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Strong, Stronger, Strongest

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.
Shamni Pande Print Edition: May 11, 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.
50% by volume, Horlicks's share of the branded
health food drinks market
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 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
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.
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.
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
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.
Stretching into categories in the immediate neighbourhood of the mother
brand may be easier than stretching into distant ones: Y.L.R. Moorthi,
Professor (Marketing), IIM Bangalore
'Extensions have so far been a mixed bag for Horlicks'

The core Horlicks brand is successful. It lays claim to more than half the
white-malted beverages market. Therefore, increasing market share
substantially might be difficult. But Horlicks has been steadily introducing line and brand
extensions to keep itself relevant. Generally, when the market share of a brand is very high, it gets
strongly identified with the parent category and, therefore, gets difficult to stretch. This has been
seen in strong brands such as Colgate, Nirma, Ponds and Lifebuoy. (This is the paradox of brand
extensions: weak parents are difficult to stretch; ironically, so are very strong parents.)

So, stretching the Horlicks brand may not be easy. But stretching into categories in the immediate
neighbourhood might be easier than stretching into distant ones. Horlicks may find it easier to
stretch into variants (Junior Horlicks, Mother's Horlicks, etc). Extensions beyond that into
categories like biscuits might prove to be more difficult given the brand's equity. The question even
for variants is whether a "kids" brand can be extended to "adults". However, that is still easy to
argue because the extensions are also malted beverages.

But once a "malted beverage" wants to extend to "food" (biscuit/noodles), that needs more careful
negotiation. Horlicks biscuits, for instance, have been available for years now. However, their
contribution to the company's kitty has been small. Horlicks oats claim better traction. But this
category, too, sees stiff competition from Indian and multinational brands. Meanwhile, several of
Horlicks extensions like NutriBar, Chill Dood and flavoured milk have been wound down.
Extensions have so far been a mixed bag for Horlicks. They have miles to go before they become
family silver like their parent.

Y.L.R. Moorthi, Professor (Marketing), IIM Bangalore

Questions about GSKCH's future arise only due to its overwhelming

dependence on Horlicks in its core areas: Arun Hegde, Former MD, Wrigley
'Juxtaposition of the sublime and the ridiculous'

Horlicks offers a fascinating view of what to do and what not to do, when it comes to brand
extensions. On this front, the evolution of Horlicks is replete with ideas of dos and don'ts. In fact,
one also sees a juxtaposition of the sublime and the ridiculous.

What has Horlicks done right? Clearly, the strategy of attacking itself, in core Horlicks territory,
before someone else does, has worked to keep it ahead. Identi-fying, creating and fasttracking sub-
segments have ensured that it has left no obvious gaps for other players to exploit. Full marks here

What has it not done right? Overextension of the brand - with Noodles and Cereal Bars - into
completely unrelated categories has made it pay, both in terms of wasted effort and long-term
dilution of the mother brand. And one really wonders why, given that the success of Boost and the
failure of Chocolate Horlicks (its first attempt to take Horlicks into a seemingly similar but actually
different consumer space) should have taught it a valuable lesson. It has also not been successful in
finding ways to make Horlicks a more mainstream product in the north and west of the country.
One can only presume that these misses were driven by some arrogance and a reluctance to invest
and take a hit on profitability.

On biscuits and oats, too, I have my doubts for the same reasons.

In the final analysis, GSKCH is a very successful company and Horlicks is one of the strongest
brands in the food and beverage business. Questions about its future arise only due to its
overwhelming dependence on Horlicks in its core areas. This makes one critical of some of its
actions that have not been thought through.

Arun Hegde, Former MD, Wrigley India

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