SHREE CHANAKYA EDUCATION SOCIETYS

INDIRA INSTITUTE OF MANAGEMENT.

PUNE 411 033 (MS)

CERTIFICATE
This is to certify that, the Desk Research Report entitledFast Moving Consumer Goods (Health Drinks)
Submitted by
Mangesh Yeolekar

Prashant Sinha

Aishwaraya Pandey

Mona Kawale
Shyam Khare

for partial fulfillment the course 215 (industry analysis desk research) as prescribed by university of pune
requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION is a record of
their own work carried out by them under my supervision and guidance during academic year 2015 2016.
Place: PUNE
Date:

Prof. GIRISH KULKARNI

[DESK RESEARCH GUIDE]

Dr. DILIP NANDKEOLYAR

[HEAD OF DEPARTMENT]

ACKNOWLEDGEMENT
We take great pleasure in expressing our profound gratitude to our Desk Research Guide
Prof. Mr. Girish Kulkarni, who have taken keen interest and tremendous enthusiasm in
providing excellent guidance towards the completion of our Desk Research Project.
We would like to thank Dr. Dilip Nandkeolyar, (HOD - MBA) for giving us an
opportunity to work on this Desk Research Project.
And a whole hearted Thanks to Dr. Pandit Mali, Director, IIM Pune and Dr. S.P.Singh,
Asst. Director, IIM Pune for permitting us to undertake this project work and guiding throughout
the project span.
Our deepest gratitude to our parents, friends, classmates and those whom we might have
unknowingly forgot to mention.
Place: IIM Pune.
Date:
Prashant Sinha (A-59)
Mangesh Yeolekar (A-62)
Aishwaraya Pandey (A-64)
Mona Kawale (B-00)
Shyam Khare(B-00)

AN INDUSTRY RESEARCH REPORT

ON

FAST MOVING CONSUMER GOODS

(HEALTH DRINKS)

(IN PARTIAL FULFILMENT OF

COURSE 215 (INDUSTRY ANALYSIS DESK RESEARCH)
AS PRESCRIBED BY UNIVERSITY OF PUNE)

UNDER GUIDANCE OF

PROF. GIRISH KULKARNI

Prepared By:
PRASHANT SINHA (A-59)
MANGESH YEOLEKAR (A-62)
AISHWARAYA PANDEY (A-64)
MONA KAWALE (B-00)

SHYAM KHARE (B-00)

DECLARATION

We the undersigned, are the students of Indira Institute of Management, Pune (IIMP)
pursuing the first year of the course of Master of Business Administration under
University of Pune; hereby declare that the project report submitted is correct and
original as per my knowledge and is not reproduced or copied from any source. I
hereby also declare that this project work is not submitted to any other
college/university.

PRASHANT SINHA (A-59)

MANGESH YEOLEKAR (A-62)
AISHWARAYA PANDEY (A-64)
MONA KAWALE (B-00)

SHYAM KHARE (B-00)

INDEX

Sr.
No.
1.

Topics
Industry Analysis
1.1
1.2
1.3
1.4

2.

3.

4.

Nature Of Industry
Players in the industry
Positioning & Differentiation Strategy
Geographical spread of plants/facilities/ capacities

1
2
3
5
6

Promoters And Management Ethos

09

2.1 Background
2.2 Management Ethos And Philosophy
2.3 Profile of CEO & CMD
2.4 CSR policy
2.5 Corporate Governance Initiatives
2.6 Initiatives towards social inclusion.

10
10
13
14
17
18

External Environment

19

3.1 Controlling ministry

3.2 MRTP Commission
3.3 Competition Commission of India

20
23
24

Financials

26

4.1 Horlicks profitability

4.2 Bournvita Profitability
5.

Page No.

