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About GlaxoSmithKline

GlaxoSmithKline Consumer Healthcare Limited (GSKH) is an India-based company that operates mainly in the food processing industry. The Company manufactures and markets malted milk food products, malted food products and biscuits. GSK is the leader in Indian Health Drink Market. It has four brands Horlicks, Boost, Viva and Maltova Glaxo Smith Kline is actually a single-product single-brand company. They acquired Viva and Maltova brands from Jagatjit Industries to become the only company in the white beverage segment. Horlicks is the most dominant player in the category. According to retail audit unit ORG Marg, GSK with four brands in the category has a 75 percent volume market share (Press Trust of India). The company enjoys market leadership in 90,000 Tonnes Indian malted milk food market.

About Horlicks
Horlicks has been a popular brand in India since 1930. It was re-launched in 2003 and included a new look for the brand targeting its core consumer, children up to 14 years old. Traditionally it has been positioned as "The Great Family Nourisher. New products have been developed specifically for India, catering different segments of the Indian market. In India, over 2 billion cups of Horlicks are drunk every year. Horlicks is the only drink clinically proven in India to make kids taller, stronger and sharper. The Horlicks available has been scientifically developed and specifically caters to the nutritional needs of the Indian diet. Horlicks alone enjoys 50% of the Health Food Drinks market. In South India, which is milk deficient, Horlicks is consumed as a substitute to milk. Horlicks was first invented as to substitute milk as baby food. However, in North India, it is consumed as a taste enhancer, although now its being recognised as a health food drink proven to make kids taller, stronger and sharper.

Health Beverages Industry


Health beverages can broadly be divided into two categories, namely 1. Milk food beverages (also known as milk food drinks) 2. Fruit juices The Rs. 14.4 billion malted foods market is composed of two segments - brown and white. 1. White beverages (such as Horlicks, Viva, Complan) and 2. Brown beverages (such as Bournvita, Maltova, Boost, Milo etc). While the brown drinks are held to be as energy boosters, the white drinks are regarded as milk substitutes.

The consumption pattern of malted beverages differs according to usage patterns across geographic zones. In the southern and eastern regions white beverages are preferred as substitute for milk. The people in the east prefer for sweetness of taste, the southern region prefers more cocoa based beverages. All the brands target SEC A and B households with one or more children. The decision- maker is the mother though pester power plays a significant role and is the reason for the school level promotions undertaken by all the brands. The mother is like a gatekeeper, who allows the entry of the product into the house because of its nutrition values. The child is only the user. The penetration of malted food in India is a low 6.1 per cent. Over the last few years, there have been a number of attempts to expand the health-beverages business. In view of the tremendous growth potential, many multi-national corporations (MNCs) as well as domestic players have made aggressive investments in this sector, but there are very few players left in this sector in India, today. Malted beverages with nutritional attributes control around 70% of the total market and energy drinks (brown beverages) account for the rest.

The Major Players


GlaxoSmithKlines Horlicks Cadbury's Bournvita Nestls Milo Heinz's Complan'

The market is dominated by GlaxoSmithKline with about 70 per cent share. Cadbury and Heinz have about 12 per cent each, and Nestle only 3 per cent. In South and East India, Horlicks is the market leader. In North India, where it is seen as a taste enhancer, it faces competition from Bournvita and Milo. GlaxoSmithKline (Horlicks, Boost, Maltova, Viva) Heinz (Complan) Cadbury (Bournvita) Nestle (Milo) 69% 13.8% 12.9% 3.4%

Consumer Behaviour
Energy drinks or milk drinks are perceived as a luxury. This explains the slow off-take. While white beverages are hailed for their therapeutic offerings, consumers look at browns as mere taste additives. Brand loyalties are not very strong as the key target, children, are always looking for new products. Promotion campaigns such as freebies and contests also play an important role in influencing brand choice. These campaigns are mainly targeted at children who force their parents to buy these products. Free gifts like crystal jars, pet jars and sippers also attract consumers.

Market Prospects

The growth opportunities in this area are tremendous. However, the growth rates have been slow so far, hovering around 6 per cent per annum, in terms of volume. The total market size is estimated to be 82,000 tonnes per annum. About 65 per cent of the total beverages market consists of white beverages The malted food beverage industry is popularly known as the health beverages sector. It is estimated to be a Rs 9.40 million market and is growing at the rate of 12-14 per cent per annum. Historically, malted beverages have had a strong association with milk, which also explains its strong presence in the southern and eastern regions of the country. These regions suffered from milk deficit and malted beverages positioned themselves as substitutes for milk. Operation Flood, launched in the 1980s, changed the scenario. Undertaken by National Dairy Development Board, Operation Flood made milk available in all parts of the country and the demand for white drinks was hit. With a view to revive demand for the brands, malted foods were repositioned as strength and energy drinks with a nutritional thrust. And this positioning stands valid till date. Apart from the availability of milk, another significant reason for medium growth rates of malted food industry lies in its limited acceptability and/or reach in Indian society. Malted foods have primarily been used in upper and upper middle-class families, which constitute a small proportion of the Indian population. However, over the last few years, there have been clear indications of a recovery. Several factors are responsible for this. Chief among these is the demand for better products and an increased acceptability of malted products. This demand has contributed to the growth in consumer options in terms of variety of taste and products. Other factors include Improved standard of living, Increased awareness and health consciousness amongst people, and Product availability at reasonable prices.

