LONDON/CHICAGO (Reuters) - Procter & Gamble’s $4.2 billion deal for Merck’s vitamin and supplements business is the latest example of a major consumer company stocking up on health-related products.
The U.S.-based maker of Tide detergent and Gillette razors announced the deal on Thursday, giving it brands such as Seven Seas vitamins and expanding its portfolio of healthcare products.
Just last month, cleaning product maker Clorox Co agreed to buy multivitamin company Nutranext for $700 million. And in December, Nestle SA paid $2 billion for vitamin maker Atrium Innovations.
The moves show how global consumer goods companies are looking to new, interesting areas to offset flagging growth in their core businesses.
The vitamins and supplements sector is attractive due to the emergence of new brands marketing themselves digitally and selling directly online to young consumers, said investment banker William Hood of William Hood & Co.
“It’s what the millennials are buying and how they’re buying it,” Hood said. “Large companies are realizing they need to figure it out.”
A spokeswoman for P&G declined to comment on the company’s strategy to expand its vitamins, minerals and supplements business. P&G already owns consumer health brands including Vick’s, Metamucil and Pepto-Bismol.
Globally, the vitamin and supplements category has grown between 5 and 7 percent annually for the past five years, according to Euromonitor.
The category is very fragmented, with market leader Amway Corp having only 3.6 percent share, Euromonitor data showed. That implies a consolidator could easily boost margins by building scale.
Consumer goods firm Reckitt Benckiser has