27
28

Recent Developments

30

5.1 Impact of latest fiscal policies

5.2 Corporate wars

31
34

UNIT 1

INDUSTRY ANALYSIS
BASIS

Industry Analysis
1.1 Nature of industry
Fast-moving consumer goods (FMCG) or consumer packaged goods (CPG) are products that are
sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks,
toiletries, over-the-counter drugs, processed foods and many other consumables. The consumer
durables market is expected to reach US$ 12.5 billion in 2015 and US$ 20.6 billion by 2020.
Urban markets account for the major share (65 per cent) of total revenues in the consumer
durables sector in India. There is a lot of scope for growth from rural markets with consumption
expected to grow in these areas as penetration of brands increases. Also demand for durables like
refrigerators as well as consumer electronic goods are likely to witness growing demand in the
coming years in the rural markets as the government plans to invest significantly in rural
electrification.
The FMCG sector has grown at an annual average of about 11 per cent over the last decade. The
overall FMCG market is expected to increase at (CAGR) of 14.7 per cent to touch US$ 110.4
billion during 2012-2020, with the rural FMCG market anticipated to increase at a CAGR of
17.7 per cent to reach US$ 100 billion during 2012-2025.Food products is the leading segment,
accounting for 43 per cent of the overall market. Personal care (22 per cent) and fabric care (12
per cent) come next in terms of market share.
Growing awareness, easier access, and changing lifestyles have been the key growth drivers for
the consumer market. The Government of India's policies and regulatory frameworks such as
relaxation of license rules and approval of 51 per cent foreign direct investment (FDI) in multibrand and 100 per cent in single-brand retail are some of the major growth drivers for the
consumer market.

Health drinks
Universally, in bringing up their children, mothers attach a lot of emotional importance to
nourishment. There is an ever-growing need for nourishment and energy in todays fast-paced
world. Who can resist a steaming, hot drink which promises to energize, nourish and refresh?
The need for nutritional supplementation is all the more relevant for kids. Coupled with the fact
that kids love the delicious taste of these drinks, once they have tried them, lies the basic tale of
milk additives and the growth and development of the Health Food Drink (HFD) category. No
one can be sure of when and how the category evolved but, today, in India the HFD market is
valued at approximately Rs. 13, 000 million and nearly 50,000 tones.
Health food drinks provide nourishment for the family, particularly growing children and serve
as energy providers for adults. The market for malted milk powders in India is huge as the
product is widely used as a nutrition and energy supplement by children and adults. The size of
the market is estimated at Rs. 10,170 million.

1.2 Players in the industry

Horlicks
Product
Put a couple of tablespoons full into a mug. Add warm water or milk and youre ready to enjoy a
drink thats tasty and nourishing. Add ice cubes, cold milk or water to reconstituted Horlicks and
it turns into a delicious, thirst quenching drink on a hot afternoon. That is why Horlicks is
considered to be the great nourisher for the entire family. The medical credentials and heritage
of the brand have reinforced the image of the brand for years.
Junior Horlicks, a specialist brand for little children. Mothers Horlicks, a special nourisher for
pregnant and breast feeding mothers, and Horlicks Biscuits are the other forms in which the
brand is available. A selection of flavor including chocolate, vanilla and honey allow
consumers to enjoy the nourishing goodness of Horlicks in a variety of delicious ways.
Brand values
Horlicks has always been a brand that stands for good
health and nourishment through a wholesome, natural
product. A commitment towards product quality and
reinforcement of essential nutrients has won over the
trust of generations of mothers. The brand gives them
the reassurance that they seek in caring for their family.
Family bonding is at the heart of Horlicks brand
values. This, in turn reinforces Horlicks image as a
caring and trusted brand.
Facts
Horlicks was first invented to substitute milk as baby food. In India, 2 billion cups of Horlicks
are drunk every year. People on special diet, including liquid diet or any diet devised for gastric
disorders, can benefit from the nutritional convenience of Horlicks.

