Coca Cola all set to buy Horlicks

June 27, 2018
Coca-Cola enters a new foray by following the steps of global consumer food giants Nestle, Danone and Hindustan Unilever and others in the $4-billion-plus pursuit to buy GlaxoSmithKline’s consumer nutrition business.
Coke has delegated Citi to help them in the competitive bidding process expected to launch next week and the evaluation work had begun even though the sale process is yet to formally launch. It will be a large transaction, so work has already begun.
With consumer beverage preferences changing swiftly in favour of low-sugar or functional options such as juice and juice drinks, flavoured water, dairy-based beverages and tea, the Atlanta-based company has been accelerating portfolio expansion beyond its core aerated brands.
Coca Cola has been stepping up launches in the ‘healthier’ space including no-sugar variants of Coke, Sprite and Thums Up, Vio dairy drink, Zico coconut water, Aquarius fortified water, Fuze iced tea, glucose and fruit juice drink Aquarius Glucocharge and Minute Maid Vitingo for micronutrient deficiency and malnutrition, besides hyperlocal variants of juices and juice-based drink.
In recent years Coca-Cola globally bought or invested in millennial friendly brands such as Honest Tea, an organic tea brand, Suja Life, a cold pressed juice maker, and AdeS, a soy based beverage brand.
But will buying Horlicks be the ideal fit for a company which is looking to rapidly reduce sugar across its portfolio. Lets see.

GSK Consumer’s Horlicks and Boost brands have strong positioning in Indian market and command approximately 70% of overall value market share in Indian Malted Food Drinks (MFD) market. These products had combined revenue of £550 million in 2017, with India contributing most of it. However, in March the company decided to review and potentially sell the nutrition products business to fund the $13-billion buyout of Novartis’ stake in a consumer healthcare JV. 

India is Horlick’s biggest market and even though the transaction is being run out of London from GSK’s headquarters, it will have significant India implications. A diverse set of suitors like Nestle, Danone, Mondelez, Abott and HUL are in fray as are PE buyout funds like KKR. Indian companies like ITC and even Dabur are believed to have evinced interest.

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