sme Case Study. How Horlicks has aided guting dated: Business Today exter Money Today Print GR Close Case Study: How Horlicks has avoided getting dated ShamniPande 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 tll 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 businesstodayintodaynstoryprirt206228 asme Case Study. How Horlicks has aided guting dated: Business Today 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 Compian were seen to be strong contenders in west and northern parts of the country, so was local player Jagatit Industries with its brand Maltova and Viva in the north, GSKCH acquired Maltova and Viva and effectively prevented competition from opening a new front. aaa] How Horlicks thrived over the years 1958: starts production in India 1992: Begins its first brand-line extension with Horlicks Biscuits coeur eee Peon ous Sate) for children rather than the entire family 2005: Launches Horlicks Lite, a low-fat and low-sugar alternative 2008: Unveils Women's Horlicks, a blockbuster product 2009: Starts aller, Stronger, Sharper’ campaign s anit: . businesstodayintodaynstnpriri205238 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.\y/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. 26sre Case Study How Horlicks has avoided guting dated: Business Today UIE. Introguces noriicks - 1s premium brand This campaign, however, was just the . precursor. The company has always 2012: Presents viewed Horlicks equity as a bank deposit Pg new ad Sei campaign - since. "It has invested at every critical ‘S pao of juncture in the brand and its nutrition profile 3) backing it with proof of science,” says Hi Sheshadri. In 2003, it offered its newly 2014: the new formulated Horlicks to the National institute Kesar Badam \ of Nutrition (NIN) at Hyderabad, which faaairen, ae conducted research to prove its effect on Viva, and Malt 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). e 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 itseff 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. businessedayetodayintonprit206238 asme Case Study. How Horlicks has aided guting dated: Business Today 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 HED 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 (til 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} Print & Close URL for this article : http:/businesstodayintodayin/storyicase-study-horlicks-appeals-across-groups/1/205238.himi @ Copyright 2010 india Today Group. businesstodayintodaynstoryprirt206228 46