Brands' share fell from 55% to 12-13%: ACI stopped making coils under pressure from unlicensed factories
In a coil market of about Tk 1,500 crore crowded by hundreds of unlicensed factories, big brands such as ACI and Mortein stopped production. They say these factories use excessive chemicals, pay no tax and ignore the rules.
According to a July 2019 Prothom Alo report, the country's mosquito coil market is worth about Tk 1,500 crore. In 2012 established brands still held more than 55 percent of it; that share has fallen to 12-13 percent. The trouble began around 2012: first a flood of unapproved coils came from China, then hundreds of factories sprang up at home in Jatrabari, Tongi, Bhairab, Narayanganj, Savar and elsewhere, many with no laboratory or chemist. In this situation ACI, one of the market leaders, stopped making coils, and Reckitt Benckiser, maker of Mortein, also shut its factory. The managing director of ACI Consumer Brands said they cannot put coils harmful to health on the market; they must follow many rules and pay tax, while those factories need nothing, so they stopped production altogether. The big companies say there are rules on which chemical may be used in a coil and in what dose, which the obscure factories ignore. One company sent coils of 14 obscure brands to India for testing and found 3 to 14 times the permitted chemical level, and up to four chemicals where only one is allowed. Because such coils drive mosquitoes away quickly, buyers choose them, and compliant factories have lost the market.
Lessons
- 1.If you make coils, price in the cost of approvals and of keeping chemicals within limits; competing only on price with cheap unlicensed coils is hard.
- 2.When most of a market is held by informal producers, even big brands cannot hold on; before entering, check how competitors are cutting their costs.
Published with the person's permission, without revealing who they are.
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