Glanbia revenues rise despite sports nutrition struggles

27 Feb 2020 --- Glanbia’s Nutritional segment (GN), alongside its recent SlimFast and Watson acquisitions, drove a 16.6 percent increase in revenue in 2019, up from €3.17 billion (US$3.46 billion) in 2018 to €3.87 billion (US$4.24 billion), according to the company’s 2019 full year results. However, the Glanbia Performance Nutrition (GPN) segment notably lagged behind its dairy segment Glanbia Nutritionals, which “impacted its revenue and earnings.” The company aims to leverage the potential of its Optimum Nutrition (ON) brand and Body & Fit direct-to-consumer platform to achieve branded revenue growth this year, as the nutrition industry continues its quest to deliver on consumer convenience trends through e-commerce and easily prepared food and beverage supplements.

“Consumer trends are changing and we are seeing more of an appetite for online sales than ever. We are moving with this trend as we serve our customers through various online platforms. We see digital as a very important route to market going forward,” a Glanbia spokesperson tells NutritionInsight.

Despite being “disappointed” that Glanbia was not able to achieve its 2019 growth targets, the group’s Managing Director Siobhán Talbot highlights that GN saw broad-based volume growth. Notable performances are reported in its vitamin and minerals blends business and healthy snacking ingredients, both underlining the continued consumer shift towards health and wellness. The Watson acquisition is also regarded as “very complementary” to the Nutritional Solutions portfolio, especially considering its 12.6 percent contribution to revenue growth.

“We’re very clear on a series of actions that will both drive revenue momentum and improve margins into the future. We will simplify our business, allowing us to concentrate on our core brands and optimize our routes to market across channels and geographies. We are confident that the actions being taken will position the company to generate enhanced shareholder value in a growing healthy nutrition market,” Talbot says in an earnings conference call.

The international and European markets, respectively, were the most challenging for GPN in 2019 as foreign exchange headwinds and higher tariffs impacted its competitive position. This resulted in branded volume declining by double digits in the year, the company reports.

Glanbia has delivered a 16.6 percent increase in revenues in 2019, driven by a strong performance from the Glanbia Nutritionals segment.Bracing for Brexit
The Glanbia spokesperson further states the decisive outcome in the UK general election has provided business with some clarity on Brexit, at least for 2020. Nevertheless, the prior uncertainty around Brexit presented an additional challenge for business in general.

“Ultimately the impact on the business will depend on the outcome of the talks on the future trade relationship, which we are monitoring carefully. The agreement on the Northern Ireland protocol and the forthcoming commissioning of the Glanbia Cheese facility in Portlaoise, Ireland, have reduced the risk factors significantly. Hopefully a trade agreement will deal with any remaining risks,” they say.

 From an overall Glanbia perspective, the spokesperson assesses its company’s exposure to the UK is relatively small, however the Joint Ventures are bound to feel the greatest impact. “We will be monitoring the negotiations closely in the months ahead as the expiry date of the transition phase gets closer.” 

Rethinking brand strategies
In a bid to address the “growing pains” GPN went through caused by the shift from the specialty to the online channel in 2019, Glanbia aims to sharpen its focus on its Body & Fit platform. Representing approximately 6 percent of the total GPN 2019, the Body & Fit brand is considered an additional “key path to growth” for the company in the European online channel, as it aims to further leverage its digital capability on a global basis.

Moreover, as ON and SlimFast represent together almost 70 percent of the total branded portfolio of GPN, Glanbia plans to further increase its marketing investment in 2020 in these brands, Talbot explain.

“We’re very focused on regaining momentum in GPN. The clear initial priority is to drive top-line growth, which can be achieved through a renewed focus on our two platform brands: ON in the performance nutrition category globally and SlimFast within the lifestyle portfolio in North America and the UK,” she continues. 

With global sales of US$655 million in 2019, ON constitutes Glanbia’s largest GPN brand and makes up the majority of sales of North America Performance Nutrition and International businesses, with its key formats being protein and energy powders.

Notably, SlimFast grew strongly in 2019 to a revenue of US$325 million and anchors the North American Lifestyle portfolio, Talbot further explains. “Ready-to-drink (RTD) has been a key format for SlimFast historically, but the range has been significantly extended in 2019 into ready-to-eat formats, particularly under the Keto range,” she says. The diet brand recently launched a low-carb, lactose- and gluten-free RTD meal replacement shake to its Advanced Nutrition line called Bananas & Cream. 

Talbot affirms that at the moment, Glanbia expects the total revenue of GPN to likely grow in the low single-digit range for 2020. “We’re not immune from global disruption for the start of 2020 as planned. In terms of the shape of 2020, we expect the half year to be broadly in line with 2019, reflecting both talent and brand investment in the first half and the seasonality of our business,” she states. 

By Anni Schleicher