This case is about the advertising war between two popular health drink brands Horlicks and Complan in India. The war for supremacy between these two brands started as early as in 1960s and had continued ever since. Over the years, the brands were involved in aggressive comparative advertising in print and television over attributes such as ingredients, protein content, growth, and flavors. However, in late 2008, the makers of Horlicks, GlaxoSmithKline Consumer Healthcare (GSK), and the makers of Complan, Heinz India (Heinz), came out with advertisements that directly compared the brands using the competitor brand's trademarks. Industry observers felt that in their bid to outdo each other, the two companies had ended up denigrating the competitor brand.
Usually issues related to disparaging ads by rival companies were resolved by the Advertising Standards Council of India (ASCI). But with constant mudslinging at each other, the two companies decided to solve the issue in courts. In September 2008, Heinz moved the Bombay High Court objecting to the Horlicks ad , while in December 2008, GSK approached the Delhi High Court against the Complan ad.
Experts felt that the latest tiff between GSK and Heinz had brought to the fore the issues and challenges involved in comparative advertising and the legal/ethical issues involved in such kind of advertising.
» Analyze the advertising strategies adopted by Complan and Horlicks over the years.
» Understand the issues and challenges faced by companies while using comparative advertising.
» Examine the efficacy of comparative advertising in enhancing brand image and sales.
» Study the implications of the advertising war between Complan and Horlicks.
» Discuss and debate the legal/ethical issues involved in the case.
Marketing communication, Advertising, Comparative advertising, Ethics, Legal, Health drinks market, Horlicks, Compalan , GlaxoSmithKline, Heinz
The Fight for the Indian Health Drink Market Turns Ugly- Next Page>>
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.
50% by volume, Horlicks's share of the branded health food drinks marketNow, 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 till 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 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 Complan were seen to be strong contenders in west and northern parts of the country, so was local player Jagatjit Industries with its brand Maltova and Viva in the north. GSKCH acquired Maltova and Viva and effectively prevented competition from opening a new front.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.ly/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.
This campaign, however, was just the precursor. The company has always viewed Horlicks equity as a bank deposit since. "It has invested at every critical juncture in the brand and its nutrition profile backing it with proof of science," says Sheshadri. In 2003, it offered its newly formulated Horlicks to the National Institute of Nutrition (NIN) at Hyderabad, which conducted research to prove its effect on 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). "We 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 itself 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.
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 HFD 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 (till 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.
'Extensions have so far been a mixed bag for Horlicks'
Stretching into categories in the immediate neighbourhood of the mother brand may be easier than stretching into distant ones: Y.L.R. Moorthi, Professor (Marketing), IIM Bangalore
The core Horlicks brand is successful. It lays claim to more than half the white-malted beverages market. Therefore, increasing market share substantially might be difficult. But Horlicks has been steadily introducing line and brand extensions to keep itself relevant. Generally, when the market share of a brand is very high, it gets strongly identified with the parent category and, therefore, gets difficult to stretch. This has been seen in strong brands such as Colgate, Nirma, Ponds and Lifebuoy. (This is the paradox of brand extensions: weak parents are difficult to stretch; ironically, so are very strong parents.)
So, stretching the Horlicks brand may not be easy. But stretching into categories in the immediate neighbourhood might be easier than stretching into distant ones. Horlicks may find it easier to stretch into variants (Junior Horlicks, Mother's Horlicks, etc). Extensions beyond that into categories like biscuits might prove to be more difficult given the brand's equity. The question even for variants is whether a "kids" brand can be extended to "adults". However, that is still easy to argue because the extensions are also malted beverages.
But once a "malted beverage" wants to extend to "food" (biscuit/noodles), that needs more careful negotiation. Horlicks biscuits, for instance, have been available for years now. However, their contribution to the company's kitty has been small. Horlicks oats claim better traction. But this category, too, sees stiff competition from Indian and multinational brands. Meanwhile, several of Horlicks extensions like NutriBar, Chill Dood and flavoured milk have been wound down. Extensions have so far been a mixed bag for Horlicks. They have miles to go before they become family silver like their parent.
Y.L.R. Moorthi, Professor (Marketing), IIM Bangalore
'Juxtaposition of the sublime and the ridiculous'
Questions about GSKCH's future arise only due to its overwhelming dependence on Horlicks in its core areas: Arun Hegde, Former MD, Wrigley India
Horlicks offers a fascinating view of what to do and what not to do, when it comes to brand extensions. On this front, the evolution of Horlicks is replete with ideas of dos and don'ts. In fact, one also sees a juxtaposition of the sublime and the ridiculous.
What has Horlicks done right? Clearly, the strategy of attacking itself, in core Horlicks territory, before someone else does, has worked to keep it ahead. Identi-fying, creating and fasttracking sub-segments have ensured that it has left no obvious gaps for other players to exploit. Full marks here definitely.
What has it not done right? Overextension of the brand - with Noodles and Cereal Bars - into completely unrelated categories has made it pay, both in terms of wasted effort and long-term dilution of the mother brand. And one really wonders why, given that the success of Boost and the failure of Chocolate Horlicks (its first attempt to take Horlicks into a seemingly similar but actually different consumer space) should have taught it a valuable lesson. It has also not been successful in finding ways to make Horlicks a more mainstream product in the north and west of the country. One can only presume that these misses were driven by some arrogance and a reluctance to invest and take a hit on profitability.
On biscuits and oats, too, I have my doubts for the same reasons.
In the final analysis, GSKCH is a very successful company and Horlicks is one of the strongest brands in the food and beverage business. Questions about its future arise only due to its overwhelming dependence on Horlicks in its core areas. This makes one critical of some of its actions that have not been thought through.
Arun Hegde, Former MD, Wrigley India