what has been reported which implies a power and influence we simply do not possess.

The company has never objected to a monograph driven generic name being published. The timetable of which is not, and never has been, within our control a monograph/generic name could have been published at any time by the regulators without reference to any third party.

The company made appropriate challenges where it felt it was justified in order to ensure patients are prescribed the right treatment. These were within the law and relevant regulations. We stress that the regulators only take a comment into account when it is valid.[59]

On 15 October 2010, RB was fined £10.2 million by the Office of Fair Trading after the company admitted anti-competitive behaviour.[60]

In 2014 the Autorité de la concurrence in France found that RB had colluded with 12 other multinational companies (Colgate-Palmolive, Henkel, Unilever, Procter & Gamble, Sara Lee, SC Johnson and Bolton Solitaire, Laboratoires Vendôme, Gillette, L'Oreal, Beiersdorf and Vania) to fix the prices of popular personal hygiene products; the fine of around €950 million was the largest ever imposed by the agency.[61]

In 2015, RB created controversy when it emerged that seemingly different versions of their product Nurofen marketed to treat specific pains, such as migraine, were all identical to the standard product despite costing twice as much. The product was withdrawn from sale in Australia for misleading consumers.[62] The Australian Competition and Consumer Commission (ACCC) took the matter to court and in December 2016, RB was fined A$6 million.[63]

Legal challenges to rodenticide regulations[edit]

In 2008 the United States Environmental Protection Agency (EPA) announced a decision to remove second-generation anticoagulant rodenticides from store shelves, leaving the products available for purchase only by US licensed applicators. The ruling was slated to go into effect in 2011 allowing poison companies time to adjust to the new law. EPA's decision was based on tens of thousands of reports of pet, wildlife and child poisonings that resulted annually from rat poisons in the US alone. In 2011, Reckitt Benckiser makers of d-CON products initiated a legal challenge to the EPA expected to take several years to resolve. Early in 2014, California State Department of Pesticide Regulation ruled that anticoagulant rat poison sales would be restricted beginning on 1 July 2014. RB filed suit in San Diego County Superior Court in April 2014 to block the decision.[64][65]

Palm oil procurement[edit]

According to a 2016 Amnesty International report, Reckitt Benckiser is one of several consumer companies that buy palm oil from Wilmar International, the world's largest palm oil refiner. Amnesty found that Wilmer profits from child labor and forced labor and exposes workers to toxic banned chemicals.[66]

References[edit]

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External links[edit]