After fruit drinks, the company is diversifying into food and hygiene products
It’s the third largest player in the pain balm segment. But the 117-year-old Chennai based Amrutanjan Health Care Ltd (AHCL) now wants to go off the beaten track by becoming a health and wellness company.
In a surprise move, AHCL announced last week that it has forayed into fortified fruit drinks, by acquiring Fruitnik. If that was not enough of a diversification, AHCL is also planning to foray into ready-to-eat segment, under the brand Kitchen Delights. It is planning to launch 12 variants of ready to eat, including four South Indian and eight North Indian variants in 300 gram package each. The price would range from Rs 33 to Rs 79.
Next in line is a foray into sanitary napkins and hand sanitisers where manufacturing would be done through third party.
S Sambhu Prasad, managing director, AHCL, who belongs to the fourth generation of the founder’s family, says the diversification moves are a part of a well thought out strategy. “In two years, we will be a health and wellness company.
Fruitnik was bought from Siva’s Soft Drink for around Rs 26 crore. “This gives us entry into a very excitement category,” he says. The company is confident of taking on competition by utilizing its formidable distribution strength and brand building. Fruitnik is the only brand which comes in 200 ml pack at a price of Rs 10. “It is a strong price point which no other company has covered. We are also focusing on a 500 ml product,” says Prasad.
In the next two years, he hopes, Fruitnik will become a Rs 40 crore brand from the current Rs 16 crore, though the focus will remain in the South for now.
Prasad says AHCL is working on a corporate architecture where all its divisions will have Amrutanjan’s name. “That’s similar to the Tata Group model,” adds Prasad.
The diversifications are expected to increase AHCL’s turnover to Rs 250 crore in the next two years from Rs 89 crore last year.
This does not mean that AHCL will ignore its mother brand. In fact, the company will re-launch the pain balm to address newer customers.
While the brand loyalty is high in the over the counter (OTC) market, the challenge is bonding with youth. “Our USP will be developing products with less menthol content in new formats to give convenience to customers. They (youth) prefer less smell and colourless balm. We will soon switch over to white balm from yellow, with less smell,” Prasad says.
All this means cost, both on R&D and raw materials. For instance, the company has spent Rs 4.5 crore in shifting from glass to plastic bottle. The format was designed by Germany-based Alpla for the design of bottle, which is pilfer-proof. Currently, the price ranges from Rs 2 (1.2 gm) to Rs 60 (45 gm).
The new format also helps to address duplicates. “We lost 7-8 per cent of sales due to duplication,” said Prasad.
Commenting on penetration, K N Srikanta, vice president-OTC Division, says the company has 1500 distributors and sells through 360,000 outlets. The points of sales include pharmacies, grocery shops, general merchants, modern trade formats and even pan shops. Recently, it registered with WalMart.
AHCL currently exports to eight countries including many in Africa and is registered with 13 more countries.