Li Jieshi strategically evaluates China's infant nutrition business!

Just now, the parent company of Mead Johnson announced in its 2020 financial report that it will conduct a strategic evaluation of its infant formula business in Greater China.
The decision is part of Reckitt's adjustment of product portfolio in order to seek higher growth.

Xiaoshidai noticed that during the performance conference call that was just held, Reckitt’s CEO Laxman Narasimhan mentioned that China’s milk powder business faces many challenges, but there are also many bright spots.

Li Jieshi said in its financial report that the strategic evaluation has not yet reached an overall conclusion and is committed to improving the operational performance of this business.

In response to this, Mead Johnson China responded to the inquiries of the snack representative today, saying that this strategic assessment will not affect the company's normal business operations, and that the company's business is proceeding as usual.

The nutrition business in the Greater China region has always been the focus of the Li & Jesse Group, and the team in the Greater China region is also very good.
This evaluation aims to release the growth potential of the great brand of Mead Johnson.

Below, let's take a look at more news.

Strategic evaluation

Strategic evaluation

Let's take a look at the latest news of the earnings report.

According to Laxman Narasimhan's financial report, the company is taking decisive actions to strengthen its product portfolio, including a strategic assessment of its infant formula business in Greater China.

At the same time, Li Jieshi has agreed to sell the foot care brand Shuangjian and acquire Biofreeze.
These decisions will position the product portfolio in faster-growing brands and markets.

Laxman Narasimhan, Global Chief Executive Officer of Reckittmann Group

However, Li Jieshi also emphasized that the strategic evaluation of infant formula business in Greater China has not yet reached an overall conclusion, and further updates will be provided as appropriate.

Looking through the financial report of Snacks, we noticed that this business accounted for 25% of Reckitt’s nutrition business and about 6% of the group’s revenue.

According to Li Jieshi's 2020 financial report, the annual net income of its nutrition business was 3.

287 billion pounds (approximately 29.
09 billion yuan), a year-on-year increase of flat.
The company pointed out that the US infant nutrition business has achieved growth, and the Airborne brand has grown by more than 100% due to increased consumers' concerns about health and immunity.
However, this was offset by the decline in infant nutrition business in Greater China.

Regarding the decline in business in the Greater China region, Li Jieshi said that it was adversely affected by the continuous restrictions on cross-border trade activities between Hong Kong and Mainland China.

In mainland China, the market share in the first few quarters of last year was stable, but it was offset by the challenging fourth quarter.
As expected, sales in the fourth quarter were adversely affected by increased price competition, especially in the channel of large maternal and child stores.

"We continue to maintain a good competitive situation with our multinational counterparts, and achieve share growth in the high-end and ultra-high-end markets.

However, the slowdown in the speed of high-endization and greater competition from local brands are expected to reduce growth opportunities in the short term.
" Li Jie said at the time.

Xiaoshidai noticed that at the performance meeting this afternoon, Laxman Narasimhan also mentioned the highlights and challenges of this business.

He said that China's infant nutrition business has shown strong basic execution, and offline execution proficiency is stronger.
In addition, innovation and new products are progressing well.
In terms of share, Mead Johnson's share of online channels and social e-commerce channels have both achieved growth, and its overall share in mainland China has also remained stable.

However, he also pointed out that the milk powder business faces many challenges, including structural challenges that need to be resolved, the Hong Kong port has been closed for longer than expected and has not yet determined when it will reopen, local competitors have invested heavily to promote growth, and the impact of the epidemic on the birth rate, etc.
.

Li Jieshi said in its financial report that the infant nutrition business in Greater China is still a key area of ​​the group's attention.
"We are committed to improving operational performance and continue to evaluate and analyze strategic options, and will provide further updates in 2021.
" The company said.

Looking forward to 2021, Reckittmann expects that in the short term, the low birth rate caused by the pandemic in 2020 and 2021 will affect the market growth of its infant formula business.

