Big brand sale

UPDATE: Suntory will buy Lucozade and Ribena for ‘sum close to £1bn’; brands won’t work in Asia, says analyst

By Shane Starling & Ben Bouckley

- Last updated on GMT

“Suntory will struggle to make these brands work outside the UK." Picture Credit: Ryan Fung/Flickr
“Suntory will struggle to make these brands work outside the UK." Picture Credit: Ryan Fung/Flickr

Related tags Energy drink Glaxosmithkline Suntory

Sources close to GlaxoSmithKline have confirmed that the sale of its iconic Lucozade and Ribena brands to expanding Japanese beverage giant, Suntory, will proceed for a sum closer to initial estimations of £1bn (€1.18bn/$1.55bn), but an industry analyst says the brands will struggle in Asia.

Some media outlets today reported the deal could go as high as £1.5bn (€1.78bn/$1.96bn) but the source said it would come in, "closer to the billion pound mark".

The confirmation ends months of speculation about the new owner of the £500m (€584m/$779m) yearly earning brands with the likes of Coca-Cola, Lion Capital and Blackstone and AG Barr, along with private equity firms, all considered as possible suitors.

The move will increase Suntory’s non-Japanese market revenues which have jumped from 12% to 25% in recent years.

Growth ignition

Julian Mellentin, from New Nutrition Business,​ said Suntory, like its Japanese rival Asahi, sought to, ignite growth – which is no longer possible in the Japanese market, thanks to an ageing population and a saturated market and falling beer sales.”


While acknowledging the strength of the Lucozade and Ribena brands, Mellentin warned of the difficulty in internationalising them because they, “are very UK oriented.”

“Suntory will struggle to make these brands work outside the UK. Lucozade is a very strong player in the energy drinks market in the UK but it stands no chance of significant success in other markets because the energy drink space is already very well-supplied and it can bring no point of difference.”

“Ribena is based on blackcurrant (cassis) and that is a very specific UK preference that you don't find in many other places.”

The business provides access to the UK and access to distribution but they are going to have look at other brands if they want to make an impact in mainland Europe.”

Brand expansion


Rollits partner and corporate finance expert Julian Wild was more optimistic, saying there was great potential to grow the two “exceptional brands”​ in Asia and other markets.

“The sports drinks category is just going to keep growing globally and these are very strong brands and so I see great potential for Suntory to drive them into new markets,” ​Wild told and NutraIngredients.

“Especially with Lucozade, there are four sub-brands in that portfolio and I don’t see why these brands can’t succeed in Asian markets.”

“It makes sense that they go to an existing beverage company like Suntory as they need to be bolted onto an established player.”

UK-based beverage analyst Phil Carroll said £1bn was a good price for such established and profitable brands and gave Suntory the “soft drinks exposure it seeks”.

New bunch of owners for Ribena
New bunch of owners for Ribena

“It may also use the UK-EU production facilities for its own brands as it develops its global soft drinks business but it is developing differently to a Coke or a Pepsi which remain focused on single brands.”

Best leveraged

GSK in April ​ announced it was putting the brands up for sale with CEO Sir Andrew Witty stating, “the tremendous growth potential of these iconic brands, particularly outside the ‘core’ Western markets, could be better leveraged by companies with existing category presence and infrastructure in these regions.”

Suntory first bought into Europe when in 2008 it paid €2.6bn for Orangina Schweppes which included the brands Orangina, Schweppes and Oasis. They earn about €1bn a year between them.

The same year it bought Danone's Frucor business which included the number one energy drink brand in Australasia, called 'V', and number one fortified water, Mizone, which is also present in China.

“We plan to build a base for our business in Europe to speed up Suntory’s globalisation,”​ Suntory said at the time. 

In early July, Lion Capital and Blackstone were rumored to be exploring a tie-up ahead of a joint bid for the GSK brands, and there were whispers later that month UK soft drinks firm AG Barr (smarting from it's failure to tie-up an all-share merger with Britvic) had approached two private equity houses with a view to advancing a joint offer.

The source said the deal would complete in the next few days.

Related news

Show more

Follow us


View more