Even as the prospect of growth drives new players into India's booming over Rs10,000-crore organised foods & beverage (F&B) market, existing players are ramping up fast in a bid to secure their position in the expanding segment. The organised F&B market in India is growing at clip of about 15 per cent per annum, so nobody desires to miss the bus at any cost.
The consumer healthcare arm of pharma major GlaxoSmithKline (GSK) is no exception, as it eyes a larger play in the food & beverage market. The maker of Horlicks and Boost already contributes seven per cent in revenues to the pharma major’s global consumer business, pegged at $5.1 billion. India, say company officials, is the third largest market for GSK Consumer Healthcare after the UK and the US. So wanting to grow the business further is logical, they say.
GSK’s consumer healthcare business, however, has been largely driven by its health food drink or HFD portfolio in India, where it enjoys a dominant 67 per cent share with Boost, Maltova, Horlicks and Viva. In terms of share in topline, it is close to 90 per cent, say sector analysts tracking the company.
However, this is slowly but steadily changing as the company attempts to step out of the HFD category into allied food & beverages, say company executives.
Leading the charge is Horlicks, GSK’s Rs1,500-crore brand — easily the largest in its portfolio contributing 70 per cent to the brand’s revenues globally.
GSK has been extending the franchise of Horlicks into territories simply unthinkable earlier. “This began with cereal bars or nutribars, followed by toddler biscuits, and then Foodles,” says Prashant Pandey, general manager, marketing, and head of the Horlicks brand, Glaxo SmithKline Consumer Healthcare.
This expansion, he says, is part of the company’s 2X Vision. “The vision was to double the business in a span of four years. This we felt could be achieved by expanding the horizon of our existing brands,” he says.
Horlicks, he says, was the most obvious choice, given the trust and equity it enjoyed with consumers in the country. Horlicks has existed in India for over 100 years now as a healthy milk food drink, targeted at growing children, mainly in urban areas. There are a number of variants of the original Horlicks, points out Pandey, beginning with Junior Horlicks that the company launched in 1986, following it up with Mother’s Horlicks for pregnant and lactating women in 1994, then Horlicks Lite in 2006, and more recently, Women’s Horlicks. “The idea,” says Pandey, “has been to make sure Horlicks touches the lives of different consumers and is not restricted to one consumer segment alone.”
Sector analysts agree as much. Says Anand Shah, senior FMCG analyst, Angel Securities, “The move to expand the Horlicks health food drink portfolio has been a clever one. You are not just depending on kids as consumers, but targeting the crucial segment of women as well.”
GSK at the moment is test-marketing an economy product called Asha under Horlicks, which is targeted at rural consumers. The test-marketing is on in Andhra Pradesh and Karnataka, says Pandey. The product is priced at Rs85 for a 500 grams pack in comparison to Rs135 for the same SKU in urban areas.
But the bigger challenge for GSK is expanding its foods portfolio. Though Pandey declines to comment on potential areas of entry, people in the know say it will include breakfast and mid-day meals. Already, say sector analysts, 10 per cent of GSK’s topline of Rs1,984 crore is contributed by new products including noodles, cereals bars and biscuits. The gameplan, according to persons in the know, is to take this contribution to 20 per cent in the next two years.
Pandey says a combination of factors will drive this growth including new formats and flavours of existing products as well as possible launches in new areas. The company, according to its 2009 Annual Report (GSK follows a January-December calendar year) has cash and bank balances of over Rs800 crore, which, persons in the know say could be deployed in new acquisitions. Pandey refuses to be drawn into a conversation about proposed acquisitions saying the firm is not closed to any prospect at this time. Incidentally, GSK’s last acquisition was made a decade ago in 2000, when it acquired Viva and Maltova from Punjab-based Jagatjit Industries.