International Journal of Retailing & Rural Business Perspectives

Volume 1, Number 1, July -September 2012

CONSUMER RESEARCH ON HORLICKS THE GREAT FAMILY NOURISHER A CASE STUDY

Binod Kumar Singh1 INTRODUCTION Horlicks is the name of a company and of a malted milk hot drink. It was manufactured by GlaxoSmithKline (GSK) in United Kingdom, South Africa, New Zealand, Bangladesh, India, Pakistan and Jamaica and under the licencing in the Philippines and Malaysia. Horlicks came to India with British Army end of World War I saw Indian soldiers of British Indian Army bringing it back with them as a diet supplement. Punjab, Bengal and Madras Presidencies became early adopters of Horlicks and lot of wellto-do Indians took to drinking Horlicks as a family drink in early 1940s and 1950s. Invented in 1873 by James Horlicks, the brand has been available in India for 70 years. From being a drink taken only during convalescence the brand has repositioned itself since the seventies as a 'great family nourished. It became a sort of status symbol in upper middle class Indians and rich classes. India, even today is by far, the biggest market for Horlicks, where it has traditionally been marketed as 'The Great Family Nourisher'. The Indian formulation for Horlicks is slightly different than in most other countries, as there it is manufactured from buffalo milk rather than cow milk due to cultural concerns. New products have been developed specifically for India, such as alternative flavours and special formulations for young children and breast-feeding mothers.The first flavour available in India, as in Britain, was malt; over the years, new flavours have been introduced, such as vanilla, toffee, chocolate, honey, and elaichi (cardamom). Junior Horlicks 1-2-3 is a large extension that is specially designed for pre-school children. Horlicks is also available in biscuit forms. Horlicks is the leading health food drink in India and as the Most Trusted Drink Brands (Economic Times Survey 2004) in India, enjoys more than half of the health food drink market(current as of 2007)(A C Neilson Report). GSK has relaunched its Horlicks brand in three new flavors in the Indian market, according to reports in the Indian press. The re-launch also includes a new look for the brand targeting its core customer, children upto 14 years old. A television advertising campaign will promote the new vanilla, honey and chocolate flavors to Indian kids and will be accompanied by print ads & hoardings. GSK has about 75% market shares of Indias health drink market along with Boost,Viva and Maltova(According to Press Trust of India).The multi-based drink is also available in UK where Horlicks attracts an entirely different, much older,audience,using the Sleep Better, Feel Better slogan. STAGES OF DEVELOPMENT In 2003, Glaxo SmithKline (GSK) was relaunched its Horlicks brand in three new variants vanilla, honey and chocolate apart from the regular malt. The re-launch also includes a new look for the brand in terms of packaging as well as new positioning which addresses children instead of mothers. According to a news paper report, the focus this time is not as much on enhancing the nutrient values of the product as it is on flavours. In sync with its new brand positioning which targets children between eight and 14 years, the company has also launched a television ad campaign created by JWT featuring kids, which would be aired across channels. Nearly half of its sales are still generated from the South, while 35 per cent come from East. IDFC SSKI Managing Director Nikhil Vora points out that GSK Consumer Healthcare has held on to its market share in a space thats grown at around 20 per cent in the last couple of years. As the market leader, the brand could yield some share but volumes hav e grown in double digits for five consecutive quarters. GlaxoSmithKline Consumer Healthcare was launched a new, sugar free, low calorie avtar of its flagship brand Horlicks for health conscious adults in 2005. 'Horlicks Lite', which is high on fiber and low on fat was launched in two flavors coffee and malt with the company looking at capturing 15 per cent of the market share of health food drinks by the end of the next fiscal. "The healthfood drink market in India is estimated to be around Rs 1300 crore and Horlicks shares 53 per cent of it. As claimed by GlaxoSmithKline India in 2005, Horlicks encourages growth and alertness in children. However, it caused some controversy. In 2008, Healthcare products maker GlaxoSmithKline Consumer launched a new supplement for women buyers Women's Horlicks to strengthen its product portfolio in the health drink segment. "The health drink Womens Horlicks is the only health drink in India with a complete list of micronutrients recommended by the World Health Organisation (WHO) for women between 19 and 50 years of age," Glaxo said in a statement. Womens Horlicks is available in two flavours chocolate and caramel and is priced at Rs 100 for a 200gm jar. The action is hotting up in the kids' health drinks market.

Assistant Professor, University of Petroloeum and Energy Studies, Uttaranchal, India, binodbhu@gmail.com

Pezzottaite Journals, Jammu & Kashmir, India.