Development in China

Development in China

Xiaoshidai once introduced that Li Jieshi officially completed the acquisition of Mead Johnson on June 15, 2017.
This $17.
9 billion transaction allowed Reckitt to enter the baby food field for the first time.
The reason for the acquisition of Mead Johnson was that Reckitt Benckiser announced in 2012 that it would transform into a consumer goods company focused on achieving "healthier lives and happier families", and has been adjusting its product portfolio accordingly.

In May 2017, Li Jieshi also pointed out in a shareholder letter that the acquisition of Mead Johnson is in line with the company’s strategy of focusing on consumer health and investing in strong brands with attractive growth prospects.
It also believed that Mead Johnson would help the company deepen Its original relationship with the consumer groups of millions of mothers.

Rakesh Kapoor, who was the CEO of Reckitt’s at the time, also pointed out that the infant nutrition business fits Reckitt’s consumer health concept, and this is a huge business that continues to grow, and its business area has developed and grown in emerging markets with Reckitt The strategy is also very consistent.

After the acquisition of Mead Johnson, Reckitt Benckiser first reorganized the company and divided its business into two new business units: "Reposter Health" (including Mead Johnson) and "Reckitter Family Hygiene", hoping to help different business units.
Focus more on their respective businesses, from innovation, brand development to customer supply.

At the same time, Li Jieshi also proposed to Mead Johnson the two major directions of "improving innovation" and "strengthening e-commerce.
" Subsequently, Mead Johnson set out to reorganize the Chinese e-commerce team, appoint new business leaders, and at the same time strengthen cooperation with e-commerce giants such as JD.
com and Tmall, and signed the "2018 Joint Business Plan" strategic cooperation agreement with Alibaba to increase the number of new business leaders.
The layout of retail channels.

According to the data disclosed by Reckitt’s executives at the analyst meeting for the first quarter of 2019, before its acquisition of Mead Johnson, the latter had 15% of its business online in China, and in 2018, the proportion has risen to more than 25%.

In addition, Mead Johnson has initiated channel reforms for third- and fourth-tier cities in China since 2018.
Through the establishment of a series of partnerships with platforms such as Alibaba and JD.
com, it has worked hard to promote the sinking of channels and sell products to lower-tier cities in China.
Under the maternal and child store, and has expanded the network to more than 250 cities.

At the same time, Mead Johnson has successively launched new products such as A2 protein milk powder and grass-fed milk powder in the Chinese market, and introduced overseas products such as Mead Johnson formula liquid milk and An Minjian through cross-border e-commerce channels.
Laxman, the current CEO of Li Jieshi, said in May last year that the construction of e-commerce channels is still the focus of attention, and he also said that there are plans to launch new milk powder products in China in the future.

Foreign News Review

Foreign News Review

Bloomberg reported today that Li Jieshi had impaired the value of Mead Johnson’s business of 985 million pounds (approximately RMB 8.
717 billion) today.
In the past few years, China’s infant nutrition products accounted for approximately 6% of Reckitt’s total sales, with the latter’s total sales being approximately 14 billion pounds.

The Financial Times quoted analysts’ opinions today as saying, “We are very pleased to see that the new management has taken swift action on this issue that has lasted for several years.
” The report stated that Li Jie Shi is betting on consumers’ continued attention to cleaning And its B2B family health department.
The company believes that demand for sanitary products will continue to grow, but also said it will take "decisive action to manage the product portfolio more broadly.
"

Xiaoshidai noticed that the French newspaper Figaro previously reported that Jan Bennink, an external consultant of activist investor Artisan Partners, had suggested that Danone should make important acquisitions in the fields of medical nutrition and infant nutrition after regaining its growth.
Because this business has the opportunity to overtake Nestlé.
To this end, he suggested that Danone acquire Mead Johnson.

However, Nestlé does not seem to give up the title of the world's largest milk powder supplier.
Xiaoshidai also introduced that the CEO of Nestlé said last week that he firmly believes that the nutrition business can become a growth contributor in the medium and long term.
It is also part of Nestlé’s DNA and is a business that will not be given up.
He pointed out that although Nestlé sold the Yinlu peanut milk and porridge business, it will not repeat itself in the nutrition business in the Chinese market.

For the follow-up progress of Reckitt’s assessment, Snacks will pay close attention to it.

Source: Snacks Generation

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