Horlicks drops its Sachet prices

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.