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Vinay Kamath

CHENNAI, Dec 3

VIVA and Maltova, the two beverage brands that Horlicks maker GlaxoSmithKline Consumer Healthcare Ltd (GSK) acquired in early 2000 have been relaunched with a new communication strategy in place.

"We've re-launched both the brands and we expect them to grow," GSK's Chairman, Mr Simon Scarff, told Business Line. GSK expects these brands to come into their own by the next year.

Mr Scarff, recently in the city, admits that the acquisition of the two brands for a sum of Rs 86.25 crore from Jagatjit Industries in 2000, has not been in line with the company's expectations. Both brands have, in fact, together dropped market share around seven per cent of the Rs 1,300-crore health food drinks market at the time of acquisition, to under three per cent. He said that GSK had to sort out some problems with the ingredients. "Much to our surprise, when we analysed the products, what was claimed on the label was not seen in the product, so a certain amount of reformulation had to be done."

However, Mr Scarff said that the delayed relaunch was not disastrous from a business point of view as both brands were part of its portfolio which has blockbuster brands such as Horlicks and its variants and Boost. "Because we own them all, when one is down, we probably pick it up on the other," he said. It would have been more pressure if somebody else had owned the brands instead of GSK, he said.

Both brands, which are strong in regional pockets, will essentially act as flanking brands and are not expected to cannibalise GSK's two chief brands. For instance, as Mr Scarff pointed out, Maltova was a more chocolatey drink than Boost and is positioned against Nestle's Milo and Cadbury's Bournvita.

Elaborating on the poor sales the fast moving consumer goods industry has been facing, Mr Scarff said, "The whole FMCG arena has been impacted. The market may have gone down but our share's gone up; we're doing better in the beverage sector than others. And, as market leader, our responsibility is to get in and try and get some growth back." GSK's Horlicks and other brands like Boost, Viva and Maltova, together have a 75 per cent share of the health food drinks market. Horlicks alone, as a white beverage, has an over 50 per cent market share in the southern states.

The Rs 967-crore GSK has seen sales plunge by 9.4 per cent in the first nine months of this calendar year. Mr Scarff says it has been a bad year in terms of sales, and one of other reasons for the dip in sales was that the entire market got fairly overheated and there was a lot of stock floating around which was stretching the company's stockists. "We've tried to pull up that, so they're not carrying so much stock, so the credit is now more under control," he said.

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