1. Last week it emerged that GlaxoSmithKline's Horlicks, a brand that has always promoted itself on its
bedtime benefits, is to go one stage further and include technical evidence in its marketing to prove
that it helps people sleep. GSK clearly sees its heritage as a "scientific nutrition company" as a vital
USP in today's competitive drinks market. Moreover, it needed to do something with Horlicks because
it has been losing sales. Turnover fell by 3.6% to L30.3m in the year ending July 12, 2003, according
to IRI. To back its scientific stance, the brand is to get a packaging make-over from Williams Murray
Hamm and a major advertising campaign through Grey Worldwide London and MediaCom
GlaxoSmithKline will give Horlicks a much needed pick-me-up with pharmaceutical evidence. But
brands don't always benefit from using the tactic, says Daniel Rogers
Last week it emerged that Horlicks, a brand that has always promoted itself on its bedtime benef its,
is to go one stage further and include technical evidence in its marketing to prove that it helps people
sleep. (Marketing, August 14).
But why should GlaxoSmithKline, which owns the 130-year-old drink, suddenly feel the need to bolster
such claims with science?
Ask GSK and it will say only that it is 'moving toward science-based marketing across the board'.
Indeed, in its corporate literature, SmithKline Beecham Drinks - the arm of GSK that markets the
Horlicks, Lucozade and Ribena ranges - describes itself as a producer of 'health-orientated drinks'
rather than simply soft drinks, as is the case with Britvic or Coca-Cola, for example.
"We're essentially a pharmaceutical company and our aim is to make consumers more healthy," says
a company spokeswoman. "There is a strong emphasis on health claims across all our brands."
Brand extensions
Perhaps we should not be surprised that Horlicks is now getting the same heavyweight science
treatment as its sister brands.
GSK has developed a number of Ribena brand extensions specifically aimed at a healthier lifestyle,
namely the lower sugar Ribena Light and the notorious RibenaToothkind, which positions itself as
benign to kids' teeth with the endorsement of the British Dental Association.
And Lucozade - once just a sweet, fizzy drink your mum gave you on your sick bed - has taken its
glucose positioning several functional stages further.
The basic product has been renamed Lucozade Energy with a growing array of claims. In April it ran a
promotion called 'Load it like Lara', which promoted its credentials as a drink that 'stimulates
alertness' and built on its link with the all-action character Lara Croft from the Tomb Raider games.

2. Meanwhile, Lucozade Sport claims to keep athletes going '33% longer' than water and is now even
backed by the Lucozade Sport Science Academy which promotes best practice in athletic nutrition
(Marketing, March 6).
GSK clearly sees its heritage as a 'scientific nutrition company' as a vital USP in today's competitive
drinks market. Moreover, it needed to do something with Horlicks because it has been losing sales.
Turnover fell by 3.6% to L30.3m in the year ending July 12, 2003, according to IRI.
GSK is not the first drinks company to emphasise the functional benefits of age-old formulae to
reverse a sales decline.
In January 2002, Tetley, facing flagging market share, pensioned off the Tetley Tea Folk ad cartoon
characters and invested L15m in a campaign focusing on a new 'Go on, live a lot' proposition.
Growing reputation
It ran into trouble when both the ASA and ITC upheld complaints in October 2002 from the Food
Commission challenging the claim that 'Tetley is rich in antioxidants that can keep your heart healthy'.
Although the positioning for the teabags had to be adapted following the watchdogs' rulings, Tetley
has pushed ahead with the overall strategy and is on the verge of launching nationally its first chilled
functional soft drink, T of Life. The drink contains a blend of Tetley tea, spring water and fruit juice,
with added ginseng, guarana, and B vitamins. It is aimed at the under-30 age group and taps into
tea's growing reputation as a natural antioxidant.
"It doesn't take a market researcher to identify the consumer trend toward healthier products and
getting the right vitamins," says a senior advertising agency executive who has worked with Coca-
Cola. "And what's happening on the ground is that well-established brands are being forced to
compete with a new breed of deliberately functional products."
Red Bull, with its 'gives you wings' energy claims and the inclusion of taurine, revolutionised the soft
drinks market in the 90s.
It has been followed with a vast array of designer beverages, most recently P&J's range of functional
smoothies, MangaJo's chilled green tea drinks and The Feel Good Drinks Company's mood-oriented
soft drinks portfolio.

