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 is the name of a company and of a malted milk hot drink. It is manufactured
by GlaxoSmithKline in the United Kingdom, South Africa, New
Zealand,Bangladesh, India, Pakistan and Jamaica, and under licence in
the Philippines and Malaysia.

Unlike similar drinks, such as Ovaltine, Horlicks is not a dry blend of malt
extract and milk powders.

In the initial stage of manufacturing milled malted barley and wheat flour are mashed together in
hot water where the starch is converted into sugars. To this sugar solution dairy powders are
added. The water content is then evaporated off to form a syrup which is dried in vacuum band
driers to form a cake. This cake is milled into the finished powder. This is then fortified
with vitamins and minerals

By far, the biggest market for Horlicks is India, where it has traditionally been marketed as 'The
Great Family Nourisher.' New products have been developed specifically for India, such as
alternative flavours and special formulations for young children and breast-feeding mothers.
Claims by GlaxoSmithKline India in 2005 that Horlicks encourages growth and alertness in
children have, however, caused some controversy[

].

The first flavour available in India, as in Britain, was malt; over the years, new flavours have
been introduced, such as vanilla, toffee, chocolate, honey, and elaichi (cardamom). Junior
Horlicks 1-2-3 is a large extension that is specially designed for pre-school children. Horlicks is
also available in biscuit forms. In 2005, Horlicks Lite was introduced; it does not contain any
added sucrose or cholesterol, and targets older consumers. In addition, energy bars have been
introduced, under the name 3
 , exclusively in India. In late 2009, Horlicks introduced
Foodles, a brand of instant noodles.


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Horlicks was invented by two British men who immigrated to America, William Horlick (1846-1936)
and his brother James Horlick (1844-1921).

d 1875 -- The brothers obtained their first US patent on 18 May 1875;

d 1883 -- On 5th June 1883, the brothers obtained US patent 278,967 for their drink's ability to mix
up in water. Thus, they became the first malted milk to be patented;
d 1955 -- Up till now, powdered Horlicks had been exported to India for bottling and labelling there.
In 1955, government protectionist policies in India stopped the import of Horlicks.

d 30 October 1958 -- Horlicks opened a factory in Nabha, Punjab, India to make Horlicks there. The
subsidiary company was called "Hindustan Milkfood Manufacturers Pvt. Ltd."

@
 

  
  

  

@ !

Horlicks' market share of the Rs 2,305-crore (Rs 23.05 billion) milk beverages market is above
50 per cent (source: The Nielsen Company). Rivals know beating Horlicks in the market place is
a tough act.
Nestle has stopped making Milo and new entrant Dabur India has decided to stay clear of Horlicks
and pitch its Chyawan Junior against GSK Consumer Healthcare's other beverage brand, Boost.

It would be foolish not to leverage the equity of such a brand. Thus, GSK Consumer Healthcare has
decided to use the brand to get into new categories. In the last few months, it has launched
biscuits for children, a nutrition drink for women, an energy bar and chilled milk. More could follow
in the days to come.
"Our business was doing well as was the economy. So both from our point of view as also from the
consumers' perspective, it was a good time to shift gears," says GSK Consumer Healthcare
Managing Director Zubair Ahmed.

Ahmed believes the new products will make a meaningful contribution to the company's top line in
the next few years.

"These categories are relevant and our research shows that consumers need these products. We
are not creating needs, we're simply fulfilling them."

Those who know Ahmed well will hardly be surprised by the fast pace of product launches. As the
chief executive of Gillette, his previous assignment, he tried to grow the business rapidly with a
slew of new shaving products. He left the grooming products company two years ago after it was
acquired by Procter & Gamble to run GSK Consumer Healthcare.

Something for everyone

Ahmed is aware that new products do sometimes end up as casualties but he has taken confidence
from the strength of the Horlicks brand. "We're riding the equity of Horlicks and supplementing it
with consumer insights," says he.

