7/31/2019 Horlicks Outsells Pepsi in India

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Horlicks outsells Pepsi in IndiaThe marketing of Horlicks is part of a broader push by Glaxo into consumer products in India

and China at a time when the European debt crisis is placing downward pressure on prices

London: GlaxoSmithKline Plcs best-seller in India isnt a treatment for asthma or cancer. Its a

malted milk drink called Horlicks.

The brand is Indias top packaged beverage behind bottled water and sells more than twice asmuch as PepsiCo Inc.s namesake cola. Glaxo, the UKs biggest drugmaker, is seeking toreplicate that success in other emerging markets as it sheds over-the-counter medicine brandssold mostly in the US.

We are trying to take Horlicks into a mega-brand strategy, Zubair Ahmed, who headsGlaxoSmithKline Consumer Healthcare Ltd in India, said in an interview.

So far, that has meant capitalizing on the brands nutritional image to extend the Horlicks name

to instant Foodles noodles, breakfast cereals and biscuits. In coming years, Glaxo plans tointroduce ready-to-drink versions of the powdered beverage and healthy snacks, Ahmed said.

The marketing of Horlicks is part of a broader push by Glaxo into consumer products in Indiaand China at a time when the European debt crisis is placing downward pressure on prices.

While they have lower margins, consumer products provide steady, low-risk revenue growthwithout patent expirations, said Rajesh Varma, who helps manage 5 billion ($6.5 billion) atDNCA Finance SA in Paris. Consumer health care is a great additional reason to buy Glaxo,said Varma, who is considering purchasing the companys shares. Youve got revenue growththat is stable that wont fall off a cliff.

Horlicks, along with Sensodyne toothpaste and Eno antacid, helped push up Indian sales ofGlaxos non-pharmaceutical products 19% last year, with operating profit growing just as fast,Ahmed said. That compares with 1% sales growth for the division in the US in the nine monthsthrough September and a 1% drop in Europe.

London-based Glaxo plans to expand distributionof its consumer products to 50,0

00 rural Indian villages over four years and spendas much as 40 million ($62 million) to boost

production capacity at its three plants in thecountry, Ahmed said.

The company is also seeking wider distribution ofits Lucozade sports drink in China through a localpartnership.

Glaxos consumer health sales in India totalled

7/31/2019 Horlicks Outsells Pepsi in India

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about 350 million, or 9% of global sales for the division in the nine months through September.Worldwide sales including pharmaceuticals totalled 20.4 bn in the period.

Horlicks, a 138-year-old drink, is made with malted barley and buffalo milk. The drinkspopularity historically stems from milk deficiencies in the eastern and southern regions of the

country due to poor infrastructure, Ahmed said.

While the drink mainly targets children, the company also sells a high- nutrient version for adultsand Mothers Horlicks for pregnant and breast-feeding women. It became part of Glaxosportfolio when the drug giant merged with SmithkKline in 2000.

Glaxo is building on the healthy nutrition heritage of Horlicks in India, said Richard Haffner,global head of beverages research at Euromonitor International in Chicago. Horlicks wasfounded as an infant formula in the US by British brothers before finding use by armed forcesduring World War II and athletes at the 1948 London Olympics.

Horlicks sold almost twice as much in India as Coca-Cola Co.s Thums Up, double Pepsi andbrought in 50% more revenue than Tata Global Beverages Ltds Tata Tea last year, according toEuromonitor, which doesnt track sales of unpackaged loose teas. The countrys best -sellingpackaged drink is Parle Bisleris Bisleri bottled water.