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| Horlicks' new hope |
| Byravee Iyer / Mumbai Dec 08, 2009, 00:35 IST |
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GlaxoSmithKline has rolled out another health drink, Asha from Horlicks, this time targeting the lower end of the market. Will it succeed?
It’s raining launches at GlaxoSmithKline Consumer Healthcare. The year started with Glaxo Nutrition ActiGrow, a protein supplement for children. In February came health snack under Horlicks Nutribar. Then it was the turn of Chilled Doodh, a flavoured milk drink, in April. Shortly thereafter came Eno Mausambi, a new flavour of the popular anti-acid. Next was Junior Horlicks biscuits for toddlers. The company has now begun to test-market in pockets of Andhra Pradesh and Karnataka a value-for-money health drink called Asha from Horlicks. A national rollout may happen within a year.
“We continuously identify and cater to the needs of various consumer segments. With Asha from Horlicks, we are looking at offering a health drink for the emerging consumer class,” says GlaxoSmithKline Consumer Healthcare Executive Vice-president (marketing) Shubhajit Sen. “The genesis of Asha from Horlicks is in research conducted by the company, which reflected a need to extend a low-cost product for this segment.” The segments in the company’s crosshairs are the low-income groups in the urban markets and rural consumers.
Price vs quality
GlaxoSmithKline Consumer Healthcare discovered that people in rural areas were not regular users of Horlicks because they were short of cash. They could afford to buy it rarely and would make it last for months. The company needed a product that could be used on a regular basis. Consequently, Asha from Horlicks is priced at Rs 85 for a 500-gram pouch pack — way below the price tag of Rs 135 on a Horlicks pack of a similar size. There is also a 200-gram pack that will cost Rs 50. The flipside, according to analyst Anand Shah of Angel Broking, is that with these aggressive prices, consumers may suspect the quality. Is it, they might ask, a lesser Horlicks?
In-house research carried out by GlaxoSmithKline Consumer Healthcare and published health data showed that a significant proportion of Indian consumers in rural areas have different nutritional needs because of their dietary habits and work patterns. Typically, these consumers meet these nutritional needs through stuff like finger millet and broken wheat, all of which of course is unbranded. Moreover, the quality of these products varies and is often nutritionally inadequate. Another part of the company’s research, after speaking directly with consumers, revealed that many people from rural areas had moved to urban centres in large numbers. With both members of the family working and no support system, people were worried they could fall ill. And they needed a drink that guards them against that.
Considering all these factors, GlaxoSmithKline Consumer Healthcare’s team of researchers decided to make a product that was nutritionally superior but easy on the pocket. Thus was born Asha from Horlicks. “The name Asha stands for hope, and the brand believes in supporting the hopes of the emerging consumer class to access a better life,” adds Sen. Of course, the company has added its flagship brand, Horlicks, to the name.
It is the largest brand in the Rs 2,300-crore health food drink market (it is growing at 20 per cent per annum) in the country with a share of over 50 per cent. Cadbury’s Bournvita and Heinz’s Complan have 15 per cent share each. Such is the brand equity of Horlicks that Nestle has withdrawn from the market its brand called Milo. Dabur has entered the market with Chyawan Junior as a rival to GlaxoSmithKline Consumer Healthcare’s other brand, Boost, and has stayed clear of Horlicks.
Wholesome brand
Asha from Horlicks is a key element of GlaxoSmithKline Consumer Healthcare’s strategy to become a wholesome brand rather than just a malt brand. Some time in the 1990s, research showed that Horlicks was nourishing but had become a boring drink. And while consumers were moving towards flavours, it had not changed its old look and feel. Thus, the company re-launched the brand and positioned it as a pleasurable nourishment drink aimed at children in the age group of 8 to14. Three new flavours were introduced — vanilla, honey and chocolate — and the look of the packs was overhauled.
Things began to move fast when Zubair Ahmed took over as the managing director two years ago. He was the chief executive of Gillette but left once the company got acquired by Procter & Gamble. At Gillette, he had tried to grow the company rapidly with a slew of new and innovative launches. He has put in place a somewhat similar strategy at GlaxoSmithKline Consumer healthcare. The company has plugged most of the markets with new products: Horlicks Lite for the elderly, Junior Horlicks for young kids, Women’s Horlicks for women, Mother’s Horlicks for lactating mothers and Horlciks Nutribar for young adults. “Over the years, what essentially was a malt-based drink has evolved into a wholesome brand catering to various age groups and geographies,” adds Sen.
Brand rivalry
Asha from Horlicks is slightly different. This is the first time the company is trying to split the market in income groups. Sector experts say there’s more to Asha from Horlicks’ launch than meets the eye. Complan has gained market share of late, which has caused sufficient concern to GlaxoSmithKline Consumer Healthcare. Both the brands have been fighting tooth and nail in the advertising space. In 2008, Horlicks came out with a campaign that made a dig at Complan’s theme of 23 vital nutrients.
This resulted in Heinz filing a case in the Bombay High Court. It then came out with its own ad that compared its virtues against those of Horlicks. The television campaign shows that Complan users grow two times more than others. Naturally, that sent GlaxoSmithKline Consumer Healthcare dashing to the Delhi High Court. Rivals are active otherwise too. So while Heinz India has launched muesli as a breakfast meal, Cadbury has introduced Bournvita Li’l Champs to counter Junior Horlicks. Both, say experts, could hurt Horlicks.
There is another pertinent factor behind the launch of Asha from Horlicks. At present, rural markets make up about 30 per cent of revenues for GlaxoSmithKline Consumer Healthcare. This figure is well below other fast-moving consumer goods companies like Hindustan Unilever and Marico which get 40 to 50 per cent of their sale revenues from the rural market. “We estimate rural markets to be an engine for growth and, with initiatives like Asha from Horlicks, we expect the contribution from rural markets to increase,” says Sen. To make sure the product is available across markets, the company has added 4,000 sub-distributors to its existing 500 distributors in smaller towns. This, the company hopes, will increase the share of rural regions in its sales by about 10 per cent over the next two years.
But will it not eat into Horlicks’ market? “Horlicks has been expanding and we want to make sure that we don’t hurt the baseline equity of Horlicks,” says Sen. Hence, the new product will be sold as Asha from Horlicks. It will be a separate brand. Sen has also begun to work on a brand-building exercise. “Since it is in the test-marketing stage, we are still experimenting. At present, we are doing a series of street plays where we are introducing the product. Then we’re screening movies and take our message across at these gatherings,” says he. “We’ve also tied up with a microfinance group where we talk to members of the group about Asha from Horlicks. Ultimately, we’d like to go to schools to send our message across and even do conventional brand-building.”
The market place just got more interesting.
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