By Amit Bapna & Ravi Balakrishnan
It’s a tough job keeping a brand alive for 140 years. It’s tougher yet trying to make it stand for something different after it has spent the bulk of its existence, defining a very specific category: in the case of Horlicks, a malted milk drink. But that’s just what Horlicks has been trying to do, especially in India.
Arriving on Indian shores in colonial times, the brand acquired enormous equity post independence, especially in the East and South. It accounts for 46.4% of the approximately Rs 5,000 crore health food drink category. The Indian subcontinent is currently the brand’s largest market, accounting for 70%- 80% of global volumes. And also the best site for experiments in seeing just how far the brand can go.
Horlicks is currently in a frenetic expansion mode. It’s revitalised its focus on biscuits launched in 1993 and is making forays into areas like noodles and more recently oats. This is hardly unique: many legacy brands are in a similar rush to stand for a lot more – Lifebuoy and Pears for instance, which have expanded into hand sanitisers and face wash.
In the case of Horlicks though, previous attempts to stretch the brand have been problematic. NutriBar, an energy bar launched in 2009 has been withdrawn as also flavoured milk which hit the market around the same time. According to marketing consultant Harish Bijoor, the taste profile of these products militated against expectations from the brand.
It tried to get into the confectionery space with cream biscuits only to back out. Horlicks is now focusing on the high function space with nutritional biscuits. Says Seema Gupta, assistant professor – marketing, Indian Institute of Management, Bangalore, “Biscuits is driven by taste or habit, and fortified calcium and nutrients is not the prime mover of the category.” It can be an added benefit if the variety and taste is as good as that of the entrenched brands, she adds.
The foray into food, currently contributes to around 10% of Horlicks’ share. Of these, biscuits still lead, with recent launches like noodles performing below expectations. At the moment, Horlicks is back to the drawing board, launching oats, diversifying its biscuit portfolio and tweaking noodles. Says Jayant Singh, executive vice president – marketing, GSK Consumer Healthcare, “We found that 40% of households are using noodles for breakfast. When we launched we were operating in all segments but then moved in the higher end, healthy multigrain area.” Adds Zubair Ahmed, managing director, GSK Consumer Healthcare, “Currently we are relooking at our entire positioning and are revisiting the category.”
It’s betting big instead on nutritional and digestive biscuits, as a healthy snacking option and oats to get a larger share of the breakfast table. At 40% annually, oats is the fastest growing segment in the breakfast cereal market valued at over Rs 600 crore. Horlicks is a late entrant in a market packed with Quaker, Saffola, Britannia and Kellogg’s. Starting with white oats in 2011, this year has seen the launch of flavours. On this front the brand is facing a bit of friction and as per industry sources there is a divided house internally.
There is a school of thought that feels the masala association can lead to equity dilution. Says marketing consultant Sunil Alagh, “In many ways, their hands are tied by the UK headquarters who decide what can and can’t be done. They are obsessed with serious health attributes – which is right for their core malt drink. But in snacking the consumer in India is not ready yet. Maybe they could go in for a sub brand since the mother brand is so strongly associated with health.”
It’s a classic chicken and egg conundrum: variants and extensions are on a low base and for them to achieve scale they need push on all sides, which often does not happen due to an over-crowded market, points out the CEO of a brand consulting firm, on condition of anonymity. In Horlicks’ case since the core brand is consumed mostly by children (over 80%), most resources are spent on increasing off take or salience. Even within the milk food drink space, it becomes very difficult for variants, for example, for women or diabetics to create the kind of impact that is required for behaviour change, he points out.
Horlicks is not relying solely on its new portfolio. Its flagship is becoming more accessible to rural markets with SKUs ranging from Rs 5 sachets to a 2 kg pack costing approximately Rs 300. “We have seen our volumes grow 300%-400%. As a part of our access agenda, we look at having close to a billion serves next year,” shares Singh.
By all reckoning, the brand faces an uphill slog. As Dr M G Parameswaran, executive director & CEO, Draftfcb+Ulka, puts it, monolithic brands can get into closely related categories, but cracking segments with different product codes is difficult. Marketing consultant Sunil Alagh who claims to have taken Horlicks biscuits from a Rs 40 crore to a Rs 100 crore business in 18 months in a stint as advisor, points to a more severe problem: “The first rule of thumb is to ensure that you have the best team and never use the existing sales force.
This is because initially the sales tend to be low since it’s a new product. The apparent rewards seem less and it requires more work. No matter what you tell them, the sales team will spend 90% of time on the existing products and only 10% on the new. Brand extensions require the primary task of getting your team out of their comfort zone.” In 2010, when he advised Horlicks, he recalls the biggest challenge was from within. He was able to grow the biscuit category only after insisting on a separate sales force.
The other problem is more intrinsic to what Horlicks stands for. Health was always its stock in trade; an outlandish ad from the 1930s claimed a cup before bedtime prevented “night starvation.” However, health has become an almost generic proposition flogged by everyone from air conditioners to chewing gum. Noodle category leader Maggi has a line that says “taste bhi, health bhi”; by focusing on health, Horlicks is trying to sell fun categories in a serious manner. As Mr Alagh puts it, “the biggest problem and opportunity for the brand is that in the East and South it’s viewed as something that’s a preventive and in the other half of the country its associated with ‘cure’.” So, can the 140 year old learn a few new tricks?
Source:The Economic Times
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