This trend is in keeping with the patterns observed across international economies where the growth of middle-class has driven the uptrend in food industry in general and health beverages in particular. As an obvious outcome, this proliferation is bound to have an impact on the supply chain, making it more complex. Speed and reach will become critical and differentiation in supply-chain capabilities would determine the success of competing companies.

Future Threats
Nido is Nestle's brand in the milk food segment. The brand is recently making lot of noises in the media. Nido is a milk powder fortified with Calcium and Vitamins. Nido is the updated version of Nestle's Milk for Growing Children. The USP for Nido is that it is fortified with Calcium and Vitamin D which helps the kids develop strong and healthy bones. Nido faces direct competition with the ordinary milk and milk based beverages. The brand competes with Junior Horlicks and a host of other nutritional foods available in the Indian market. In terms of promotion and positioning, Junior Horlicks is miles ahead of other brands. But there is a difference between Nido and Horlicks in the sense that Nido is a milk food while Horlicks is Malt based beverage. So the competition is essentially Industry competition rather than direct brand

competition. The brand takes the differentiation from other milk brands by having 25 essential nutrients that growing children needs (comparison with 23 nutrients of Complan) .Nido is addressing competition from both ordinary milk and brands like Horlicks, Bournvita, Complan and the like.

Emerging Trends for Horlicks


Vending Machine
It is one of the strongest Emerging Format to meet the demand of fast pace of life. Have your food Anywhere & Anytime concept. It is basically promoting making pleasurable nourishment available to consumers on the go. There are nearly 500 vending machines, placed at institutions such as school, corporate & hospital. Horlicks vending machines continue to do well and have helped the thrust on growing out-of-home business. Top line growth continues to be supported by aggressive advertisement and various sales and marketing initiatives whereas several initiatives were implemented to reduce operating costs in the business. The Company continues to operate with minimum trade pipelines, selling as per the market demands, and maintaining a very efficient supply chain.

Demand Forecasting
There is no scientifically designed technique used by GSK for accessing the demand. The demand is assessed on the basis 60% Value Based and the rest 40% is Gut based. Value based includes Previous year same time sales Last three month sales Current trends Competitors drives Consumer promotion schemes Two way process for demand assessment. Distributor tells his demand requirement to the company and then the top level sets his targets

Factors Affecting Demand


During summer vacations, demand for Horlicks is lower than during school days. In summers, kids consume more Horlicks as a cold drink with milk. Mothers Horlicks is sold through doctors prescription, only at chemists. Horlicks Lite is sold only at confectioners. At bunk outlets, only small SKUs of Horlicks are sold.

Seasonality
The demand for Horlicks goes up in the rainy season as doctors prescribe Horlicks when people fall ill. The sales are lean in November and February.

Marketing
The earlier approach to marketing was simple enough: make sure the product is visible - on store shelves and through mass media advertising - and it will more or less sell itself. With the evolution of modern retail, though, the emphasis is shifting to in-store displays and promotions - probably also because for the first time, the space for such initiatives is available. But manufacturers no longer have the last word on what will happen at the store. Modern trade has a significant say in promotions, perhaps because it offers far superior results with a much faster lead time. With increase in the retailing boom shelf visibility and consumer appeal is becoming very important. Modern trade outlets call for instant consumer attraction. The key consideration for any new packaging design is pack appearance and ability to engage consumers. Modern trade outlets are fighting for consumer attraction.Differentiated shapes or attractive graphics are the need of the day.

Consumer appeal and convenience


Horlicks is really focusing in developing its SKUS to attract customers and get immediate attention as soon as a customer walks in a retail outlet. Horlicks is also trying to build each SKU according to consumer convenience by introducing products as shown below.

Junior Horlicks Unique cute baby elephant packing

Inbuilt handle in cap

Easy to Tear.

Easy to hold packing

for ease in carrying.

Laser etched pouches.

Format.

We have studied the Sales and Distribution of Horlicks in North Delhi and parts of Central Delhi.

Modern Trade Chain(value added chain)


Today apart from the normal small retailer, there is a trend of food super stores (like big bazaar etc) that keep almost each food item apart from others. These superstores can not be covered by the usual distribution network. Therefore there is a separate distribution network that covers these super stores. Under this network, the C&F Agent is the same like the one for the companys main distribution network but generally there is a separate distributor appointed who caters only to these super stores and institutions. Display commission or margins is a major source of revenue for the modern bazaars. Since the modern bazaars do not buy quantity in bulk vis a vis wholesalers and have a high turnover, they require a regular and frequent supply. Due to this reason the company generally assigns the task of supplying to them using separate distribution network. But sometimes the same distributors that are supplying through the normal channel can also be used when the demand expected is not significant to assign a separate channel. These organised retail chains follow the Distribution Centre model to get their stocks, Reliance being an exception. The distributors for GSK service these DC. For instance, Subiksha has a Distribution Centre in Delhi, where all the products from several companies come. From here the stocks are sent to the various Subiksha outlets across Delhi.

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