Big brands still count in the nutrition and health market. That’s the clear message underlined by results from Reckitt where these two areas helped it beat expectations.
At a time when household budgets are under real pressure, you’d think people would be happy to buy unbranded over-the-counter drugs but products like Nurofen still look to be a winner with consumers.
AJ Bell’s Russ Mould said: “The strong infant nutrition sales in the US shouldn’t be counted on long term, as a recall by rival Abbott Laboratories after customers complained of their kids contracting bacterial infections allowed Reckitt to fill the gap. However, lingering brand damage for Abbott could help Reckitt consolidate at least some of these market share gains.
“Reckitt has been able to successfully pass on higher costs and this helped make up for lower sales volumes but it is fast approaching a point where it needs to decide if investors can continue to stomach further increases. Short-term gain could easily turn into long-term pain if it means Reckitt loses share to its rivals.
“This decision will fall to new CEO Nicandro Durante who can at least draw on years of industry experience to help make that call.”