International Journal of Retailing & Rural Business Perspectives

Volume 1, Number 1, July -September 2012

The growing kids' health drinks market in India is headed for a big war with the existing biggies like GlaxoSmithKline and Heinz engaging in no-holds barred war for eyeballs. FMCG majors like Hindustan Unilever (HUL) and Dabur India are also adding fuel to the fire with their new malted food drinks. While HUL has already test-launched its new brainfood Kissan Amaze for kids, Dabur India is preparing to nationally roll out its health drink GlaxoSmithKline Consumer Healthcare (GSKCH), maker of Horlicks and Boost, is on a growth high. The company closed the January-March 2008 quarter with an all-time high sales growth of 25.7%, Rs 410.6 crore, and a net profit growth of nearly 34%. GSKCH, MD, Zubair Ahmed shares how the company leveraged its pharma parentage, in-the-works acquisition plans, revival of the Glaxo brand and more. In 2009, GSK which is a pioneer in the health food drink industry with its flagship brand Horlicks has now decided to take this product to the rural masses also with a new variation of Horlicks known as Horlicks Asha. It has given it a new sub name Asha which means hope in hindi language, along with the main brand name Horlicks as by launching a new cheaper variant under the same brand name would have diluted the brand equity that Horlicks initially had in the market and would also have made the consumer think that whether the quality has been reduced by horlicks for its new variant. So this initiative to come with a sub brand under the bigger brand that is Horlicks is a well thought out initiative to stop the original brand equity from getting diluted. But will it be successful it remains to be seen. Now one more thing that has to be seen is that this product is still in its market testing stage only and has not been launched commercially and it is being tested in the Horlicks traditionally strong market i.e. southern Indian states of Andhra Pradesh and Karnataka where it moved after initial test launch in Andhra only. The Rs 1,000-crore-plus health food drink brand from the Gurgaon-based GlaxoSmithKline Consumer Healthcare (GSKCH) has undergone category segmentation at various levels, this is for the first time that Horlicks is gunning for the price-sensitive, mass consumer. Priced was about 40% cheaper than the mainstream brand. In late 2009, Horlicks introduced Foodles, a brand of instant noodles. In 2010, packaged consumer goods company GlaxoSmithKline Consumer Healthcare (GSKCH) was invested over Rs 300 crore on repositioning original milk food drink Horlicks as the company's umbrella brand. Apart from relaunching Horlicks with a new look and promoting the brand across media, including the digital and mobile marketing space, GSK is also looking at foraying into other categories like breakfast and mid-day meals. SOMETHING FOR EVERYONE GSKCH Managing Director, Zubair Ahmed was aware that new products do sometimes end up as casualties but he has taken confidence from the strength of the Horlicks brand. Were riding the equity of Horlicks and supplementing it with consumer insights, he said. Horlicks may be the countrys sixth most-trusted brand but GSK Consumer Healthcare is playing in a market where consumers can be demanding. And rival brands are no rabbits Cadburys Bournvita and Heinzs Complan each with a 15 per cent share. So far though, GSK Consumer Healthcare has succeeded in segmenting the customer base by catering for specific needs of women at the same time cashing in on the increasing population of children with Horlicks. Ogilvy & Mather Country Head (planning) Madhukar Sabnavis feels the brand today talks to every member of the family rather than the entire family. With Junior Horlicks, launched in 1995, GSK Consumer Healthcare had positioned a product exclusively for children between the ages of two and five. Anand Ramanathan, who advises companies in the FMCG space at consulting firm KPMG, points out is a crucial segment given that India is a young country a clever ploy to engage consumers at a very young age. The Junior Horlicks brand has grown to become a Rs 150-crore brand now, said, GSK Consumer Healthcare head of marketing.Again, five years ago, GSK Consumer Healthcare had reached out to pregnant and lactating mothers with Mothers Horlick s last year it came up with Womens Horlicks catering for women across age groups. The idea is to address all age groups. Theres Horlicks Lite for the elderly who often have a sugar problem and for the yout h we have Horlicks Nutribar launched, said, Ahmed. With Horlicks Nutribar, positioned on the twin planks of health and convenience, GSK Consumer Healthcare has leveraged the brand to venture into an entirely new product category energy cereal bars.When youve created a strong brand, it opens up do ors to new variants and even new categories. Unless you enter a completely unrelated area, theres little risk in extending the b rand to other productssaid, Ashish Nanda, Ernst & Young Partner. While the company hopes that Horlicks Nutribar will chip in with about Rs 100-150 crore of revenues in five years, it hasnt stopped there.It invited consumers to taste its summer drink called Horlicks Chilled Doodh (milk), available in four flavours. Sen concedes that the product will be up against some keen competition in the Rs 45-crore chilled milk category from Amul Kool and strong regional players like MAFCO in Mumbai, but he hopes the brand can pull in revenues of Rs 50-100 crore in about five years more than the current market size. GSK Consumer Healthcare will promote other brands too it does need to hedge its risks, after all. Thus,Glaxo ActiGrow, a protein supplement for children, was unveiled. Ahmed explains that the company is cashing in on the brand equity that Glaxo still has with mothers and will leverage that for specialist products like ActiGrow. Were looking at new products across food and beverages, like healthy snack foods because the opportunities arent taken care of simply by Horlicks, said, Ahmed.

