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September 20, 2018

Nestle explores strategic options for skin health division

Nestlé is exploring strategic options for its skin health division as the Swiss food giant "sharpens" its focus on food, beverage and nutritional health products.

Nestlé is exploring strategic options for its skin health division as the Swiss food giant “sharpens” its focus on food, beverage and nutritional health products.

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Based in Lausanne, Switzerland, Nestlé Skin Health provides science-based solutions for healthcare professionals, patients and consumers through three complementary business units: Epiduo and Soolantra in prescriptions, Restylane and Azzalure in aesthetics, and Cetaphil and Proactiv in consumer care. The division employs 5,000 people in 40 countries and had sales of around CHF2.7bn (US$2.8bn) in 2017.

The owner of food brands Maggie noodles and Häagen-Dazs ice cream is considering the future of skin health as part of its nutrition, health and wellness strategy, and will meanwhile “deepen resource commitment to its key growth initiatives and facilitate the implementation of its accelerated long-term value creation strategy”.

The review is expected to completed in mid-2019 and comes on the back of an announcement this week that Nestlé will sell its Gerber Life Insurance business to Western and Southern Financial Group for $1.6bn.

“Nestlé Skin Health has made significant progress under its new leadership team over the past two years,” chief executive Mark Schneider said in a statement today (20 September). “The company has developed convincing growth strategies for each of its business units and regained a competitive cost structure. Now is the right time to explore the best ownership structure for Nestlé Skin Health and to consider ways of taking it to the next level.”

As part of the review, Nestlé re-affirmed it commitment to its Nestlé Health Science division, which focuses on medical nutrition and consumer health products, as part of its nutrition, health and wellness strategy. To that end, the company acquired Atrium Innovations earlier this year, adding to its own brands Boost, Nutren, Meritene and Peptamen. 

Chairman Paul Bulcke added: “Our Board has fully reconfirmed the value potential of Nestlé’s Nutrition, Health and Wellness strategy. Sharpening our strategic focus on Nestlé’s core food, beverage and nutritional health products offers the best opportunity for long-term profitable growth and is fully in line with the pursuit of our company’s purpose. As a consequence, our board is convinced that exploring strategic options for Nestlé Skin Health is in the best long-term interest of this business and Nestlé shareholders.” 

Alain Oberhuber, the CEO of Zurich-based MainFirst Schweiz, said if Nestlé decides to sell the skin business it could use the funds to finance a potential purchase of GlaxoSmithKline’s (GSK) Horlicks business in India. Nestlé and Anglo-Dutch consumer goods giant Unilever have been touted by media as being possible suitors for Horlicks, along with beverages giant Coca-Cola Co.

Oberhuber estimates Nestlé’s skin division could be disposed of for a sales multiple of 2.5X to 3X, and 17-20X EBIT, and could reap around CHF6.8bn to CHF8bn from a sale. The analyst puts the potential value of Horlicks at US$4bn.

“We think that the divestment of Nestlé’s Skin Health business is clearly positive for the share price as it shows that the company is refocusing its business on health and wellness, primarily on food and less on personal care,” said Oberhuber. “Secondly, the company divests businesses at a time when valuation multiples are still high.”

And the MainFirst CEO also reiterated he still sees potential for further divestments, which could include the frankfurter brand Herta, frozen prepared dishes and ice cream.

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Unilever- A Deep-dive into Product Launches and Advertising Strategy

Unilever product advertising is mainly through mainstream TV channels. Out of the products advertised so far at least 50% (over 850) of ads have been run on TV, while print media comes second with 496 ads. Unilever also utilizes social media platforms for advertisement. Unilever products are categorized by innovation ratings and tags in our product launch database. The North American region consists of almost 74 products with innovations related to the formulation of the product. Europe and other regions also have more products categorized under formulation-related innovation, followed by the packaging and positioning of the products. Most Unilever products are tagged with “High Vitamins”, “Recyclable”, and “Natural” tags to understand what the product differentiator is from other products available in the market. The majority of products belong to the personal care industry with a total of 5,788 products to date. This report, through the Unilever Example, illustrates how GlobalData Explorer enables you to:  
  • Track product launches by FMCG companies to get an understanding of the product-level strategies including geographic concentrations, innovation types, product claim, category focus and more
  • Monitoring the advertising strategies of various brands and gain insights into channel focus, regional focus, and more
  • Perform company-level analysis to understand business model, size, and geographic focus
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

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