Shine goes off Sunny Delight
Delight up for sale in order to concentrate on its snack and coffee
businesses.
Sunny Delight, the soft drink brand frequently surrounded by controversy, has been put up for sale by its US-based owner Procter & Gamble.
P&G is "exploring strategic alternatives" for the brand, which has hit the headlines over the years for a variety of reasons, including one spectacular case where a young boy's skin turned yellow after drinking large quantities.
The company's other fruit juice drink, Punica, is also up for sale. P&G is also looking for new partners or licensees to help it develop its nutritional products business, which has potential applications across the food industry.
The move will allow P&G to focus on its snacks business, which includes the Pringles brand, and its coffee arm, Folgers. Both are said to be billion dollar businesses with excellent potential for growth.
"Exploring strategic options for P&G's business is an ongoing process. P&G's strategy for sustained growth is focused on building from the core. A key element of our strategic focus involves tough choices that enable us to re-deploy resources and invest in core and new businesses. This is one of those tough but right choices," said A.G. Lafley, P&G chairman, president and chief executive.
"The Sunny Delight and Punica businesses have made significant progress on delivering a better cost structure, better brand equity and are leading brands in their home markets," said Jorge P. Montoya, president of P&G's global snacks and beverages business. "However, while the juice based market is large, the business model is better for companies that have chosen juice beverages as a corporate priority."
P&G is now soliciting offers for the refrigerated drink/juice businesses and said it would consider sale or alternative offers for the businesses as a group or as individual units.
Sunny Delight has strong market positions in a number of countries, including the US, Canada, Spain, Portugal, the UK and France. Since acquiring the brand in 1989, P&G has more than quadrupled sales through geographic expansion, new flavours and packages and effective marketing.
The brand now includes Tangy Florida Style and Smooth California Style orange juice drinks, a Tropical Caribbean variant, a calcium fortified version, a new lemonade sub brand and a variety of sizes.
Punica is a leading brand sold primarily in Germany, and was acquired by P&G in 1984. It recently launched new a sub brand Schorle and tea and fruit flavours of the main brand, as well as new PET packaging forms.
Neither brand has been performing particularly well recently, and while P&G is certainly right in saying that the drinks business is increasingly one dominated by specialist groups rather than diversified companies, it is also true that Sunny Delight in particular has suffered because of its less than healthy image.
Frequent high profile complaints about the colourings, high sugar content and low juice content of the drink have stuck in consumers' minds, especially at a time when healthier drinks are the most in demand.
Which of course makes it harder to predict who is likely to want to buy the brand, especially as it is likely to need a great deal of investment to win over increasingly savvy consumers.