Bournvita
Product
Bournvita has a unique taste which combines the goodness of malt and chocolate. It
gives the child physical and mental alertness resulting in a healthy body and an
active mind. In turn this gives the child the confidence to succeed in life.
In 2001 Bournvita, complete with new packaging and design was re-launched. It had
many firsts. Bournvita introduced a pet jar (shifting from the old glass bottle). It

introduced shrink-sleeved packaging (from the old jar labels). There was a complete re-design of
the logo. A loyalty programme, in the form of a Bournvita Nutrition Centre, dedicated to
counselling mothers on her child's daily nutritional needs was opened. It was Bournvita's way of
showing it cared.
Brand Values
The core values of the brand have been mental alertness and physical fitness for children who
consume Bournvita daily. This layered with the great Cadbury chocolate taste has made the
brand distinct from other offerings in the consumers mind.
Facts
Cadbury Bournvita won an ABBY for its press campaign - 'No Bournvita. No
Milk'.Bournvita was the official health drink for the Indian team for the 1980
Moscow Olympics. The Bournvita Quiz Contest is India's longest running
national school quiz.

Complan
Product
Enriched with 23 vital nutrients in balanced proportion Complan is an ideal
nutritional supplement for children in its target segment of four to fourteen years. It
is Heinzs constant endeavour to upgrade Complans formulation as per the latest d
evelopments in nutritional sciences and the changing requirements of growing
children.
Complan the Complete Planned Food in a Drink is formulated as per the World
Health Organisation (WHO) guidelines suggested for growing children.
Milk protein, which has superior digestibility properties, contains all essential
amino acids balanced to perfection and hence is the ideal engine for growth. It is
also a superior source of energy and meets the WHO guidelines of energy
requirement from proteins. It provides more energy (429kcal/100 gms) than any
other major brand in this category. 20% of Complan is protein and 100% of it is derived form
natural milk. No other brand can match this claim.
To extend the goodness of Complan and make it available to children any time, the brand was
also conceived in a biscuit form. Complan Crunch Timers biscuits have nourishment sandwiched
in their cream centres and are a delightful anywhere bite.
Brand Values
Complan, with a history going back half a century, is the Gold Standard in childrens nutrition
and one of Indias heritage brands. The brand takes its job of delivering nutrition to growing
children seriously and has built enormous credibility over the years. Heinz is committed to

ensuring that Complan continues to meet the stringent demands its consumers make on it. This
perhaps, explains why Complan continues to be the Gold Standard. It is one of the few brands in
the MFD category in India to have uniformly spread across the country indicating its
acceptability across regions and socio-economic strata.
Facts
Complan was formulated in Britain, as an ideal nutritional supplement for soldiers wounded on
the frontlines in World War II. The brand name Complan is derived from the product statement
Complete Planned Food. The current Bollywood heartthrob Aftab Shivdasani was a Complan
Boy.

1.3 Positioning & Differentiation strategies of key players

Segmentation, Targeting and Positioning of Horlicks
The market of Horlicks is segmented as follows
Geographic segmentation- In the northern part of the country, it has a huge demand as a white
drink whereas chocolate horlicks is very popular in the southern part of the country.
Demographic segmentation- Here the market is segmented on the basis of the age groups.
Junior horlicks- for preschool children
Horlicks regular- for general use
Women's horlicks-for pregnant and breast feeding women
Horlicks Lite- for health conscious adults and for diabetic people
Chocolate and other flavored horlicks- for teenagers
Once the firm has segmented the total market, it should select the target market segment or
segments for marketing. This is called targeting.
Horlicks currently focuses on one segment of market that is children between the age group of 814. This is so because children have a huge influence on the products purchased for the family.
The focus of Junior Horlicks continue to be the kids between one and three while all the action
will be in general Horlicks.
Positioning of a product or service is creating an image in the consumer's mind. Horlicks was
initially introduced as both an additive and substitute to milk and positioned itself as a nutritional
supplement for the kids. In 2003, it positioned itself as a "pleasurable nourishment" by launching
its vanilla, honey and chocolate variants. It adopted a new positioning strategy via product
packaging which now carries a logo ,'taller, stronger, sharper." Junior horlicks brand has

positioned a product exclusively for children of the age group 1-3. Today, the brand talks to each
member of the family. Its objective is to cater to the needs of all the age groups.