3. "In the first seven months of 2003 a great many products have appeared, from cholesterol-busting
products through to meal replacement solutions, an abundance of 'water-plus' variants and a surge of
wellness products," says Laura Appel, editor of Zenith International's functional drinks newsletter.
Functional growth
Although functional drinks still only account for 3% of the beverage market, Zenith expects 70%
growth in Europe by 2004. Could we be about to emulate Japan where functional drinks comprise 18%
of all beverages sold?
"Refreshment, relaxation or fun are no longer sufficient for today's sophisticated and demanding
consumer," explains the advertising executive. "Drinks marketing has moved on through 'need states'
- occasions to drink - toward more clearly defined health benefits. The market is now offering drinks
that claim to boost your immune system or improve the look of your skin."
Horlicks could potentially fare well in this fightback. GSK certainly has the brand heritage and the
marketing war chest to blow any functional upstarts out of the water.
To back its scientific stance, the brand is to get a packaging make-over from Williams Murray Hamm
and a major advertising campaign through Grey Worldwide London and MediaCom.
But history tells us that such functional relaunches are rarely plain sailing. RibenaToothkind was dealt
a huge blow in January 2001 when a High Court judge ruled that the company was wrong to claim
that it did not encourage tooth decay.
Mr Justice Hunt said that when taken as a whole, the evidence did not justify the "absolute nature of
the claim".
The ruling followed a stand from the Advertising Standards Authority (ASA), which argued that
RibenaToothkind's positioning was misleading. This generated a damaging amount of negative PR for
GSK, including various BBC news stories.
Debatable value
Horlicks essential claim - relaxing sleep - seems somewhat less tangible, and probably less
contentious, than avoiding heart disease or tooth decay, so the likelihood is that it will avoid a
backlash. However, Peter Matthews, former chief executive of Cullens and now the entrepreneur

4. behind a range of high-performance drinks called Optio, believes that, as a rule, brands need to add
genuine value if they are to be accepted as functional.
"Where there is an added ingredient with a functional benefit - what is generally known as a
'neutraceutical' - then that's great, but when it's simply a repackaging issue, the value is debatable,"
says Matthews.
His answer, Optio, is an unashamedly functional creation - a blend of fruit smoothie and vitamin and
mineral supplement in a single, daily 'shot'.
"In many countries around the world liquid supplements are popular. With sales of vitamin tablets now
stalling, I think this market will take off and Optio is the first real player," he says.
Peter Shaw is director of brand consultancy Corporate Edge. It has extensive experience with branding
household names and recently created the identity and positioning for Optio.
Shaw believes the rule is that if a brand is to adopt scientific positioning, then it needs to explain this
very clearly to the consumer.
"You need to understand which side of the water you're on," says Shaw. "If you are a functionally
created drink such as Optio you need the right retail positioning, whether that's in a health store or in
a Tesco NutriCentre. If you're an established brand, the repositioning must be done in a subtle and
incremental way, or you may even need a mark II version of the drink. It's when you fudge the issue
that you can become unstuck."
Sidebar
BRANDS FACE LEGISLATION BATTLE
Rules being proposed by the European Commission will trigger a shake-up of food marketing,
including a ban on vague health claims and an end to endorsements by medical professionals.
Under plans announced last month by the Health and Consumer Affairs Commissioner David Byrne,
nutritional, functional and health-related claims must not be deceitful, raise doubts over foods that do
not make similar claims or be unintelligible to the 'average' consumer.
And, in a move that has implications for GlaxoSmithKline's revamp of the Horlicks brand, all health
claims based on scientific data must be submitted to the assessment of the European Food Safety
Authority. For sister brand Ribena Tooth kind the perils are even clearer, with the Commission's

