The chief executive of GlaxoSmithKline (GSK), Andrew Whitty, has announced a strategic review of the pharmaceutical giant’s Lucozade and Ribena brands that could potentially lead to their sale.
In GSK’s fourth quarter results announcement, issued last Wednesday, the company announced a ‘new major change programme’ in its European operations with a view to achieving savings of ‘at least £1 billion by 2016’.
“In line with this strategic focus, we have decided to initiate a review evaluating all strategic options for the Lucozade and Ribena drinks brands, which are primarily marketed in established western markets,” Whitty commented in the report. “These brands are iconic and the review will look at the best ways to ensure their continued growth.”
However, given GSK’s strong focus on pharmaceuticals, and a weakening European performance, the sale of the brands appears to be very much ‘on the table’. In 2012, the company’s European sales performance (down 7 per cent) was ‘weaker than expected’. By contrast, sales in emerging markets continue to rise (up 10 per cent), and emerging markets now account for 26 per cent of the company’s turnover.
“There are occasionally brands, phenomenal brands, iconic brands actually, but they don’t quite fit as perfectly within that framework that I’ve just described,” Whitty was quoted as saying last week. “And the two best examples are Lucozade and Ribena. They’re primarily brands that are in our Western markets, not primarily in the emerging markets. And they are brands that are not generally expert-endorsed in the way that others are.
“So I think it’s time and it’s appropriate for us to ask a really broad question of, what is the right strategy to make sure that those brands are invested to allow them to grow to the maximum they can possibly do? What’s the right strategy for doing that? How should that be done? And, that’s the purpose of the strategic review.”
Experts estimate that Glaxo could sell the brands for around €900 million, and interest has reportedly already been shown from a number of investment banks.
Source: Checkout