Segmentation, Targeting and Positioning of Bournvita

Demographic
Cadbury has segmented the marketplace for their flagship product "Bournvita" demographically.
Bournvita has segmented its product on basis of period cluster that is 5-16. It is targeting one of
the biggest customer clusters in India. Children give too far significance to condition and
Cadbury has addressed both the things extremely well. Bournvita Li'l Champs formulated
alongside scientifically proven ingredients like DHA & whey protein, came to be an flawless
condition drink for children amid the formative years of 2 to 5 yrs.
Behavioural
Benefits that the product offers are as follows :

Proteins- 7 grams,
Fats- 2 grams,
Carbohydrates- 84 grams of which sugar is 70.3 grams.

Thus the major portion of the Bournvita i.e carbohydrates provides energy.
Positioning
Positioning is the procedure by that the marketers endeavor to craft an picture or recognize in the
minds of the target marketplaces for its produce, brand or organization. Bournvita has always
positioned itself as a children drink and has been advancing itself that way. In 1970, brand
positioned as a product that helps in good upbringing and utilized the tagline "goodness that
grows alongside you." Across 80's concentrated modified from upbringing to intelligence. In
1990's the firm contacted it ought to focus on finished condition of the youngster and therefore
modified its focus to body and mind. The brand utilized an acronym RDA, to underpin the
condition positioning. The brand utilized a ingenious Nutritional meter to converse the RDA
formula: 2 cups of Bournvita for balanced nutrition.
Targeting
Most of the Cadbury's promotional activities are based on the children who influence their
parents to buy Bournvita. Bournvita offers unique combination on health and taste. Thus it
targeted mother's concern about their child's health and taste preferences. It also attracted
children with freebies and gifts time to time

Segmentation, Targeting and Positioning of Complan

Marketing strategy
Milk has a unique position in the consumer s psyche.
It positioned itself directly against milk. The Ad said, YOUR BODY NEEDS 23VITAL FOOD
,Milk Gives 9 COMPLAN gives all 23 nutrition.
The strategy went through a radical change. It was now decide to position it not by the
competitor but by the target users and usages occasion.
COMPLAN is compete with the 23 vital food for the body .it re- positioned itself as drink
fulfilling the nourishment needs of people who cannot do not eat enough.
Target audience
Complan mainly target growing children because children need adequate and balanced nitration
to help them achieve their maximum growth potential.
Complan is also ideal for the adults (especially house wives and rushed office goers), Expectant
and nursing mother, elderly people and athletes.
Positioning
Positioned as a product to Displace milk from the Dining table
Positioned as the great nourished
Focused on children who lacks nourishment

1.4 Geographical spread of plants/facilities/ capacities

Horlicks Geographical location
The Company, with its manufacturing plants located in Nabha, Rajahmundry and Sonepat, has a
total workforce of over 2700 people.
The factory at Nabha was set up in the year 1960 to produce Horlicks for the first time in India.
The Rajahmundry factory was set up in the year 1975 to meet the increasing demand of Horlicks.
The factory at Village Khewra, Sonepat District, on 140 acres of land, incorporates the highest
and most stringent global manufacturing practices in the industry. Set up at a cost of Rs 252
crores, the beauty of the factory is in its automated design that allows the final product to be
produced hygienically and completely untouched by human hands. Fully operational, the plant
will have the capacity to produce 26100 tons of Horlicks per annum. The sprawling facility is
environmentally friendly and is equipped with a technologically advanced effluent treatment
plant and an incinerator for solid wastes. Treated effluents from the plant will be devoid of any

harmful chemicals and will consist of treated water that will be utilized to develop a green belt
that is an integral part of the project.

