Health Drinks Sales Slowing Down; Divestment In-Process
Following GlaxoSmithKline PLC’s putting renowned health drink Horlicks up for sale, it is now competitor Kraft Heinz Co. that is set to do the same with Complan. In what comes as a surprise to the average consumer of either of these products, it has been reported that growth of the market for malt-based drinks like Horlicks, or rival Bournvita, have seen a steady slowing down in the last five years or more. There is added competition from a new category of drinks similar to these, classified as “supplement nutrition drinks” that have a forecasted annual growth for the period ending in 2022 of greater than five percent, which is significantly higher than the 3.7% forecast for malt-based drinks during the same period. Interestingly, Complan belongs the supplement nutrition drinks category, but has seen slower growth than competitor Ensure, with this segment too seeing a considerable slow-down in its growth.
Although the reasons for the divestment of these products by their parent companies are largely similar, regardless of the market segments that either of these health beverages may fall into, it appears that their parent companies have seen a large enough negative shift in sales for several years leading up to this point to have prompted this decision. Now, it remains to be seen who the takers will be, and whether or not any buyer will step in to acquire either of these brands in a market that is highly competitive as of now. On the other hand, it is more than likely that in spite of losses experienced by GlaxoSmithKline and Kraft Heinz that has led them to make this decision, their asking price could be severely undercut by potential buyers who see nothing more than stiff competition in a saturated market to have to contend with immediately after acquisition.