Ever-expanding Japanese beverage behemoth, Suntory, is the new owner of Lucozade and Ribena, which GlaxoSmithKline (GSK) has sold for £1.35bn (€1.6bn/$2.11bn) as it admits defeat in its internationalisation plans and trains its focus on its pharma activities.
Suntory Beverage and Food (SBF) takes control of the two energy-sports-health brands which notched up sales of about £500m (€584m/$779m) in 2012, mostly in the UK, although its exact plans for the brands have not been made clear. It was not making a comment on the matter today.
GSK said it was the right time to sell the brands that are profitable but have remained very UK-centric.
“Lucozade and Ribena are iconic brands that have made a huge contribution to GSK over the years, but now is the right time to sell them as we increase the focus of our Consumer Healthcare business and execute the delivery of our late stage pipeline of pharmaceuticals and vaccines,” said David Redfern, GSK chief strategy officer.
“We believe the future of Lucozade and Ribena is in good hands given SBF’s established beverages business, ambitious growth plans and also their recognition of the strong performance and capability of the GSK employees working on these products.”
GSK said it would receive £1.3 billion after tax, fees and costs in the deal that is expected to be finalised by year’s end.
GSK management performed a strategic review of Lucozade and Ribena in February and announced its intention to divest them soon after as they were found to be outside its core focus and showed little promise in emerging markets.
Under the deal, Suntory gains global rights to Lucozade and Ribena as well as GSK’s UK-based manufacturing plant which could be used for some of Suntory’s own brands like Orangina which it acquired for €2.6bn ($3.43bn) in 2008.
GSK will continue to manufacture and distribute Lucozade at a Nigerian going concern under license from Suntory.
Suntory, which earned €14.26bn ($18.8bn) in 2012, raised about €3bn ($4bn) in a recent share issue and analysts predict that further acquisitions are likely from a company that has made no secret of its expansion ambitions with the Orangina and other buys as its home market flatlines.
It has doubled its non-Japanese revenues in recent years but an analyst told us on Friday it, like GSK before it, may struggle to take the brand beyond the UK shores.
“Suntory will struggle to make these brands work outside the UK,” said Julian Mellentin, from New Nutrition Business.
“Lucozade is a very strong player in the energy drinks market in the UK but it stands no chance of significant success in other markets because the energy drink space is already very well-supplied and it can bring no point of difference.”
“Ribena is based on blackcurrant (cassis) and that is a very specific UK preference that you don't find in many other places.”