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Reckitt Reviews French's Food Unit After Mead Johnson Deal

By Steve Wynne-Jones
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Reckitt Benckiser Group Plc is beginning a strategic review of its food business, which includes brands like French’s mustard, after agreeing to buy infant-formula maker Mead Johnson Nutrition Co. for $16.6 billion.

Reckitt said it will consider all options for the business, which it called “non-core” in a statement. With 411 million pounds ($515 million) in sales last year, French’s Foods accounted for 4 percent of Reckitt Benckiser’s total revenue.

The possible sale of the food unit, as Reckitt focuses on businesses such as Dettol cleaner and Durex condoms, comes amid a reshuffling of portfolios at global consumer giants, many of which are experiencing a slowdown in sales growth for stalwart brands. Unilever has launched a strategic review after fending off a takeover approach from Kraft Heinz Co., and a sale of its spreads business is one option, according to people familiar with the situation.

Strong Performance

While preparing the food unit for a possible sale, Reckitt Benckiser said it had a “history of outperformance.” Like-for-like food sales grew 5 percent last year, and the business generated adjusted operating profit of 118 million pounds. The division makes ketchup, yellow mustard, Worcestershire sauce, onion flavorings and other products.

Reckitt Benckiser’s acquisition of Mead Johnson, announced in February, marks an “inflection point,” Chief Executive Officer Rakesh Kapoor has said. He cited urbanization, changes to China’s one-child policy and increasing rates of women entering the workforce as reasons for entering the infant nutrition market, which he sees growing at 3 percent to 5 percent a year in the medium term.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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