Associated British Foods surprised the City with a £171m deal to buy Ovaltine and a clutch of other hot beverage brands from Novartis.
The brands will combine with ABF's Twinings tea operation to create a £350m international hot beverages business.
Although Ovaltine has a rather fusty image in the UK, where hot beverages have been struggling to compete with soft drinks, it has a completely different market positioning on the Continent and in Asia, said ABF head of external affairs Geoff Lancaster.
"Sales have been growing at 4% for the last couple of years. In countries like Switzerland, Ovomaltine [as the brand is known outside the UK] has associations with extreme sports like skiing and snowboarding and providing energy for young people on the move."
Less than 10% of Ovaltine's sales are in the UK.
The deal could be followed by further acquisitions in groceries and ingredients categories, said Lancaster.
Analysts said there could be synergies in distribution as well as opportunities to take some of the brands into new markets via the Twinings operation.
Other brands included in the deal are Options  a low calorie hot drink sold in the UK and Scandinavia, Caotina  a luxury Swiss chocolate drink, Fu Lacovo  a malt drink popular in China, Jarrah instant coffee, and the Ultraslim range.
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The brands will combine with ABF's Twinings tea operation to create a £350m international hot beverages business.
Although Ovaltine has a rather fusty image in the UK, where hot beverages have been struggling to compete with soft drinks, it has a completely different market positioning on the Continent and in Asia, said ABF head of external affairs Geoff Lancaster.
"Sales have been growing at 4% for the last couple of years. In countries like Switzerland, Ovomaltine [as the brand is known outside the UK] has associations with extreme sports like skiing and snowboarding and providing energy for young people on the move."
Less than 10% of Ovaltine's sales are in the UK.
The deal could be followed by further acquisitions in groceries and ingredients categories, said Lancaster.
Analysts said there could be synergies in distribution as well as opportunities to take some of the brands into new markets via the Twinings operation.
Other brands included in the deal are Options  a low calorie hot drink sold in the UK and Scandinavia, Caotina  a luxury Swiss chocolate drink, Fu Lacovo  a malt drink popular in China, Jarrah instant coffee, and the Ultraslim range.
{{NEWS }}
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