Optimum Nutrition could become a global brand, Glanbia said

Optimum Nutrition could become a global brand, Glanbia said

Glanbia wants to build "global" performance nutrition brands, the Ireland-based food group's managing director Siobhán Talbot has said.

The owner of brands including Optimum Nutrition and BSN sells sports nutrition products in 19 markets and is eyeing further expansion.

Speaking at the Consumer Analyst Group of Europe investment conference in London yesterday (17 March), Talbot said Glanbia could capitalise on what remains a "fragmented" sector.

"What is interesting is that, because the area is fragmented, in a lot of geographies there isn't one large incumbent, which actually in some ways makes it easier to come into the market with our Optimum Nutrition brand," she said.

Optimum Nutrition and BSN are part of what Glanbia calls its global performance nutrition arm.

The division generated revenues of EUR655.3m in 2013, up almost 12% on 2012, thanks largely to higher sales volumes. Glanbia grew its share of the US performance nutrition sector in the US - the largest market for that side of its business - despite what it called "significant competition".

Over two-thirds of sales from Glanbia's performance nutrition division are made in the US. Talbot told CAGE the company wanted to grow further internationally and was prepared to invest.

"Our ultimate aim is to bring brands global - and to acquire brands. We are interested in looking at brands in the US and looking at brands internationally as well," she said. "Possibly some of the reasons why some of the [rival] brands haven't extended internationally is that it takes quite a bit of investment. We've been very comfortable in recent years to do that and I think it will give us a sustainable advantage for the longer term."

Performance nutritition is one of two divisions Talbot described as Glanbia's "global growth platforms" and businesses that will "take the group forward".

Glanbia's global ingredients business, which supplies products including cheese, whey and grain products to manufacturing, retail and foodservice customers, is the other growth platform.

The unit saw revenue rise 8% in 2013 to EUR1.07bn thanks to increased sales volumes, higher pricing and M&A.

"We will seek to sustain our leadership position in US cheddar cheese. We will continue to leverage our whey expertise - Glanbia is the organisation that really knows the capability of whey as a very high-quality protein and you will see us do more in blending that with other ingredients," Talbot said.

"We will look to scale in dairy and non-dairy. Our expertise is predominantly in dairy but we are quite comfortable with other ingredients, such as the grain area, which has complementary benefits."

The two divisions are Glanbia's most profitable, although margins from global ingredients fell in 2012. Nevertheless, Talbot believes the businesses will help Glanbia grow further.

For 2014, the company forecast an 8-10% rise in adjusted earnings per share on a constant-currency basis compared to 2013, when earnings by that metric were up 11.9%. It expects to see "similar" growth between 2014 and 2018.

"We believe we can sustain that rate of growth organically with the building blocks we can see today if you assume no dislocation in dairy prices and currencies. Our core strategy is that we sustain the leadership position we have today - and we drive to get more."

Addressing analysts and investors at CAGE, Talbot made few comments about Glanbia's Irish consumer dairy brands. Glanbia saw profits from that side of its business fall in 2013 as the company was squeezed by higher dairy costs and a "difficult retail environment" in Ireland.

The division is Glanbia's smallest by sales and margins are the lowest of its four units. Talbot told CAGE the growth prospects for the unit were weaker than in performance nutrition and ingredients.

"These are solid businesses but possibly the most challenged business in 2013 was the consumer products business in Ireland. Our strategy for Ireland is clear. They are not suddenly going to become double-digit businesses. It's about keeping that particular business segment stable as we move forward."