A few weeks ago, AkzoNobel, the Dutch-based Sadolin brand owner terminated its licence agreement with Sadolin Paints East Africa, which is currently called Kansai Plascon, freeing itself to sign a new local manufacturer.
Daily Post Uganda brings you details of what exactly happened triggering contract termination.
Akzo Nobel did not sell Sadolin to Kansai Plascon as some have been made to believe. And it’s not just a change of name. It’s a change of everything, including the paint itself.
Kansai Plascon (Japanese paint giant) bought Sadolin Uganda Limited (a local company which chose a strategic name for business reasons). Sadolin Uganda Limited has for many years had the license to manufacture, market and sell paint branded Sadolin (which is a brand belonging to Akzo Nobel-a competing paint giant from the Netherlands).
Confused? Think about Crown Beverages in Nakawa…it’s a local company which has the license to bottle and market Pepsi brands.
So, when Kansai wanted to come into the market, they gave the Indians of Sadolin Uganda Limited a better deal to drop Akzo Nobel’s brand Sadolin and instead sell Plascon. It’s like Coca-Cola coming and buying Crown Beverages the bottlers for Pepsi in Uganda when they want to enter the Ugandan market if they weren’t here yet.
So instead of investing billions in building a factory and a distribution network, they bought the local company that has been doing all the manufacturing and distribution for Akzo Nobel. That includes a high end, high capacity production plant and a distribution network of over 400 mega distributors countrywide. Now add to those the thousands of hardware shops twho purchase from these distributors…and you have a giant structure that Plascon found already built.
Akzo Nobel (Sadolin) was caught unaware. You can say that they were murdered in their sleep.
Remember that Akzo Nobel’s contract with Sadolin Uganda Limited was meant to expire at the end of January 2018. Kansai Plascon knew it so they run very fast and told the Indians here not to renew the contract with Akzo Nobel and offered better commissions if they instead sell their Brand (Plascon Paint)
Legally it was wrong for Plascon to start advertising the Plascon name since Sadolin Uganda (The Crown Beverage in this case) was supposed to keep selling the paint Sadolin till end of Jan next year.
But Plascon knew that if they had waited till end of January, Sadolin would have a new game plan and maybe would have out marketed them. So they took the gamble and told the Indians to immediately rebrand the paint Plascon and start running advertising campaigns.
Plascon knew very well that Akzo Nobel would sue and cancel the contract with Sadolin Uganda Limited as a result but they didn’t care. They made the calculation that it would benefit them in the long run. Any fines the courts would make them pay for deliberately breaching the contract and marketing Plascon instead of Sadolin paint before Feb 2018 was too small compared to the financial benefit they would get if they completely crush Sadolin out of the market and it has worked.
Akzo Nobel was is left with a brand name Sadolin and no manufacturer, or established distribution channel
Now Akzo Nobel is saying they are partnering with Regal paint. Considering the fact that Sadolin had 60% market share, no paint manufacturer in Uganda can produce the capacity they were producing on a daily basis
So they have said they are going to invest 10 billion to build a new big plant.
Plascon is laughing out loud. Because by the time that production plant will be up and running to capacity…Plascon will be very far ahead. They would have won the confidence of the customers and it would only take a miracle for Sadolin to undo that.
This situation has left Sadolin (Akzo Nobel) playing catch up. They are now running an advertising campaign to remind people that they are still here. The only problem is that they do not have paint to sell because Regal Paints has not yet began making enough paint for them to have enough stock to sell.
It is said that the Plascon formula is better and that the paint quality has significantly improved. But Plascon made the smart decision not to say that in the adverts to the public for now because this would show people that actually Plascon is a different company yet they are trying so hard to convince the same public that they are Sadolin, the company you have loved for 55 years and just changed the name.
The issue of the improved paint quality was left to the very influential paint distributors and painters to explain to the customers when they go to purchase. You can not say no when your painter or paint dealer tells you “boss this new Plascon paint is better than the old Sadolin. I think the new management improved the paint”.
This decision is meant to help them to win over the good will of Sadolin’s die hard loyal customers.
So you might ask…is the paint the same? Of course not. Coca-Cola would not buy Crown Beverages and allow it to keep making Pepsi the Soda, or Mirinda only to change the label on the bottle to read Coca-Cola or Fanta. You can’t pack Sadolin’s formula inside Plascon branded tins. It’s impossible. Plascon came with it’s own formula and this is the one being manufactured now.
It’s a brain game. And Plascon played the cards very very very well… Kinda like Vladimir Putin.