5. proposals banning any reference to, or endorsement by, doctors or health professionals. Tetley Tea,
which carries the backing of the British Heart Foundation, would also be affected.
The restriction has been conceived because of a concern within the Commission that customers might
mistakenly think that not consuming the endorsed product could lead to health problems. More
broadly, the legislation would place much stricter control on the use of phrases such as 'low-fat' and
'high in fibre', for so long the mantra of hundreds of food products on sale in UK supermarkets.
There will also be greater prohibition on claims that refer to the energy-giving properties of food and
drink products, which could curtail the marketing strategies of scores of brand manufacturers.
The proposals, which have already gained the backing of consumer groups across Europe, will have to
be agreed by European Union member governments.
But it is clear that with such detailed proposals now being supported at the highest levels in Brussels,
food manufacturers are facing an unprecedented battle to retain claims that for many years have
underpinned the appeal of their products.
Horlicks is hip. After 130 years of being the favourite of grannies everywhere, the malted-milk drink is
now claimed to be the late- night beverage of choice for London's A-list.
Like camomile tea, ginseng and Classic FM, Horlicks has a reputation for inducing slumber. So when
media reports have it turning up on menus at the Groucho Club and Clerkenwell's trendy Zetter hotel,
one has to wonder on to what sort of bandwagon all those groovy people are jumping.
The story that Horlicks is being sipped by celebrities is partly the result of clever marketing. But
GlaxoSmithKline, which owns the brand, has done its research. Ian Ainsworth, Horlicks' marketing
director, says there are a million people in Britain aged 28 to 45 who find it hard to sleep. So GSK is
marketing the drink directly at younger consumers, and is happy to have the products placed in
trendy settings.
Sleep researchers agree that we are more tired than past generations. "We've stopped living our life
according to day and night," says Neil Stanley, chairman of the British Sleep Society. "We've got a
24/7 society and that has made people forget about the importance of sleep, which is a pity. A good
night's sleep is one of life's great pleasures."
It is not easy to get accurate figures on the prevalence of insomnia, but "logic demands that it is
increasing," says Professor Kevin Morgan from the Loughborough Sleep Research Centre. That is

6. partly due to the proliferation of anxieties that cause sleepless nights in the first place, such as job
insecurity. It is also because our population is ageing, and insomnia tracks demographics like shadows
follow the sun.
Research shows that 5 per cent of people between the ages of 18 and 25 say they are dissatisfied with
the quality of their sleep. This rises to 30 per cent for those over 65, Morgan says. "As you get older,
sleep gets shorter, lighter and more fragmented. That is a biochemical imperative."
The number of sleeping pills prescribed by GPs has stayed at about the same for the past two
decades. But that might have more to do with developments in the treatment of sleep problems -
doctors have come a long way from recommending we all pop a benzodiazepine before bed.
Taking a pill is like saying "this problem is beyond my control," says Morgan. "Everything we're
learning about insomnia is going in the opposite direction. We're moving towards a broad approach to
treating insomnia that includes, but isn't dominated by, sleeping tablets."
The focus is on "sleep hygiene" and establishing the right conditions for dropping off, which include
making sure the bedroom is warm, dark and quiet. It also involves setting up a routine that prepares
the mind for sleep, which is where milky drinks come into the equation.
As far as science is concerned, there's no magic ingredient in Horlicks that induces sleep. It is not
vastly different from plain hot milk or herbal tea. Almost anything that might theoretically cause sleep
has ended up in a bottle in the health food shop, and the evidence for most of these remedies ranges
from slender to non- existent.
One of the few treatments that have been shown to work is cognitive-behavioural therapy (CBT), a
form of structured psychotherapy that aims to identify and change extreme thinking and unhelpful
behaviour. In a recent scientific paper, Boston-based researcher Greg Jacobs said that counselling
should replace pills as the standard treatment.
What CBT does is teach you how to switch off. "We live in a society that does not know how to relax.
We turn the TV off, brush our teeth, do a pee, get into bed and say 'sleep, come and take me,'" says
Stanley. "It's not surprising that sleep isn't always that interested. You've got to get the conditions
right for sleep to find you
It would have been ironically appropriate if the directors of Premier Foods were buying the rights to
the eponymous bed-time drink, Horlicks, in their proposed GBP1.2bn deal to acquire fellow foods
processor RHM. And that's because, in fixing the details of buying RHM, which owns brands such as

