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| Horlicks noodles: One too many? |
| Seema Sindhu / New Delhi Mar 01, 2010, 00:51 IST |
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GlaxoSmithKline is confident that Foodles will be a winner, but the jury is out on whether it will dilute the mother brand’s equity
Product extension is not something new to Horlicks, the flagship brand of GlaxoSmithKline Consumer Healthcare (GSKCH). In fact, the health drink brand, which accounted for over 65 per cent of the Rs 1,985 crore revenue of GSKCH in the January-December 2009 period, launched 10 new products including variants last year.
These include Horlicks biscuits, Nutribar, a nutrition drink for women, ready-to-drink flavoured milk dubbed Chill Dood and Horlicks Asha, a more affordable variant of the health drink etc. That frenetic pace is a reason why Horlicks continues to have over 50 per cent market share in India. Competitors Bournvita and Complan have just about 15 per cent share each.
The latest brand extension is, however, audacious even by Horlicks’ own standards. In December, the company entered the noodles category with Horlicks Foodles. The main USP of Foodles is the “Health Maker” sachet which comes along with the noodles pack. The health maker sachet contains the essentials of five vitamins.
Many analysts and observers, however, say there is little logic for Horlicks trying its hand in launching a noodles brand, which is a totally unrelated diversification. Besides, many say a foray into noodles may dilute Horlicks’ brand positioning as a health drink since noodle is perceived by many to be unhealthy, junk food.
Naimish Dave, Director, OC&C Strategy Consultants, says “noodles remains a test case. Introducing it on the Horlicks platform may be a gamble as this is one product that may not have a ‘healthy’ connotation with mothers who will be the primary shoppers for the product.”
Subhajit Sen, executive vice-president for marketing, GSKCH, however, says pre-launch research along with initial market feedback suggests that consumers are very excited with this launch.
The company is positioning Foodles on the health, taste and convenience plank. “We are very proud of our multi-grain variant that has the goodness of rice, wheat, ragi and corn and Foodles is fortified with nine vital nutrients,” says Sen.
But will that be enough to take on Maggi noodles, an established market leader with a dominant market share, and sundry other big players? Sen says he believes the noodles foray is a winning proposition due to the credibility of a trusted brand.
The company believes Foodles will capture more than a fair share of the incremental growth in the category and is targeting a 5 per cent share in the geographies it is already present in. “Given the size of the opportunity, we believe this business segment will contribute a significant part of our business over a three to five year time horizon,” says Sen.
GSKCH says the noodles launch is a part of the company’s three-level strategy to grow the brand. Sen says “the company tackles the challenge at three levels – first, investing in new science on the original Horlicks and keeping the promise relevant and the imagery contemporary; second, expanding the brand’s footprint into new health drink extensions where we tap consumer segments who may not be using the category (eg Junior Horlicks, Women’s Horlicks, Mother’s Horlicks, Asha, Horlicks Lite etc) and third, expanding the brand to new categories like cereal bars (Horlicks NutriBar), ChillDoodh, biscuits and now instant noodles.”
Purnendu Kumar, Associate Vice President, Technopak too believes that the company can be on the fast track on noodles. “With Foodles, it will be targeting the same consumer (kids/mothers) as of Horlicks. And since the company has strong brand equity in this segment because of Horlicks, it wouldn’t be difficult for it to get good volumes in Foodles.” The company’s strong distribution will help it achieve market share faster.
Noodles comes a month after the launch of Asha, an affordable version of Horlicks, through which the company is targeting the price-sensitive mass consumer. Priced about 40 per cent cheaper than the mainstream brand, Horlicks is hoping Asha will open up an entirely new segment, as none of the big players have a similar product. Rural markets already contribute 30-35 per cent to GSKCH’s sales.
Analysts however are putting their bets more on Asha than on Foodles on the grounds that penetration of health drinks in rural/semi-urban markets lags urban areas and thus there is a huge gap in these markets which Asha can fill. It’s an open market as there is nobody in the affordable fortified drink segment at present.
But here again the lack of awareness among rural mothers about health drinks is a challenge. “Having achieved the right product at right price, we do face the obvious challenge of taking the message (awareness) and the product (availability) to the rural consumer. We are building awareness through van activation, street plays and tying up with MFIs - apart from the more conventional mass media,” Sen says. The company is also beefing up its sales and distribution infrastructure.
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