Alliance Boots looks to extend global reach

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Alliance Boots looks to extend global reach

After initiating an ambitious domestic expansion drive in early2007, UK health and beauty retailer, manufacturer and wholesalerAlliance Boots is now looking to extend its global reach. Europeand emerging markets are key targets for the group.

Alliance Bootsacquired by private-equity firm Kohlberg KravisRoberts & Co in June 2007currently has some 3,000 standalone doorsin 17 countries. The group plans to open up to 400 Boots pharmaciesin the Netherlands, Italy and Switzerland, following the rebrandingof eight Alliance Apotek pharmacies in Norway under the BootsApotek banner. Our re-branding trial in Norway is producing veryencouraging results, and we expect to take a decision [soon]regarding the rollout [&] across Norway to well over 100 [doors],a group spokesperson tells CosmeticNews.

However, as some European countries still prohibit privately ownedchain pharmacies, developing in Europe will depend on theliberalization of the continents pharmacy market. [Boots] has tobe present in the countries theyre targeting when [regulations]free up [...] to acquire pharmacies in Europe, Colin Hession md ofColin Hession Consultants says. Alliance recently entered Francevia the rollout of the Boots Serum 7 and Soltan lines in partnerpharmacies and will soon introduce the brand to Portugal.

In terms of emerging markets, the group is setting its sights onIndia. Alliance Boots confirmed to CosmeticNews that it is inadvanced talks with several parties to launch a franchised healthand beauty chain in the country with a local partner. News reportscite a potential partnership with Indian behemoth Reliance Retail.An entry there would further Alliances influence in Asia, where italready counts Boots standalones in Thailand. Boots will continueto target other fast-growing markets through acquisitions andpartnerships, including investments in associates and jointventures, the Alliance spokesperson says. While the company mayhave the resources to pursue this expansionthe group saw divisiontrading profits soar 20.1% on year in H1analysts warn that thecompany needs to ensure it comes up with the right offer for theright market.

The barriers against [Alliance] Boots will be their ability tounderstand and adapt to local market specifics while retaining thecore values that give them strength, says UK distributor Fragranceand Beauty ceo Mark Earnshaw. An ill-adapted offer was one of thereasons cited for Bootss pullout from Japan in 2001. Analystsconclude that Boots should cautiously approach opening standalonesin emerging markets, while continuing to open shop-in-shops incountries such as the US where competition is strong. Hession saysbolstering this format in both the US and other markets wouldprovide incremental sales growth and appreciable gross marginincreasesan ideal scenario for the group in many countries.


Courtney Traub
CosmeticNews Weekly # 360