Entry of new variants in the health foods sector in India has caused growing competition among brands. To counter intense pressure from new entrants from giants such as Nestle, Danone and Abbot, GSK’s Horlicks has decided to drop its price by almost a fifth for its low unit packs to boost sales in small towns.
On the other hand, it is stepping up launches of high margin specialised variants.
Manoj Kumar, Managing Director, GSKCH said, “The category is having a volume growth problem. The rural economy has not been good over the last two years. So, the slowdown of the small town phenomenon over the last two years hurt this category the most.”
There has been a spurt of activity from rivals in the past two months that possess a threat to Horlick’s share. Last month, Nestle relaunched its fortified milk drink Milo with under 10% sucrose per pack. French firm Danone SA’s also introduced its health drink Protinex Grow into market.
Other products like Abbot’s Pediasure and Ensure and US firm Mead Johnson’s Enfagrow, a nutritional milk powder for kids, made their entry into the market.
In February, Danone announced that it expects to double India revenue by 2020 and that it will introduce 10 products in health and nutrition segment this year.
While India is the second largest country after the US in terms of topline for GSK Consumer, the Gurgaon-based firm continues to depend heavily on Horlicks. The brand and its variants contributing 75% to its total sales.
Kumar said, “Since a significant portion of our category is in rural and small towns, we are very much linked to the revival of the economy there. We are playing both the mass and high-science segment with clinical claims. GSK will be attacking the premium segment willing to pay for functional and life stage products on one end and lower prices in the mass segment which is looking for value on the other end.”
Kumar added, “The government’s focus on the rural economy and a good monsoon last year did help revive the category, but the demonetisation move again stalled consumption. However, the revival of the rural economy and reversing pricing of sachets by 20% should move sales, as consumers tend to enter the category and then upgrade.”
Sachet prices of Horlicks have been dropped from Rs 6 to Rs 5.
In order to connect with its younger audience, Chocolate Horlicks, a GSK Consumer Healthcare product, has collaborated with popular toon character Chhota Bheem. This partnership marks the first ever movie integration for the brand, with ‘Chhota Bheem Kung Fu Dhamaka’.
The collaboration is supported by an outreach campaign including television and digital campaigns culminating through an on-ground activation, in line with the campaign idea of “Horlicks Chocolicks ke liye Kuch Bhi Karega.”
Vikram Bahl, GSKCH Indian subcontinent area marketing lead, nutrition, and digestive health, said, “At GSK, we look forward to creating brands and campaigns that directly connect with our audience. Chocolate Horlicks is one of our most successful brands and its taste enjoys high equity with children.”
“To strengthen our connection with the younger audience, we associated with Chhota Bheem, which is one of the most loved toon characters amongst kids. This integration is aimed to delight them, not just with a fun time at the carnival but also with the taste of Chocolate Horlicks,” he added.
GlaxoSmithKline (GSK) has shortlisted Nestle, Unilever and Coca-Cola for the second round of bidding for its Indian nutrition business, which includes the Horlicks brand. GSK will sell 72.5% stake in its Indian subsidiary.
The auction process had witnessed some of the world's biggest food and drinks companies including PepsiCo, General Mills, Reckitt Benckiser, Danone, and Kellogg's compete alongside homegrown ITC and private equity buyout funds such as KKR to purchase the GSK's consumer portfolio.
Earlier, ITC has withdrawn itself from the bidding race as it is of the view that the brands do not fit its portfolio.
Some bidders have opted out of the race while others were not shortlisted for the second round. It's not clear how many bidders are still in the race.
GlaxoSmithKline Plc CEO Emma Walmsley had earlier said, "The company is initiating a strategic review of Horlicks and its other consumer healthcare nutrition products, and that it's exploring partial or full sale of its 72.5% stake in its Indian subsidiary GlaxoSmithKline Consumer Healthcare."
दुनिया की सबसे बड़ी उपभोक्ता कंपनियां, नेस्ले, यूनिलीवर और कोका-कोला, भारतीय हॉर्लिक्स खरीदने के लिए बोली लगाने वालों में से हैं, जिनका स्वामित्व ग्लैक्सोस्मिथक्लाइन के पास है। बोलियों से $ 4 बिलियन से ज्यादा की कमाई की उम्मीद है।
तीनों दिग्गजों को उपभोक्ता सामान व्यापार के लिए प्रबल दावेदार माना जाता है, जो तेजी से बढ़ते उभरते बाजार में महत्वपूर्ण पद्चिह्न पेश कर रहा है।
जेम्स और विलियम होर्लिक द्वारा 1873 में स्थापित, हॉर्लिक्स एक माल्ट-आधारित पेय है। दोनों ने शुरुआत में शिकागो में एक कंपनी की स्थापना की थी, जहां वे पेय का निर्माण करते थे। पहले विश्व युद्ध में ब्रिटिश सेना के साथ लड़े सैनिक भारत में इस स्वास्थ्य पेय को लेकर आये।
होर्लिक्स बिजनेस हासिल करके, कोका-कोला पिछले महीने $ 5.1 बिलियन के लिए कोस्टा कॉफी खरीदने के सौदे के बाद एक और बहु अरब डॉलर के अधिग्रहण को चिह्नित करेगा।
इस साल की शुरुआत में, जीएसके ने अपने छोटे यूके हॉर्लिक्स बिजनेस को अमीया फूड्स को एक अनजान राशि के लिए बेच दिया।
Some of the world's biggest consumer companies, Nestle, Unilever and Coca-Cola, are among bidders for buying Indian Horlicks which is owned by GlaxoSmithKline. Bids are expected to fetch more than $4 billion.