Horlicks may be the country's sixth most-trusted brand but GSK Consumer Healthcare is playing in
a market where consumers can be demanding. And rival brands are no rabbits: Cadbury's
Bournvita and Heinz's Complan each with a 15 per cent share.

So far though, GSK Consumer Healthcare has succeeded in segmenting the customer base by
catering for specific needs of women at the same time cashing in on the increasing population of
children with Horlicks. Ogilvy & Mather Country Head (planning) Madhukar Sabnavis feels "the
brand today talks to every member of the family rather than the entire family."

With Junior Horlicks, launched in 1995, GSK Consumer Healthcare had positioned a product
exclusively for children between the ages of two and five. That, Anand Ramanathan, who advises
companies in the FMCG space at consulting firm KPMG, points out is a crucial segment given that
India is a young country - a clever ploy to engage consumers at a very young age.

The Junior Horlicks brand has grown to become a Rs 150-crore (Rs 1.5 billion) brand now, says
GSK Consumer Healthcare head of marketing Shubhajit Sen. Taking advantage, the company
launched Junior Horlicks biscuits last month.

Again, five years ago, GSK Consumer Healthcare had reached out to pregnant and lactating
mothers with Mother's Horlicks; last year it came up with Women's Horlicks catering for women
across age groups.

"The idea is to address all age groups. There's Horlicks Lite for the elderly who often have a sugar
problem and for the youth we have Horlicks Nutribar which we launched in February this year,"
says Ahmed.

With Horlicks Nutribar, positioned on the twin planks of health and convenience, GSK Consumer
Healthcare has leveraged the brand to venture into an entirely new product category - energy
cereal bars. Says Ernst & Young Partner Ashish Nanda: "When you've created a strong brand, it
opens up doors to new variants and even new categories. Unless you enter a completely unrelated
area, there's little risk in extending the brand to other products."

While the company hopes that Horlicks Nutribar will chip in with about Rs 100-150 crore (Rs 1-1.5
billion) of revenues in five years, it hasn't stopped there. In April this year, it invited consumers to
taste its summer drink called Horlicks Chilled Doodh (milk), available in four flavours.

Sen concedes that the product will be up against some keen competition in the Rs 45-crore chilled
milk category from Amul Kool and strong regional players like MAFCO in Mumbai, but he hopes the
brand can pull in revenues of Rs 50-100 crore (Rs 500 million to Rs 1 billlion) in about five years -
more than the current market size.

Of course, GSK Consumer Healthcare will promote other brands too - it does need to hedge its
risks, after all. Thus, in April, Glaxo ActiGrow, a protein supplement for children, was unveiled.
Ahmed explains that the company is cashing in on the brand equity that Glaxo still has with
mothers and will leverage that for specialist products like ActiGrow.

"We're looking at new products across food and beverages, like healthy snack foods because the
opportunities aren't taken care of simply by Horlicks," says Ahmed.

At the moment, Horlicks takes care of GSK Consumer Healthcare's top line. The brand, which was
worth around Rs 800 crore (8 billion) in the early parts of the decade, is today 50 per cent bigger
at close to Rs 1,200 crore (Rs 12 billion), bringing in the bulk of the company's annual turnover of
Rs 1,580 crore (Rs 15.80 billion).
If Indians drink more than five million cups of Horlicks everyday it's because GSK Consumer
Healthcare has worked on the product. At one time, in the late 1990s, market research showed
that Horlicks was seen "as a nourishing, but boring drink" and was beginning to lose significance.
What's more, consumers were beginning to prefer flavours over nutrients.

So, in 2003, the brand was revamped: It was made tastier and launched in two new flavours -
vanilla and honey. The company had earlier launched a chocolate version to try and win over
consumers in the North and West who typically prefer chocolate-flavoured drinks. But the success
was limited.

