Clorox buys Renew Life

Steve’s breakdown: We’re expecting the advertising budget of Renew Life to double or even triple after this acquisition and they HAVE TO dump the campaign they are running. A “Live Digestively” ad is the featured video.

PALM HARBOR, FL & OAKLAND, CA: Clorox  CLX 1.87%  is best known for its namesake liquid bleach, Glad garbage bags, and Brita water filters. But now the consumer products giant is taking aim at a whole new market: digestive health.

On Tuesday Clorox said it has bought Renew Life, a $115 million-a-year digestive supplement brand with a heavy focus on probiotics to take advantage of a booming but “highly fragmented” $10 billion market that is growing 7% a year. Within that, probiotics are a $1.3 billion product category expected by analysts to grow 15% a year.

“The Renew Life acquisition is consistent with our strategy to accelerate growth through bolt-on acquisitions of leading brands into fast-growing categories with attractive margins,” Clorox CEO Benno Dorer said in a statement.

Clorox, whose many other brands include Liquid Plumr and Burt’s Bees, said Renew Life would add about 2% to its annual sales. The company also has a sizable business serving hospitals and other health care facilities.

The news came as Clorox, which competes with the likes of Procter & Gamble  PG 0.20%  and Colgate Palmolive  CL -0.70% , reported strong quarterly results.

The company raised its full-year earnings forecast to a range of $4.85 to $4.95 a share from $4.75 to $4.90. It now expects sale to grow 1% to 2%, rather than range from flat to rising 1%. Its gross profit margin rose to 45.3% in its most recent quarter from 43.2% a year before, helped by favorable commodity costs, cost savings, and price increases.

Excluding discontinued operations, Clorox, which last year exited the once important market of Venezuela, had earnings of $159 million, or $1.21 a share, above the $1.11 a share analysts were expecting, according to Thomson Reuters. Revenue rose to $1.43 billion in the quarter.


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