The brand was acquired from venture capital and private equity firm L Catterton, majority owner of Zarbee's, for an undisclosed sum. The transaction is expected to close during the third quarter of 2018.
Zarbee’s Naturals was founded in 2008 as a drug-free cough syrup brand for children. It has since added products in the cough, sleep, immune support, and vitamin categories.
The acquisition marks Johnson & Johnson's first foray into dietary supplements. Its consumer products portfolio includes over-the-counter (OTC) drugs Tylenol, Benadryl, Zyrtec, as well as different personal care and hygiene brands. Publicly-traded Johnson & Johnson, which sells products in the consumer, medical devices and pharmaceuticals markets, recorded $76.5 billion in sales in 2017.
It won't be the CPG giant's first venture into preventive healthcare, however, as its pharmaceutical subsidiary Janssen Research & Development inked a deal with Israeli microbiome testing company DayTwo back in February to create a platform for personalized clinical nutrition for diabetes.
"We are thrilled by the opportunity to further accelerate our growth as part of Johnson & Johnson Consumer," said Bret Furio, Chief Executive Officer of Zarbee's Naturals. "Over the past 10 years, Zarbee's has attracted a passionate and loyal consumer following by using simple, natural ingredients and creating effective products for both kids and adults.”
He added: “I am confident that Johnson & Johnson Consumer will be a great home for both our brand and our people and we will continue to grow and succeed as we enter this exciting new chapter."
Katie Devine, global president, OTC franchise, Johnson & Johnson Consumer Inc. said "Zarbee's is a values-driven company that was founded on and has achieved significant growth by meeting the evolving health needs of today's families. As a global OTC leader, Johnson & Johnson Consumer shares in this vision and is committed to providing innovative healthcare solutions that satisfy the preferences of consumers."
Another CPG giant that bought supplement brands
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OTC and supplements
The acquisition reflects the increasing trend in the OTC space of consumers opting for natural alternatives to drug ingredients. The category in which Zarbee’s plays is not an easy one—though its products all have Supplement Facts panels, many of its product claims and names tread a fine line between drugs and supplements.
In 2014, it received a warning letter from the FDA because its website “promotes for conditions that cause the products to be drugs.” The letter was closed as recently as March this year, with the FDA stating that the company “appears [to have] addressed the violations.”
A major CPG company like Johnson & Johnson betting on products like those in Zarbee’s portfolio also hints at a future in which OTC drugs and supplements may become more intertwined.
For example, many members of the dietary supplement industry reacted positively to the idea of pre-market notification for dietary supplements during a summit in 2015. With such a scheme, supplements will follow the market route of OTC drugs, submitting a notification to the FDA before going on the market.