The three consumer goods giants are seen as frontrunners for a business, which is offering a significant footprint in a fast-growing emerging market.
Founded in 1873 by James and William Horlick, Horlicks is a malt-based drink. They both had initially set up a company in Chicago where they manufacture the drink. The soldiers who fought with the British Army in the First World War brought the health drink in India.
By acquiring the Horlicks business, Coca-Cola would mark another multibillion-dollar acquisition, following a deal to buy Costa Coffee for $5.1 billion last month.
Earlier this year, GSK sold its much smaller UK Horlicks business to Aimia Foods for an undisclosed amount.
Coca-Cola is set to join global consumer food giants Nestle, Danone and Hindustan Unilever and others in the $4-billion-plus pursuit to buy GlaxoSmithKline’s consumer nutrition business, people close to the development said.
This marks an entirely new foray for the Atlanta headquartered firm and could give it bandwidth to play in the pure health-nutrition space aimed primarily at children, these people added. Coke has mandated Citi to help them in the competitive bidding process expected to launch next week.
“The evaluation work had begun even though the sale process is yet to formally launch. It will be a large transaction, so work has already begun,” said an official involved, on condition of anonymity as the discussions are in private domain. “This also marks the company’s return to big bang M&A in a market like India.”
Coke acquired Parle’s stable of brands in the early 1990s including the popular Thums Up and gained access to its nationwide bottling and distribution infrastructure, thereby getting a strategic advantage over others. This was the first and only transaction by the company in the country.
With consumer beverage preferences changing swiftly in favour of low-sugar or functional options such as juice and juice drinks, flavoured water, dairy-based beverages and tea, the Atlanta-based company has been accelerating portfolio expansion beyond its core aerated brands.
Coke president T Krishnakumar had said that it would also launch nutrition products including electrolyte hydration drinks to be sold over-the-counter at pharmacies.
“So far we have been very active in the refreshment space; we now want to be a serious player in nutrition,” he had said in an interview. Coke said in its quarterly earnings for the January-March 2018 quarter that it has had three quarters of growth on the back of better distribution and portfolio expansion.
The maker of Thums Up, Minute Maid juice and Kinley water has been stepping up launches in the ‘healthier’ space including no-sugar variants of Coke, Sprite and Thums Up, Vio dairy drink, Zico coconut water, Aquarius fortified water, Fuze iced tea, glucose and fruit juice drink Aquarius Glucocharge and Minute Maid Vitingo for micronutrient deficiency and malnutrition, besides hyperlocal variants of juices and juice-based drinks.
“As a matter of policy we do not comment on any speculative news,” said a Coca-Cola spokesperson. “At this point there is nothing to report on the said matter. We will keep you informed of developments if any.”
Both Coca-Cola and rival PepsiCo, which sell a combined $100 billion a year in drinks and snacks, have tried to reduce reliance on soda and other aerated drinks by acquiring new products, particularly in faster growing drinks categories such as water or tea.
In recent years Coca-Cola globally bought or invested in millennial friendly brands such as Honest Tea, an organic tea brand, Suja Life, a cold pressed juice maker, and AdeS, a soyabased beverage brand.
However, another top official said buying Horlicks wouldn’t be the ideal fit for a company which is looking to rapidly reduce sugar across its portfolio.a
GSK Consumer’s Horlicks and Boost brands have strong positioning in Indian market and command approximately 70% of overall value market share in Indian Malted Food Drinks (MFD) market.
These products had a combined revenue of £550 million in 2017, with India contributing most of it. However, in March the company decided to review and potentially sell the nutrition products business to fund the $13-billion buyout of Novartis’ stake in a consumer healthcare JV.
The review will also include an assessment of the parent’s 72.5% stake in GSK Consumer in India. The current market cap of the company is Rs 25,544.95 crore.
The outcome of this review is likely by end-2018 which may or may not result in any transaction, eventually, as per the company. Morgan Stanley and Greenhill are advising GSK in the sale.
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