7. Frank Cooper's marmalade and Mr Kipling cakes, they seem to be making the said Horlicks of
Premier's arrangements to pay dividends. First, though, the trickier question: how is it that the name
of the world's best-known malted-milk drink is almost as well-known as a synonym for you know
what, especially since former foreign secretary Jack Straw used it to describe the compilation of the
government's infamous dossier on Iraq's weapons of mass destruction in 2003? The answer isn't clear,
but at least it can take us on a sentimental tour of the UK's changing corporate landscape over the
past 100 years.
This week's column is as much about etymology as investment, but may be none the worse for that.
Alternatively, some readers may think that, as usual, it's a complete Horlicks, which is where my train
of thought began. The thing is, it would have been ironically appropriate if the directors of Premier
Foods were buying the rights to the eponymous bed-time drink in their proposed GBP1.2bn deal to
acquire fellow foods processor RHM. And that's because, in fixing the details of buying RHM, which
owns brands such as Frank Cooper's marmalade and Mr Kipling cakes, they seem to be making the
said Horlicks of Premier's arrangements to pay dividends.
But more about Premier's dividends in a moment. First, though, the trickier question: how is it that
the name of the world's best- known malted-milk drink is almost as well-known as a synonym for you
know what, especially since former foreign secretary Jack Straw used it to describe the compilation of
the government's infamous dossier on Iraq's weapons of mass destruction in 2003? The answer isn't
clear, but at least it can take us on a sentimental tour of the UK's changing corporate landscape over
the past 100 years.
To do that, however, we have to stop being twee, and acknowledge that Horlicks is a euphemism for
bollocks, because that's really the key word here. Quite why and how Horlicks got its slang meaning is
not clear. But it was certainly established by the early 1990s because that was when GlaxoSmithKline,
the brand's owner since 1969, commissioned a TV advertisement for the product featuring a harassed
housewife, who cursed "Horlicks".
And we should not be too surprised by the connection. Clearly, the two words sound alike. Indeed, in
its time, Horlicks has had many meanings. For example, in India, its biggest market, Horlicks is called
- would you believe - "the great family nourisher". Not just that but, in 2005, Glaxo's Indian arm
claimed that children who regularly drank Horlicks became bigger and brighter. That, in itself, you
might think, justifies Horlicks' alternative meaning.
Even before then, the product had long been a study in hyperbole. Back in 1931, its marketeers
conjured up the notion of "night starvation" to re-invent Horlicks as a bed-time drink. Before that, it

8. was a source of nutrition in the trenches in World War I and for polar expeditions. And, before the turn
of the last century, it was patented as a food for infants.
Soon after that, Frank Hornby, a Liverpool clerk whose name lives on in the eponymous models-
making company whose shares are listed on the London stock market, secured the patent on a new
toy called 'Mechanics Made Easy', or Meccano, as the world's little boys grew to know it. This then
went on to provide an even richer vein of etymology along the same lines as Horlicks.
Exactly how Meccano and bollocks came together, as it were, is uncertain. However, legend has it that
an early version of the toy came in two versions: the 'box standard' and the 'box de luxe'. From the
box standard, we get the phrase 'bog standard'. Simultaneously, in a wonderful piece of spoonerism,
the box de luxe transformed itself into the 'dog's bollocks', which it almost certainly was.
Whether that will be an apt description of new-look Premier Foods remains to be seen. True, its deal
to merge with RHM looks better business than its previous deal - the GBP460m acquisition of
Campbell Soup's UK and Irish operations. Yet it looks better still for RHM's shareholders. Premier's
bosses think that they can deliver GBP85m a year in cost savings from the bigger group. And any
back- of-the-envelope net-present-value calculation will value those savings at well over GBP500m.
That amount ostensibly justifies the GBP280m take-out premium that Premier proposes to pay to RHM
shareholders. But RHM's shareholders will also own 41 per cent of the enlarged group, so they will
have a future claim on the synergies, too - a bit like being paid twice for the same thing.
Meanwhile, Premier's directors have to sort out the Horlicks surrounding the timing of Premier's
dividends. Having been foolish enough to make just one payout in 2006, they will be paying four -
almost certainly more than 20p-worth - in 2007. Meanwhile, former RHM shareholders will get three
payments next year.
Maybe this sounds more dog's dinner than dog's bollocks, but a last word on the subject, which all
investors and business chiefs should heed. Note that there is also dog's bollocks syndrome, which is
expressed in the question: why do dogs lick their private parts? Answer: because they can. But it's
really a generic joke. For example, why do business chiefs do takeover deals? Answer: because they
can.
So the worry is that Premier's bosses may be victims of the syndrome. They made four acquisitions
for GBP730m, which accounted for over half Premier's stock-market value, in the two years since the
company's shares were listed. Now, the RHM deal represents a step change, bringing the total spent
to almost GBP2bn. Sure, the nature of the low-growth food-processing industry makes mergers a way

