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10/25/2014 Case Study: How Horlicks has avoided getting dated : Business Today

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Case Study: How Horlicks has avoided getting
dated
Shamni Pande April 30, 2014
EXECUTIVE SUMMARY: Brands and products tend to age over the years if not nurtured
properly. Horlicks has learnt to defy age. By successfully launching variants at different
points in time, it has strengthened its core brand values, apart from addressing new
consumer needs and thus bringing such consumers into its fold. This case study looks at
how Horlicks has avoided getting dated.
Never more has success of a brand in India been so paradoxical than Horlicks from the
GlaxoSmithKline Consumer Healthcare (GSKCH) stable. Conventional management
wisdom will tell you to extract as much as you can from a brand and its variants but to derisk
the owner from overdependence on the brand. But Horlicks is a case of repeated success
with brand variants making a virtue of GSKCH's dependence on it. "Horlicks is a very
powerful brand associated strongly with the milk and health space. This is both its strength
and its weakness," says marketing consultant Sunil Alagh.
GSKCH's health food drink (HFD) brands - Horlicks, Boost, Maltova and Viva - account for
58.6 per cent by value and 65.1 per cent by volume of a some Rs 5,000-crore market, per
date from market researcher Nielsen for 2013. Horlicks and its variants account for almost
half the HFD market by volume. (See Healthy As Ever.) Cadbury India's Bournvita had a
share of 17 per cent and Heinz's Complan, 11 per cent.
{blurb}Now, flip that inwards. The HFD category contributes 77 per cent to GSKCH's
revenues of Rs 3,079 crore for calendar 2012. (Results for 2013 have not been announced
yet.)
So, really, how has the company fared in fortifying a brand that is 140 years old? Horlicks
was locally manufactured in India only since 1958, though it had been available via imports
since the early 1900s. It was one of the early starters with aggressive advertising and it
pulled in celebrities such as Amitabh Bachchan in the 1970s to endorse its brand over radio.
"But Horlicks remained largely a family drink till the 1990s," says Jayant Singh, Executive
Vice President, Marketing, GSKCH. The company then recognised that there was a specific
need for toddlers in the one to three years age group and launched Junior Horlicks in 1995. It
had made a bid for its first brand line-extension with biscuits in 1992, but that hardly moved
10/25/2014 Case Study: How Horlicks has avoided getting dated : Business Today
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the needle for the company. "The market, for various economic and other social conditions,
was undergoing several changes and we saw only single-digit growth in our top line," says
Singh.
This was a period of turmoil in the consumer products market, as India, after liberalisation,
saw the entry of several new brands both from domestic and international players. Bournvita
and Complan were seen to be strong contenders in west and northern parts of the country,
so was local player Jagatjit Industries with its brand Maltova and Viva in the north. GSKCH
acquired Maltova and Viva and effectively prevented competition from opening a new front.
It simultaneously invested in consumer
research and aggressive brand strategy.
"We would visit homes and the company
wanted to listen in to the consumer needs
even in the early 1980s,"says Bindu Sethi,
Chief Strategy Officer at ad agency JWT.
She has been associated with the brand
since then, first as part of market research
firm IMRB and then when she joined HTA
(now JWT) in 1988 as a media planner. "It
was this consumer voice that found
reflection in the repositioning of Horlicks as
a drink targeted at children in 2003, with the
'Epang, Opang, Jhapang' campaign," she
says. (Watch the campaign on YouTube at
http://bit.ly/epang.)
This was the tipping point. What appeared
to be a natural slot for the brand to slip into,
actually followed heated debate within the
company: Horlicks was a family drink until
then, the great "family nourisher". All
branding and communication spoke to
different family members and how it meant
different things to different people, while the
new campaign spoke to children directly.
"There were worries that it would disengage
a loyal adult base," says Charubala
Sheshadri, Marketing Director, Wellness
(OTC) and Oral Health, GSKCH, who joined
the company in 2004 as marketing manager
for Horlicks.
10/25/2014 Case Study: How Horlicks has avoided getting dated : Business Today
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This campaign, however, was just the
precursor. The company has always
viewed Horlicks equity as a bank deposit
since. "It has invested at every critical
juncture in the brand and its nutrition profile
backing it with proof of science," says
Sheshadri. In 2003, it offered its newly
formulated Horlicks to the National Institute
of Nutrition (NIN) at Hyderabad, which
conducted research to prove its effect on
the growth of children. "We clearly identified
three key benefit areas to do with bone
health of children, muscle health and their ability to focus better," says Singh. This led to the
"Taller, Stronger, Sharper" campaign.
In this, the company tapped into the growing pester power of children who now were key
decision makers not only with what they ate, but also other key decisions around the
household. There was someone else too, pushing for this change. The company now had a
new managing director in Zubair Ahmed in 2007. He inherited a company that had already
accelerated into double-digit growth. By then, the company had speeded up its brand variant
launches with Horlicks Lite in 2005, aimed at diabetics and Horlicks NutriBar in 2006 (this
launch did not work as planned). "We were already a part of the morning menu with milk.
Now we are growing in our presence with various extensions and adjacents," says Ahmed.
The company found that women were an ignored segment as there was no specific product
addressing their specific need. This led to the launch of Women's Horlicks in 2008, creating
a blockbuster product. "It has been growing 60-65 per cent year on year [even if] on a small
base," says Singh. But the effect has been that Horlicks Lite combined with Women's
Horlicks ensured that the company clocked growth of more than 17 per cent in revenues until
2011. Given that competition was also pumping up volume on the benefit of micronutrients
and research-backed offering, in 2012 GSKCH again decided to challenge itself to deliver
further on its by-now older promise of "Taller, Stronger, Sharper". Aided by its R&D centre, it
formulated a blend of Horlicks that was guided by its earlier study done by NIN. The results
showed five clear areas of benefit: more bone area, more muscle, better concentration,
more active nutrients, and healthier blood. This led to its launch of the "5 Signs of Growth"
positioning and campaign.
GSKCH had its hiccups with its Horlicks extensions. The 2010 launch of Chill Dood, its
flavoured milk range, did not take off. Nor did its attempt to launch cream biscuits and
noodles, under the brand Horlicks Foodles, in 2009. "I think it has huge potential in the health
segment of biscuits with digestive, diabetic, milk, etc. However, in segments like noodles and
snacking where taste is supreme, they will find it difficult to compete with the likes of Nestle
and ITC," says Alagh, the marketing consultant and former managing director of biscuit
maker Britannia Industries.
10/25/2014 Case Study: How Horlicks has avoided getting dated : Business Today
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According to Alagh, GSKCH needs to transform brand Horlicks from "purely health,
especially aimed at children, to a tasty but healthy positioning" for all. Therein lies the
challenge. Industry insiders say much of the company's success has come from adjacent
brand variants such as Horlicks Junior, Women's Horlicks, Horlicks Lite and Mother's
Horlicks and not from extensions into biscuits, noodles and, even low-priced HFD variants
such as Asha.
Latest extensions like Horlicks ProMind and Horlicks Gold are yet to establish themselves
conclusively, though they have shown promising offtake in their test markets in the south.
GSKCH thinks successes far outnumber failures. "We are already the second-largest brand
in the south after Quaker Oats," points out Singh. GSKCH is certainly on a fast track.
According to the Ace Equity database, Horlicks and its brand variants have helped the
company accelerate its revenues and profits in the last five years (till December 2012) to
19.2 per cent and 23.4 per cent, respectively, against 13.1 and 20.8 per cent in the preceding
five years. Taller, Stronger, Sharper, indeed.
{blurb}
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