How Durex’s strength keeps entrants at bay

The condom market is neither a very sexy nor safe place at the moment: Jiffi’s parent company has ceased distributing its condoms in Britain and is attempting to sell the Jiffi brand name (MW August 20). Meanwhile, London International Group’s Durex, which controls about 70 per cent of the UK market, is once more coming under the scrutiny of the Office of Fair Trading.

The OFT’s findings will be of great interest to a new entrant to the UK market. German manufacturer Condomi is intending to launch in the UK imminently, according to managing director Ralph Patmore, former managing director of Jiffi distributor Sime Health (MW August 20). The company has yet to secure any stockists in the UK, but the brand is available in Germany, Italy, Spain and Austria.

Yet as one industry observer says: “With Durex being such a dominant brand, people think ‘why bother trying to enter this market?'”.

The launch of Condomi or any other new brand will not be easy. Ansell Mates director Chris Bell says: “Although we welcome competition, it is a very, very difficult market to get into. Unless you have deep pockets.”

He cites BX International Healthcare, which launched Le Condom in the UK in 1991, then a leading brand in continental Europe. The company went into administration within a year, when it was reported that it had cashflow problems as a result of heavy advertising expenditure.

According to Bell, Ansell Mates, which now controls about 20 per cent of the UK market, spent nearly 10m launching the Mates brand following its purchase from Virgin in 1988. He says the brand also benefited from the association with Richard Branson. The company used an established name for a second time, when it launched Benetton branded condoms last October.

The demise of Jiffi highlights some of the problems faced by condom companies. Sime Health, a subsidiary of Malaysian conglom-erate Sime Darby, is attempting to sell the Jiffi brand, which it bought in 1989. One source says the asking price is 10m. No one from Sime Health was available for comment.

Sime stopped distributing condoms in the UK earlier this year, though existing stock has been bought by Family Planning Sales, which estimates it has enough stock to last into 1999.

One source attributes the decision to sell the brand to the current Asian crisis. Sime Darby is a South-East Asian conglomerate with interests ranging from tyre manu- facturing to banking and insurance. The source believes the company wants to rid itself of non-core activities as a result of the economic downturn.

The demise of Jiffi can also be attributed to a poor brand positioning, according to one industry expert. He says slogans such as “Got a stiffy put on a Jiffi” have made it the “lager lout” brand.

But Durex, produced by LRC Products, part of London International Group, with its vast market share and concommitant clout with stockists is a formidable opponent to any new entrant.

Durex marketing manager Leigh Taylor says: “Durex has a heritage of reliability – that’s the main factor behind its success.” He says entrants have to build the right brand values if they are to succeed.

The Office of Fair Trading is planning a review of the undertakings it imposed on Durex parent LRC in 1994, which were based on the recommendations of the Monopolies & Mergers Commission. These included the withdrawal of trade price controls, which had been im-posed following an MMC report in 1982, and the request that LRC would undertake not to enter into exclusive purchasing supply agreements with wholesalers or retailers.

An OFT spokesman says next year’s review is the result of changes in the market, including the imposition of European Commission regulations. He says the relaxation of price controls will be reviewed.

Prices have soared since the lifting of controls in 1994. A Which? Health magazine report from August 1993 discloses that a Durex Fetherlite condom cost 43p at that time, but it now it costs about 88p. Durex’s most expensive condom, The Avanti, which was launched in the UK last September retails for 3.99 for a pack of two.

No doubt this price inflation will preoccupy the OFT next year. The chance of any new brand succeeding in entering the UK is likely to hinge on the outcome of the review.

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