Nestle seeks to pip Unilever in the final round of negotiation to grab GSK's Horlicks
Published Date | 2018 November 20
Nestle seeks to pip Unilever to grab GSK’s consumer nutrition business as Coca-Cola opts out. The acquisition of Horlicks would give Nestle an immediate category leadership given that it already has Milo in the malt drink segment.India: It is going to be Nestle vs. Anglo-Dutch consumer giant Unilever in the final rounds of negotiations to acquire GlaxoSmithKline’s consumer nutrition business in India that includes Horlicks, as Coca-Cola, the third contender selected for the due diligence process, has opted out. Three players- Nestle, Unilever, Coca-Cola- were shortlisted for the acquisition of GSK's consumer nutrition business. Nestle is likely to be the front-runner in the process with a more aggressive offer given that Coca-Cola has opted out. Nestle looking to widen its portfolio in India, trying hard to grab GSK's consumer nutrition business in India. In March, GlaxoSmithKline Plc. had said that it is exploring a partial or full sale of its 72.5% stake in Indian subsidiary GSK Consumer Healthcare by the year-end to help fund its USD 13 billion buyouts of the Novartis stake in their consumer healthcare joint venture. GSK may rise between USD 3.1-3.5 billion for its stake in the consumer nutrition business in India, which includes brands like Horlick, Boost, Viva, and Maltova. Horlicks and Boost together account for almost 60% of the volume share in India. Horlicks alone has a value market share of 43.35%. According to BlueWeave Consulting, India is a priority market for GSK. Horlicks and Boost brands have strong positioning in the Indian market and command approximately 70% of overall value market share in Indian Malted Food Drinks (MFD) market. While the India arm of Nestle, the world’s largest food company, sells malt drink, Milo, it remains a small brand in a market dominated by Horlicks. The acquisition of Horlicks will also boost Milo's distribution through the pharmacy channel. However, it is a stagnant category in terms of growth; still, there is huge potential for scale-up for malt beverage drinks in a key emerging market such as India. The acquisition of Horlicks would give Nestle an immediate category leadership given that it already has Milo in the malt drink segment. Hence, this acquisition will have a significant impact on the consumer health drink industry and will expand phenomenally in the years to come. According to the upcoming report by BlueWeave Consulting on “Global Malted Beverages Market, By Type, By Distribution Channel, By Region- Industry Analysis, Size, Share, Growth, Trends & forecast by 2018-2025”, the global malted beverages market is projected to grow significantly during the forecast period. Malt beverage is a fermented drink in which the principal component is the grain, or seed, of the barley plant. The cereals are predominantly kept in water for germination; later they are dried, boiled and processed into dry powder. The dry powder is also known as malt which is supplemented with vitamins, minerals, fiber, and protein for adding nutritional value. Malt contains half sweet as normal sugar and generally used as a healthier alternative sweetener. Parents opting for healthy and nutritional products for their children’s, high demand for quality products, increasing health awareness, growing nutritional concern, rising number of nuclear families, increasing product endorsement by companies are some factors, which are expected to boost the malted beverages market globally.