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As multinational consumer goods companies struggle, the consumer health care arm of British drug major GlaxoSmithKline posted 15 per cent top line and 10 per cent bottom line growth in the three months ended March. GSK Consumer Healthcare Managing Director Zubair Ahmed explains in an interview with Viveat Susan Pinto how the company has maintained its growth trajectory in a persistent slowdown and what it is doing to reduce its dependence on Horlicks. Edited excerpts:
What are you doing to ensure you deliver double-digit growth quarter on quarter, especially when rivals like Nestle are down in the single digits?
We have a two-pronged strategy to address the challenges emerging from a slowdown. One is to keep our products as relevant as possible to consumers since the first thing they do when faced with the prospect of escalating costs or inflation is they either downtrade or simply keep out of the category for some time.
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By staying relevant to consumers in terms of addressing specific needs, we give them less of a chance to avoid us. That is one. We also base our products on science and drive this point repeatedly through our communication. When you do this, again you are giving very little room for the consumer to ignore you when he or she goes out shopping. I think these initiatives are helping us in these tough times.
Horlicks remains a significant contributor to GSK Consumer's revenues. What are you doing to bring down your dependence on one brand?
Horlicks does give us 80 per cent of our revenues. But you have to understand that from the listed entity's point of view, it will always be big since our non-food business, including oral care and over-the-counter products, is not included in this business. The latter is part of GSK Asia, for which GSK Consumer Healthcare undertakes sales and marketing. So what GSK Consumer Healthcare gets is a fee for the services rendered.
Having said that, let me add here that you have to look at dependence from the point of view of the base variant of Horlicks, that is, the classic white-coloured Horlicks that has been in the country for many years now. It is a large chunk of the business but the skew is changing. In the last few years, we have launched many different variants of Horlicks from Women’s to Mother’s to Junior Horlicks to Horlicks Lite, which is a no-sugar variant. These products are growing at a faster pace than the classic Horlicks, and we see them being significant contributors to the business going forward.
Some of the extensions of Horlicks such as the much-publicised Foodles, which was your foray into noodles, did not work.
The most important lesson is the need to base our products on science. Otherwise, the danger is of becoming like any other consumer goods company that succumbs to the vagaries of the business climate. Products that are backed by clinical studies and have a strong scientific proposition can help us stand out of the clutter. With noodles, that perception was not there, which is why it did not work.
What next after Sensodyne and Parodontax? Are there any new products in oral care, health food drinks or over the counter?
There are a couple of launches in the pipeline. But I cannot tell you in which segments these will be. We need to strike a balance among the three core categories. They are big focus areas for us. We will take a call appropriately.
Do you see consumer sentiment changing with a new government? Most consumer goods companies are counting on that.
The slowdown has largely affected the middle and lower middle classes in India. What matters to consumers in these segments is inflation, precisely food inflation.
The weather forecast suggests there could be scanty rainfall this year, which will push up food prices. So, the new government will have little control over food prices. I see the slowdown easing, not in the next six to eight months but possibly in the next two years. Things will change but not in the short term.
