Some of the most well known nutritional drinks in India are being purchased by Unilever ion its effort to enhancing its presence in the fast growing Indian market.
Most of the India consumer healthcare business owned by GlaxoSmithKline (GSK) is being bought by this global consumer goods group which includes very popular beverage brands such as Horlicks and Boost and has earmarked some $3.9 billion for these purchases.
According to this deal which was made public earlier in the week would see the merger of the Indian businesses of Unilever (UL) and GSK. The Indian businesses of the two companies are called Hindustan Unilever and GSK India respectively. Following the closure of the deal, GSK will end up owning a 5.7 per cent stake in Hindustan Unilever.
In the Indian market, the very popular and famous malted milk drinks Horlicks is considered to be a nutritional product for children and this brand has had the leading market share in this segment for years now. According to consulting firm RedSeer, in 2017, about 45 per cent of the entire health drink market in India was owned by this brand which is about thrice the market share owned by its nearest competitor in the market – the Bournvita brand, which is owned by Oreo-maker Mondelez International.
Another of India’s most popular malted drinks, Boost, would also be now owned by Unilever. This brand has some of the India’s biggest sports celebrities, including cricket icon Sachin Tendulkar and the country’s current cricket captain Virat Kohli as its brand ambassadors for many years now.
According to data from RedSeer, this deal and the acquisition of these two brands would provide Unilever with a combined market share of more than 60 per cent of India’s health drinks market.
Unilever also plans to expend an amount of $723 million to acquire some of GSK’s business in India’s neighboring country Bangladesh as well as brand rights to nutrition products of the company for “certain other territories”.
This move by Unilever underscores the strategy of many large global companies to push for market share in India which is amongst the fastest growing major economies and the sectors that are getting the most attention include industries such as retail, consumer goods and technology. Billions into the Indian market in recent years have been put in by big names including Ikea, Walmart and Amazon.
The money that it would garner form the sale of its brands to Unilever would be used for boosting up of its other healthcare products in India, which would include over-the-counter medicines, GSK has said.
The shareholders of Hindustan Unilever and GSK India, as well as by Indian regulators still need to ratify and pass the deal and it is expected that the deal would close by the end o next year.
(Adapted form CNBC.com)