A Beverage Divestiture

GlaxoSmithKline chose to divest two iconic consumer drink brands because the company was increasingly focusing its core health operations on emerging markets in which the two brands were relatively weak. The divestiture also helped streamline the company’s late-stage pipeline of pharmaceuticals and vaccines.

In April 2013, after a strategic review of its corporate portfolio, UK-based GlaxoSmithKline announced that it would divest two of its best-known consumer drink brands. Lucozade, a brand of sports and energy drinks, and Ribena, a fruit-based drink concentrate, no longer fit in with company goals, including growth in emerging markets and expanding the company’s portfolio of vaccines and pharmaceuticals.

We love these brands, and we think we’ve done a terrific job, but there are other potential owners able to generate greater value with a better distribution footprint.

Andrew Witty

The company asked BCG to help craft a sound business plan for the two beverage brands. The plan had to demonstrate the brands’ successful turnarounds in their home markets and provide an attractive growth story that outlined opportunities in new markets. The company also had to clearly communicate the commercial viability of the assets’ stand-alone operations.

The team spent ten weeks conducting commercial vendor due diligence. It also performed upside assessments that reviewed market opportunities for Ribena and Lucozade outside of their heritage home markets—including Africa, for which almost no external market data was available.

BCG helped GlaxoSmithKline develop and quantify the impact of operational improvements, such as optimizing the supply chain and manufacturing footprint. It also supported the company during presentations and Q&A sessions with strategic bidders.

In December 2013, the company completed the divestiture to Japanese soft drink manufacturer Suntory Beverage & Food Ltd. for £1.35 billion.

M&A, Transactions and PMI