Pezzottaite Journals, Jammu & Kashmir, India.

International Journal of Retailing & Rural Business Perspectives FULL OF BEANS

Volume 1, Number 1, July -September 2012

At the moment, Horlicks takes care of GSK Consumer Healthcares top line. The brand, which was worth around Rs 800 crore in the early parts of the decade, is today 50 per cent bigger at close to Rs 1,200 core, bringing in the bulk of the companys a nnual turnover of Rs 1,580 crore. If Indians drink more than five million cups of Horlicks everyday its because GSK Consumer Healthcare has worked on the product. At one time, in the late 1990s, market research showed that Horlicks was seen as a nourishing, but boring drink an d was beginning to lose significance. Whats more, consumers were beginning to prefer flavours over nutrients. So, in 2003, the brand was revamped. It was made tastier and launched in two new flavours vanilla and honey. The company had earlier launched a chocolate version to try and win over consumers in the North and West who typically prefer chocolate flavored drinks. But the success was limited. Nearly half of its sales are still generated from the South, while 35 per cent come from East. But that doesnt seem to bother investment analysts. IDFC SSKI Managing Director Nikhil Vora points out that GSK Consumer Healthcare has held on to its market share in a space thats grown at around 20 per cent in the last couple of years. As the market leader, the brand could yield some share but volumes have grown in double digits for five consecutive quarters. Not just higher tonnage, the company does succeed in extracting a price from consumers. For instance, prices were upped by about 5 per cent in Jan., 2003. What has worked in the companys favour, said, KPMGs Ramanathan, is Horlicks value -formoney positioning. Horlicks may not be a cheap product but its been communicated as a value -for-money product. Parents today are willing to spend more on nutrition for their children and that has helped GSK Consumer Healthcare. To that extent, Horlicks may have gained over competitors such as Complan which are perceived to be more expensive, a perception that hasnt changed over time. Compared to competitors, Horlicks is the best money proposition and, moreover, the consumer gets value for the money spent, said Ahmed. For the new launches too, he has in mind a similar value proposition, though final prices will be fixed keeping in mind the target group. Womens Horlicks is far more expensive than the base Horlicks but thats because the consumer is getting much more and theres no other product available. Horlicks Nutribars will be primarily a metro phenomenon to start with, so the pricing has been decided accordingly. NOURISHING THE BRAND Horlicks does not feel the need for a brand ambassador, though GSK Consumer Healthcare has engaged expensive celebrities like Kapil Dev, Sachin Tendulkar and Mahendra Singh Dhoni to endorse Boost. Still, the several new launches could push up the ad budget of one of the countrys top advertisers, most of which is spent on television. Typically, FMCG companies spent 12 to 1 3 per cent of their turnover on brand promotion. The radio, through which Horlicks reached out to mothers even 40 years ago, is still an effective channel in states such as Bihar or Orissa where consumers dont have access to television or where power cuts are frequent. In the early years, mothers were the sole target audience since the product catered to the entire family. However, once pester power became big in the 1990s, the Horlicks advertisements started talking to children too. The change worked because it was also the time when mothers mindset was changing and let children drink what they liked, rather than imposing on them a drink of their own choice. Debarpita Banerjee, Director, JWT Client Service believes that the Internet can be a good way to connect with kids. So, there are tips posted on examinations on the website Exams ka bhoot bhagao (Drive the exam demon away). Besides, the company has also reached out to children with Wizkids, a contact programme that provides a platform for schoolchildren across 25 cities to showcase their talent. ADDING RURAL REACH Under Ahmed, GSK Consumer Healthcare has upped the ante on distribution. An aggressive Go to Market approach created a second layer of distributors in the smaller towns to supplement the existing chain of around 500 big distributors. Most of these 4,000 sub-distributors were appointed in the eastern and southern parts of the country. The idea, according to Vice-president (sales) Navneet Saluja, is to increase the retail reach by at least 30 per cent. Right now we reach out to around 25 per cen t of the rural market and we hope to extend this reach to about 40 per cent of the hinterland in a couple of years. Were looking to have a presence in towns that have a population of 5,000 people. As for reaching out to customers in the urban markets, GSKCH has begun to work with retailers to create excitement and awareness. In some outlets, even created play areas for children. Although modern trade remains a relatively small channel currently, fetching just 4.5 per cent of the firms sales. Ahmeds was not worried about the expense. Well be leveraging th e P&L (profit and loss account) for some time because we need to invest in the business and new products, he said. Clearly, no effort is being spared to grow Horlicks. It may not reach the levels of the Pepsi vs. Coke "Cola Wars" of the 1980s, but the signs of a major skirmish in the making are clearly visible in India's food sector. The instant noodles market in India, which has long been dominated by Swiss giant Nestle with its brand Maggi, has been seeing a flurry of activity with new entrants stocking the shelves in 2011. Be it GlaxoSmithKline's Horlicks Foodles, Hindustan Unilever's Knorr Soupy Noodles, or ITC's Sunfeast Yippee, each is out to grab a share of the consumer's palate and wallet.