9. of life. But, even so, there are good deals and bad ones. Premier's bosses haven't obviously made a
Horlicks of it yet. That said, they have yet to prove that their acquisition strategy is the dog's bollocks.
Bio - MrBearbull's column has appeared since the 1950s. Its aim is to help readers manage their
investment portfolios. Details of all the Bearbull portfolios can be found at
www.investorschronicle.co.uk/bearbull/ E-mail: bearbull@ft.com
GlaxoSmithKline's best-selling product in India isn't a treatment for asthma or cancer. It's a malted
milk drink called Horlicks. The brand is India's top packaged beverage behind bottled water and sells
more than twice as much as Pepsi. Glaxo, Britain's biggest drugmaker, is seeking to replicate that
success with other consumer products in emerging markets, including China, as it sheds over-the-
counter medicine brands sold mostly in the US. Glaxo's efforts to build on the Horlicks brand are part
of a broader push into consumer products the company is making in places such as India, China, and
Latin America. Emerging markets have become increasingly important to the British drugmaker's
strategy as the European debt crisis puts downward pressure on pharmaceutical prices.
Zubair Ahmed's true test as the India MD of GSK Consumer Healthcare came four years ago. Ahmed
prevailed on its UK parent GlaxoSmithKline to think out of the box, something none of his
predecessors had dared to even try for decades. Making a conservative, British healthfood major allow
its Indian subsidiary to get radical on a sacrosanct brand asset, Horlicks, was unthinkable. Ahmed
pulled it off.
Last August, as part of Ahmed's grand design, GSK extended Horlicks into unrelated terrain-instant
noodles-and launched HorlicksFoodles. The transition was not obvious. And it wasn't easy. Brand
Horlicks stood for health and nutrition, noodles are everything but this. Inside and outside the
company, the question was asked: is the company killing its golden goose? In 2010, Horlicks
accounted for 85% of the company's Rs 2,306 crore revenues.
"There was a knee-jerk reaction to the proposal, but Zubair made the management see reason in his
'apparent madness'," says a GSK insider.
"Once the concept of transitioning Horlicks into a megabrand due to its high equity became clear,
there was tremendous support for this idea," says Ahmed. Foodles has already garnered a market
share of around 6% in the South and East within six months of launch.
"What clinched it for us was the fact that we were addressing the same target group (that consumes
Horlicks) and providing consumers with a range of healthier options under the Horlicks brand," adds
Ahmed. Foodles was just the start. In September 2010, GSK followed it up with a slew of launches in

10. the confectionery segment-premium biscuits, creams and cookies-under the umbrella brand. The
company, says sources, is now planning a foray into categories like breakfast and mid-day meals, also
under Horlicks.
GSK's adventure and great expectations are not limited to a hallowed brand like Horlicks. Other power
brands in its portfolio-Eno, Crocin and Iodex-are in for similar experiments in India. The company has
lined up innovations in these three products, primarily for the rural audience, says a company official
who did not wish to be named.
For GSK, the brand extensions mean more than just moving on from being a health-beverage maker
to a company with FMCG aspirations. It signals a higher trajectory in its risk-taking ability.
Traditionally, the company has been reluctant to scour spaces beyond health-milk beverages. With
reason. In the late-1990s, two of its new products - Aquafresh toothpaste and Ribena, a black currant
drink-bombed.
With this new-found inclination to experiment, GSK is attempting to leave its conservative, middling
past behind. A new, confident and aggressive GSK has emerged; one that is willing to try out new
ideas, even if it means taking a few failures in its stride. The company is "trying to optimise
underleveraged brand assets," says Ahmed.
It's looking to take on the biggest and the brightest in the FMCG space. Compared to them, it has a
smaller distribution network and less experience in the new categories. "I can't see them (GSK)
getting very large numbers in the newer categories," says the CEO of one of India's largest consumer
goods companies, requesting not to be named. "Some products will work for them, some will not."
At the brand level, there's a fear that GSK will over-leverage the mother brand, Horlicks. New
products like noodles will draw heavily from it, but give back precious little. The refined flour (maida)
in noodles makes mothers distrustful of the product, and this could end up diluting the flagship brand.
Ahmed is unfazed. "Even before we extended Horlicks, we ensured its transition to a mega brand
through a series of variants, such as Horlicks Women, Lite, Nutribar," he says. "What we are doing in
new products is to also give the science behind Horlicks and not just another product."
Foodles forms part of GSK's 'better for you' sub-range, where taste is the primary driver, but health
plays a key role as a differentiator. "While Foodles borrows from the health equity of Horlicks, it builds
or adds back the taste equity to the mother brand," says Ahmed.

