Reference no: EM131288303

Durex condoms: SSL will sell Durex condoms in the Japanese market through its own organization
Durex condoms will go on sale in Japan for the first time after SSL International, the manufacturer and distributor of health care products, announced it is to expand its operation in the country. SSL International was formed in June 1999 by the merger of Seton Scholl Health Care with LIG (London International Group). Durex is the most sold condom brand in the world, available in more than 140 countries, and with approximately 22 per cent of the global branded condom market.

The Durex brand name was registered in 1929, with the name Durex derived from Durability, Reliability and Excellence. Generally the SSL managers run a brand-oriented strategy: ‘We want Durex to be the Coca-Cola of the condom world.' The move into Japan was made possible by the 1999 merger. Seton Scholl has its own presence in Japan, with marketing and distribution networks set up, whereas LIG did not. Through Seton Scholl Japan it already distributes Scholl products such as shoes and other footwear products throughout the country as well as surgical gloves, which are manufactured by the old LIG company. SSL has terminated a long-term contract with Okamoto, the largest supplier of condoms in Japan, freeing it to vie for a share of the country's 200 million condom market.

The Chief Executive, said, ‘It now makes sense for us to take control of our own destiny in Japan.' SSL aims to have won 5 per cent of the market within five years, generating £10 million worth of new revenue. SSL has bought out its partner in Seton Scholl Japan, giving it full control. Iain Carter again: ‘We saw more prospect of generating value for shareholders by going it alone in Japan.' He added that Durex was already well known as an international brand in the country. The Japanese market for condoms is said to be the world's largest, with annual turnover worth about £200 million. It is dominated by Okamoto (42 per cent market share) and other locally produced products.

The Japanese market is as large because until June 1999 the contraceptive pill was banned and most people had to rely on condoms for birth control. Experts say that it will still take one or two generations before the pill is widely used in Japan. One reason it took 40 years for the contraceptive pill to be legalized in Japan was lobbying by condommakers against its introduction. Japanese health officials said they were concerned that use of the pill, instead of condoms, would spread sexually transmitted diseases. It was even claimed, by other opponents, that the urine of women on the pill would pollute rivers and deform fish.

QUESTIONS
1. What were the main motives for SSL establishing its own distribution channels for condoms in Japan?

2. What are the major barriers to SSL reaching a higher market share for condoms in Japan?