Pezzottaite Journals, Jammu & Kashmir, India.

International Journal of Retailing & Rural Business Perspectives

Volume 1, Number 1, July -September 2012

Unlike similar drinks, such as Ovaltine, Horlicks is not a dry blend of malt extract and milk powders. In the initial stage of manufacturing, milled malted barley and wheat flour are mashed together in hot water where the starch is converted into sugars. To this sugar solution dairy powders are added. The water content is then evaporated off to form syrup which is dried in vacuum band driers to form a cake. This cake is milled into the finished powder. This is then fortified with vitamins and minerals. Its a brand that's been growing steadily over the years, and increasing the audience that it addresses as well. The new ad campaign of the Rs. 600 crore Horlicks brand is just hitting national networks and the message is clear,'many things to many people. Although Horlicks features in the top 10 of most consumer surveys this is one of its highest ratings so far said, Simons J.Scarf, MD, Smith Kline Beecham Consumer Healthcare (SBCH), "We are delighted at the rating that Horlicks has got in the ET survey. Were obviously aware of the power of Horlicks through our closeness to consumers, but it is always nice to get independent acknowledgement of the fact." The flagship of SBCH, Horlicks has been showing consistent annual value growth of about 25 per cent in the last three years. And more is expected.Which is why SBCH is busy setting up a Rs. 250 crore dedicated Horlicks facility at Sonepat, Haryana. In fact, the company's consumer research shows that consumers over time and experience have developed an emotional bonding with the brand. Thats something they find more powerful than a rational bonding. Vibrancy has been maintained despite its mature age by avoiding complacency. Most big brands with huge equities tend to fall to the temptation of sitting tight. And that in turn can result in a brand losing relevance. But Horlicks has taken a proactive stance."Our learning has been that if there is a big brand with a lot of equity and it does nothing new, someone else usually comes in and segments the market,said , R. Shyam Sundar, Head of marketing, Nutritional Business, SBCH. If instead, the market leader is the one to segment, he can gain the most". So before anyone else could, the company stake out some new turf. This is why Horlicks has come out with new products such as Junior Horlicks, Mothers Horlicks and Horlicks Biscuits. The idea here is to extend the core values to new formats and benefits. A different distribution and marketing technique allowing access to the brand at a low price and that gives the brand a means to get into smaller outlets including the corner pan-bidi shop where it never could have been before. Even if products like Junior Horlicks cannibalize the mother brand, at least 80 percent of its users are new incremental consumers. QUESTIONS 1. 2. 3. 4. Explain the motives behind launching Asha? Discuss the role of brand research in this case. Suggest some other strategies should GSKCH adopt so that their products easily reachable to consumers? Elucidate the rural marketing strategies adopted by horlicks?

REFERENCES 1. 2. 3. 4. "Never mind a Cosmopolitan, how about some Horlicks?". The Independent. Retrieved 20 June 2011. Rachel Kaufman (2008). "Is your bedtime drink bad for you?". The Daily Mail. Retrieved 20 June 2011. "Straw says dossier was 'embarrassing'". BBC News. 24 June 2003. Retrieved 2007-08-12. Kitchen Lore: The History of Malted Milk Powder.

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Pezzottaite Journals, Jammu & Kashmir, India.