GSK Consumer Healthcare aims to penetrate rural markets

The company is looking at expanding reach from around 2.7 million stores to another 1 million in 18 months

 

Health food drink major GlaxoSmithKline Consumer Healthcare is planning to expand its reach in the country by penetrating the rural markets and adding one million more stores to its existing network of around 2.7 million stores in next 18 months. The company is expecting the expansion to build up the infrastructure for its future growth, and estimates between Rs 500-1,500 crore to come from each of these new stores in near future, said senior management officials in the company.

Speaking to the reporters while announcing relaunch of Horlicks with a new packing, Sidharth Singh, EVP Sales, GlaxoSmithKline Consumer Healthcare said, "There are around nine million stores in the country of which we have a reach of around 2.7 million stores at present, including Horlicks, which has a reach to 1.6 million stores. We are planning to add 1 million more stores in next 18 months."

He said that the company is planning to set up large scale rural structure. It would also cover the top 40 towns with 1 million and above population and would cover 200,000 more stores in these cities in the next 18 months. These stores would address the slum dwellers in these growing towns, where the company would spread awareness about malnutrition and the need for the health food drink.

The company is also looking at promoting social entrepreneurship by selecting "socially mature and confident" women from rural locality and provide them with micro loans to start brand promotion and sales of GSK's consumer healthcare products. The concept, 'Horlicks Akka' (which in Hindi is Horlicks Didi), would work as GSK's representative for one or two villages and supply the company products.

These initiatives would help to expand the market presence of its flagship brand Horlicks drink. The company is expecting its smaller quantity packagings at a lower price would help it to penetrate the rural and the slum markets. The health drink offering starts at a Rs 5 sachets, which has 18 gram when it comes to Horlicks pack and 15 gram when it comes to the company's chocolate health drink Boost.

These packet sizes will make the products affordable to the lower segment of the population.

Last year, the company had a sales of Rs 3,000 crore in Horlicks brand, of which around Rs 2,750 crore were from the malted food drink, while the rest was from the non-drink products, such as Oats and biscuits.

Speaking about the company's plans on product expansion, Jayant Singh, EVP Marketing, GSK Consumer Healthcare India, said, "At present our focus is on building scale in the existing categories. We want to penetrate more into the market".

He said that Horlicks' turnover from South and Eastern part of the country is around 40 per cent each, while the North and West contributes to 18-19% of the market at present. The company is also looking at the potential of its premium products in the online market, which it is currently selling through third party sites.