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GlaxoSmithKline is looking to find a buyer for its malted-milk brand Horlicks, as it raises funds for its $13 billion buyout of its consumer healthcare joint venture with Novartis.
Reportedly in the bidding for Horlicks is Kraft Heinz, as the drink is popular in the United Kingdom, Australia, New Zealand, Hong Kong, Bangladesh, India, and Jamaica.
Made from wheat, malt barley, sugar, milk and vitamins, the beverage dates back to 1873 when Horlicks was invented by two British-born men, William Horlick and his brother James Horlick from Gloucestershire, England. James was a chemist, working for a company that made dried baby food. William, the younger brother, had emigrated to the United States in 1869 and James decided to join him in Chicago in 1873. That same year, they started their own company, J&W Horlicks, to make a malted milk drink. They called their product ‘Diastoid’ and their advertising slogan read: ‘Horlick’s Infant and Invalids Food’.
The company that acquires Horlicks will have to cope with a decline in the popularity of malted-milk sector. In India, negative volume growth in the health food drinks segment was -6.8% in 2016-17, according to India’s The Economic Times.
“Horlicks is a terrific brand with a long history, especially in India,” GSK Chief Executive Officer Emma Walmsley noted at a recent investors’ meeting. “But in the context of funding for this (Novartis) transaction and our desire to increase focus on our over-the-counter and oral health portfolios, as well as other group capital allocation priorities, it makes sense for us to review it.”
© 2018 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.