Nearly half of its sales are still generated from the South, while 35 per cent come from East. But
that doesn't seem to bother investment analysts. IDFC SSKI Managing Director Nikhil Vora points
out that GSK Consumer Healthcare has held on to its market share in a space that's grown at
around 20 per cent in the last couple of years. "As the market leader, the brand could yield some
share but volumes have grown in double digits for five consecutive quarters."

Not just higher tonnage, the company does succeed in extracting a price from consumers. In
January this year, for instance, prices were upped by about 5 per cent. What has worked in the
company's favour, says KPMG's Ramanathan, is Horlicks value-for-money positioning. "Horlicks
may not be a cheap product but it's been communicated as a value-for-money product. Parents
today are willing to spend more on nutrition for their children and that has helped GSK Consumer
Healthcare."
To that extent, Horlicks may have gained over competitors such as Complan which are perceived
to be more expensive, a perception that hasn't changed over time. Says Ahmed: "Compared to
competitors, Horlicks is the best money proposition and, moreover, the consumer gets value for
the money spent."

For the new launches too, he has in mind a similar value proposition, though final prices will be
fixed keeping in mind the target group.

"Women's Horlicks is far more expensive than the base Horlicks but that's because the consumer is
getting much more and there's no other product available. Horlicks Nutribars will be primarily a
metro phenomenon to start with, so the pricing has been decided accordingly."

Nourishing the brand

Horlicks does not feel the need for a brand ambassador, though GSK Consumer Healthcare has
engaged expensive celebrities like Kapil Dev, Sachin Tendulkar and Mahendra Singh Dhoni to
endorse Boost. Still, the several new launches could push up the ad budget of one of the country's
top advertisers, most of which is spent on television. Sen believes that spends could inch up over
the Rs 194 crore (Rs 1.9 billion) that GSK Consumer Healthcare spent on advertising and
promotions last year.

Typically, FMCG companies spent 12 to 13 per cent of their turnover on brand promotion. The
radio, through which Horlicks reached out to mothers even 40 years ago, is still an effective
channel in states such as Bihar or Orissa where consumers don't have access to television or
where power cuts are frequent.

In the early years, mothers were the sole target audience since the product catered to the entire
family. However, once pester power became big in the 1990s, the Horlicks advertisements started
talking to children too. The change worked because it was also the time when mothers' mindset
was changing - they had become more indulgent and let children drink what they liked, rather than
imposing on them a drink of their own choice.

Today, JWT Client Service Director Debarpita Banerjee believes, the Internet can be a good way to
connect with kids. So, there are tips posted on examinations on the website - "Exams ka bhoot
bhagao" (Drive the exam demon away). Besides, the company has also reached out to children
with Wizkids, a contact programme that provides a platform for schoolchildren across 25 cities to
showcase their talent.

Why Horlicks is the No.1 brand in India

Under Ahmed, GSK Consumer Healthcare has upped the ante on distribution. In an aggressive 'Go
to Market' approach earlier this year, it created a second layer of distributors in the smaller towns
to supplement the existing chain of around 500 big distributors.

Most of these 4,000 sub-distributors were appointed in the eastern and southern parts of the
country. The idea, according to Vice-president (sales) Navneet Saluja, is to increase the retail
reach by at least 30 per cent. "Right now we reach out to around 25 per cent of the rural market
and we hope to extend this reach to about 40 per cent of the hinterland in a couple of years. We're
looking to have a presence in towns that have a population of 5,000 people."
As for reaching out to customers in the urban markets, Sen has begun to work with retailers to
create excitement and awareness. "In some outlets, we even created play areas for children," he
says.
Although modern trade remains a relatively small channel currently, fetching just 4.5 per cent of
the firm's sales, Saluja's aiming for higher shares. Ahmed's not worried about the expense. "We'll
be leveraging the P&L (profit and loss account) for some time because we need to invest in the
business and new products," he says. Clearly, no effort is being spared to grow Horlicks
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