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Swiss icon lands in British hands

Ovomaltine, an icon of all things Swiss, has been sold to a foreign multinational, Associated British Foods (ABF), for SFr400 million.

Production of the famous malted drink will remain near the Swiss capital, Bern.

The Swiss pharmaceutical giant, Novartis, put the beverage on the auction block earlier this year, as part of a drive to sell off its health and functional food activities and focus instead on its core pharmaceuticals business.

Along with Ovomaltine, which represents over 70 per cent of Novartis' food and beverage sales, the British company has also purchased brands such as Caotina chocolate drinks and Galactina baby foods.

"Ovomaltine is an extremely good fit with our Twinings tea business," said Geoff Lancaster, ABF's head of external affairs. "It also has very good growth potential."

"It doesn't compete with our products, but it has a similar market position. The combination of the two makes us a major player in the international hot beverage market," he told swissinfo.

Critical mass

ABF chief executive Peter Jackson said the purchase of Ovomaltine and related brands would give his company critical mass in that sector.

This is the second major acquisition in 2002 for ABF, after the purchase of Mazola cooking oils earlier this year.

"Our policy is to buy market leading brands," Lancaster told swissinfo. "Ovomaltine is the leader in its category in nine out of ten of its European markets, and this is the sort of brand we already have in our portfolio."

Because there is no overlap with businesses it already owns, ABF is not planning to make changes in production.

"We've had a very good look at the assets," said Lancaster. "They're good quality and serving the company well, and we don't have any immediate plans to change anything in that area."

Long tradition

Ovomaltine has a long tradition in Britain itself. For nearly 90 years, a factory in Kings Langley made the product, which was sold under the brand name Ovaltine.

Many British even consider it a national brand, rather than a foreign one. The downside to this has however been a rather stodgy image, as Lancaster admits.

"In Britain, Ovaltine is perceived mostly as an older person's drink, unlike in the rest of Europe."

Elsewhere, Ovomaltine benefits from a more youthful image, sponsoring among other events, snowboarding competitions.

The new owners don't expect to move away from that brand positioning. "We think one of the major assets we've acquired is a very strong marketing team," said Lancaster.

No job cuts

The Swiss employees have been told that no jobs will be cut and that the collective bargaining agreement will be respected until it runs out in September 2004.

One of the conditions set by Novartis had been that Ovomaltine production would remain in Switzerland. Around 240 people work at the Neuenegg facility near Bern, with other factories in Thailand, the Philippines, China and Australia.

But the sale goes beyond a simple business transaction. For nearly a century, Ovomaltine has been a success at home and abroad, and for many consumers sits alongside chocolate, clocks and the Alps as a symbol of Swissness.

ABF is aware of the perils involved if it tries to fiddle with the Ovomaltine image. "We realise we have bought something of a Swiss national treasure," Lancaster told swissinfo. "We understand that national brands like Ovomaltine need to be nurtured."

As Swiss as chocolate

But although Ovomaltine may be as Swiss as chocolate and cheese, there is no escaping its wider appeal.

"It's true that there is a strong Swiss heritage there, and we have no intention of dismantling it," Lancaster told swissinfo. "But I think it is already considered a European, if not worldwide, product."

"It's a major product in Thailand for example, where you can even buy it as draft."

swissinfo, Scott Capper

Key facts

Novartis is selling off its food and beverage business to Associated British Foods (ABF).
The deal - which is subject to regulatory approval - is worth SFr398 million.
Under the terms of the deal, ABF will acquire the Ovomaltine, Caotina and Lacovo brands.
ABF is the sixth biggest European food company with 34,000 employees and annual sales of SFr10.2 billion.

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