GlaxoSmithKline (GSK) has launched a strategic review of its Lucozade and Ribena brands, hinting that the western-facing brands do not fit its increased focus on emerging markets such as China and India.
Announcing GSK’s Q4 2012 results yesterday, CEO Andrew Witty said that Glaxo was increasing its focus on a core portfolio of healthcare brands and in emerging markets, “where we are seeing very positive consumption trends and benefit from sales and distribution synergies with pharmaceuticals".
GSK reported a 2012 turnover of £25.431bn or $34.247bn (-3%) and an operating profit of £7.392bn (-5%); Q4 turnover fell 3% to £6.802bn but quarterly operating profit rose 3% to £1.94bn. (N.B. We are not reporting these figures on a constant currency basis.)
Discussing the ‘excellent progress’ of GSK’s Consumer Healthcare business, Witty noted divisional sales up 5% for FY 2012, but mentioned “clear adverse impact” from European sales (-7%).
Review looks to grow 'iconic brands'
“Investments to maximize returns in these markets continue. Last year, we opened a new innovation center in China, and most recently, we increased our shareholding in our Indian subsidiary,” he said.
In line with this strategic focus, Witty said that GSK had decided to begin a review evaluating all strategic options for its Lucozade and Ribena drinks brands, which fall within its Consumer Healthcare business, and “are primarily marketed in established western markets”.
“These brands are iconic and the review will look at the best ways to ensure their continued growth,” Witty added.