11. The thinking within GSK, says a company official, is that the Horlicks label, which new products ride
on, will be phased out. Foodles, for instance, will shed the 'Horlicks' prefix after a while. Eventually,
GSK's strategy is to move beyond Horlicks, says ArnabMitra, analyst, IndiaInfoline. Its entry into wider
foods may pay off considering it is using the same umbrella brand - Horlicks - which carries the
nutritional connotation, he adds.
GSK is going full steam with its brand extension plans. A full-time team of ideation managers is in
place to generate new product ideas that can fit in with the company's power brands like Horlicks,
Boost, Viva, Eno, Crocin and Iodex.
This team, which has nine people across functions like marketing and design, has been picked from
various FMCG companies across industries. The company is cagey about sharing how the team works,
except to say their only task is to understand consumer insights and ideate. Additionally, the company
has 60 scientists.
While this team is new, the ideation team has, in the past, developed ideas like Women's Horlicks.
Ideas in the pipeline, though, are a closely-guarded secret.
GSK's weak spot is distribution. Its retail coverage remains way below that of rivals Hindustan
Unilever Limited (HUL), ITC and Nestle. The company is banking on its new products to change that.
HUL covers about 6.5 million outlets out of the 7.5 million outlets in India, according to an analyst,
while Nestle reaches 3 million.
ITC's FMCG arm reaches 2.5 million. By comparison, GSK's retail coverage (direct and indirect) is
about 800,000. And products like Foodles reach barely 250,000 outlets.
Horlicks has traditionally been strong in the East and South, but categories like noodles, biscuits and
toothpaste require an equally strong retail network in the North and West, which is missing. GSK
serviced the milk-deficient East and South well in the 1960s and 1970s, and built Horlicks as a
nutritional substitute.
Over the years, the distribution network was beefed up there, while the North and West remained
underserved. GSK is hoping new products such as noodles, cookies and nutribars will help Horlicks
gain equity in these areas.
ShubhajitSen, vice president (marketing), GSK, says to carry on a long-term growth trajectory, the
company needs to extend to the North and West," says. "To an extent, we have been hampered by
our product portfolio," he says. "But we believe that over the next three-five years, newer products

12. will play a significant role in our business strategy." In an aggressive 'go to market' approach two
years ago, GSK created a second layer of sub-distributors in smaller towns to supplement the existing
chain of around 700 wholesalers and big distributors.
Called 'project canvas', it led to GSK making inroads into towns it had no presence in before, like
Abhor and Moga in Punjab. The sub-distributors are smaller distributors appointed with the large
distributors' help. The idea is to increase retail reach by at least 30%, says NavneetSaluja, sales
director of GSK.
GSK also has big plans for the rural market, which accounts for about 30% of overall sales. The
company is present in 30% of the rural market and hopes to extend this to 40% to 45% in a few
years. "All the GSK brands, be it nutritionals (Horlicks) or OTC ones (Eno, Crocin, Iodex) are players in
categories relevant for the rural market," says Ahmed.
The company is conducting consumer insight studies for ideas on new product and delivery formats for
the rural audience. For instance, Eno, which is essentially an indigestion and acidity-relief Ayurvedic
solution, could be looked at to develop products for other gastrointestinal ailments. "There's a
discussion on the possibility of launching fizzy Eno in a ready-to-drink format," says an official who
requested not to be named.
Similarly, Crocin would be made available in other product formats that have a high degree of
familiarity among the rural audience, such as traditional home-made potions used in rural homes for
cold relief. "At the first stage of this initiative, we are making our current brands and concepts
available in low-cash ring packs like sachets and dibbis," says Ahmed.
For high-end customers, the company is trying out a mix of launches from the parent's global
portfolio. Sports drink Lucozade and Sensodyne toothpaste are two recent launches, while smoke
control brands, NiQuitin and Alli in the weight management category are in the pipeline.
While GSK's entry into newer categories is logical, the challenge will be to grow big within them.
Sustaining the initial momentum in terms of market share and national distribution has been a tough
test for GSK so far, say analysts. "It's not difficult to gain initial market share," says ArnabMitra of
IndiaInfoline.
"But to keep growing in competitive categories like the ones they have entered now and to cross 8-
10% market share will be the challenge."

