Japanese giant buys Lucozade, Ribena brands.

There has been hype about Suntory Beverages & Food Ltd., one of the largest players of the drinks and food market in Japan, offering to buy the well-known British drink brand, Lucozade and Ribena from GlaxoSmithKline Plc for approximately 2.1 billion dollars.  

I feel that this move by Suntory was a very smart move especially for buying the Lucozade brand. But how smart?

Firstly, Suntory could possibly create a new segment of the energy drink market that is so saturated right now with domestic and foreign brands. The reason I think this is because currently, there is no presence of a slightly less extreme energy drink in the Japanese market which Lucozade successfully represents. All of the well-known energy drink brands such as Red Bull, Monster Energy, Ripovitan D, Oronamin C, are extremely high in caffeine content and mostly only appeal to businessmen and young teens who are looking for a caffeine boost. If Suntory could successfully position the Lucozade and Ribena brands to be a less extreme form of the energy drinks in the market, they would be able to successfully target a wider customer segment, with a first-mover advantage.

Secondly, because of the highly saturated non-alcoholic drinks market in Japan, this move by Suntory is probably a strategy to increase their source of revenue from outside of Japan. Also, because Suntory will acquire global rights to the brands and the manufacturing sites, owning these two brands will provide Suntory with a foothold to expand their products in countries such as Nigeria and Malaysia where Glaxo already operates.

 

http://www.gsk.com/media/press-releases/2013/gsk-reaches-agreement-to-divest-lucozade-and-ribena-.html

http://dealbook.nytimes.com/2013/09/09/glaxo-to-sell-drink-brands-for-2-1-billion/?_r=0

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