13. Some of GSK's new launches are either showing signs of fatigue or require sustained investments,
says a recent report by ManojMenon, FMCG analyst at brokerage firm Kotak Securities. Two recent
failures make this a tricky line to pursue. HorlicksAsha, launched two years ago for the bottom-of-the-
pyramid (BoP) audience, has failed to make a mark and is being withdrawn. Similarly, Horlicks' foray
into chilled/flavoured milk, a year ago, came a cropper and has been discontinued.
While it is easy to develop products targeted at a BoP audience, the company needs to build a mindset
to serve them, say analysts. "You have to have a focused strategy and not tweak a product to
hammer down the cost and release it in the same distribution pipeline as other products," says a
brand analyst who has worked in senior marketing positions.
HorlicksAsha caused dissonance in the mind of BoP consumers, admits an insider. "They saw it as a
stripped-down version of Horlicks, priced lower and that was not acceptable to them," he says. Ahmed
agrees the company's BoP strategy needs a fresh look.
Chilled milk, on the other hand, posed another big challenge for GSK. The category itself has not
managed to take off in India. Players such as Nestle and Britannia, which experimented with it, have
not had much success either. Amul'sKool too has not made much headway.
"Getting kids to drink milk has always been mission impossible, says Ahmed. "Where mothers'
supervision doesn't work, flavoured milk was actually meant to be had on the go, unsupervised," he
adds.
Top-end products such as Sensodyne toothpaste, Lucozade and health supplements are yet to take off
in a big way and will remain niche.
The company has had its share of disappointments in the late-1990s too, when it launched a family
toothpaste, Aquafresh, and a black currant-based fruit drink called Ribena as its first diversification. In
both cases, the choice of products turned out to be wrong. The family toothpaste segment was highly
competitive, with entrenched players like HUL and Colgate. Ribena was ahead of its time, and a non-
starter.
Fighting to get a toe-hold in the toothpaste segment meant GSK diverting all its resources from
Horlicks. Aquafresh and Ribena were withdrawn in 2001.
In 2000, GlaxoWellcome and SmithKline Beecham merged to form GlaxoSmithKline. In its new avatar,
the Indian arm hurriedly pulled new products off the shelf and decided to focus on Horlicks. Having
burnt its fingers, GSK saw a long period of lull and no innovation. GSK's aversion to risk partly

14. emanated from the fact that for over two decades, it was run by the same conservative leadership.
Nick Massey, who came on board as MD in 1995, did try to bring in some vibrancy, but that was
mainly limited to Horlicks.
Four years ago, Ahmed moved to GSK from P&G Gillette India. He brought with him some fresh, out-
of-the-box ideas -- and the element of risk -- into GSK. Under his watch, revenues have increased at a
compounded annual growth rate (CAGR) of 17.5% and net profit at 24.2%; good enough to fetch any
business leader a plum global posting in reward.
At GSK's headquarters in Gurgaon, a sense of optimism and raw energy fill the air. The sleepy, stodgy
look of the early-2000s has given way to a vibrant facade -TV monitors are blaring everywhere, there
are open announcements of employee achievements, and the company's freshly packaged products
are strewn everywhere.
With a striking performance and value creation, Ahmed has delivered so far. Yet, how he goes down in
GSK's chronicles might well pivot from how his grand superbrand strategy plays out.
Copyright Bennett, Coleman & Company Limited Feb 3, 2011
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