Bournvita Geographical location

Kolhapur (Maharashtra)
Rewari Haryana
Baddi HP

Complan Geographical locations

Aligarh
Paonta Sahib HP
Uttarakhand

UNIT 2

PROMOTORS
&
MANAGEMENT ETHOS

Promoters & Management Ethos

2.1 Background Promoters
Horlicks
Health consciousness, capex to drive growth GSK Consumer Healthcare (GCHL) is one of the
largest malt beverage companies in India with strong brands like Horlicks, Boost, Maltova &
Viva. Over the years, it has been a leader in the malt beverage market with a combined volume
market share of 66%. The company is also involved in selling & distributing some OTC products
like Crocin, Eno, Sensodyne, Iodex & Breathe Right of GlaxoSmithKline Asia Pvt Ltd and
GlaxoSmithKline Pharmaceuticals and generates auxiliary income. The brand equity of Horlicks
& Boost, rapid pace of growth of OTC products & introduction of newer OTC products has led
to revenue and PAT CAGR of 17.5% & 20.2%, respectively, in CY09-FY15. We believe the
malt beverage industry in India is poised to witness swift growth led by higher disposable
income, increase in rural penetration & premiumisation. We expect the company will witness a
revenue & PAT CAGR of 15.3% & 17.7%, respectively, in FY15-17E. We initiate coverage on
the company with a BUY recommendation. Undisputed market leadership GCHL has been a
market leader in the HFD business with a market share of 58% by value (66% by volume) in a ~|
6000 crore industry. The malt based beverage market is estimated to have grown 2.7x from ~|
2200 crore in 2009 to ~| 6000 crore in 2014 and is expected to reach | 7800 crore by 2016.
GCHL, being the established player in this segment, has benefitted as a result of this growth in
the HFD industry. Auxiliary income augurs well GCHL also earns auxiliary income apart from
the sale of products manufactured by it (Horlicks, Boost, Maltova, Viva). The company earns
business auxiliary service commission from certain group companies for services rendered
towards selling and distribution of the latters products.

2.2 Management ethos and philosophy

Horlicks
Horlicks Wizkid event has a popular patron feature called Wiz Team where participants are
tested on their versatility based on their academic achievements, their personality, and social
awareness on anything and everything. The participating team as well as the audience gets the
thrill of being on the edge of good and excellence. There were 10 finalists who proved to be
inspiring role models by the virtue of their stage performance. There was a mathematician
studying in STD X who had the talent of calculating the cube and square roots of 6 digit number
faster than the calculator who gave an enthralling performance of playing the tabla! A moment
of pride for us when Priyanka Dapodikar impressed the compeer so much with her sand painting
that she was the only student who was awarded spontaneously Awesome Attitude. It was

truly an awesome moment for all those at Gurukul, who made hectic arrangements for sand
painting technical setup. Many were such motivating moments sprinkled through day as various
events were held simultaneously under three categories Main Stage, Creative Zone and Fun
Zone.
Complan
As a child Seema Modi loved her daily dose of hot chocolate milk made with Heinz India's
iconic powdered milk energy drink, Complan. Today, as Complan celebrates its golden jubilee
year Modi looks on fondly as the firms's first woman managing director. "It's not just the
memories I have of Complan but also the brand's own rich and unique heritage that makes this
year special for me. The drink has come a long way, adapting to changing needs in the market,"
says Modi. Completing her 16th year with Heinz, a firm she first joined as marketing manager in
1997, Modi too has come a long way.
"In 2008, I got my first big break with the firm and was posted in Indonesia as marketing director
for Heinz ASEAN which includes the markets in Singapore, Malaysia, Vietnam, Philippines and
Indonesia. Working across a variety of different cultures was a valuable lesson in both leadership
and marketing," adds Modi. A vegetarian herself, Modi's first challenge was to overcome her
personal limitations to make the brand a success in a largely non-vegetarian market. "I realised
that as marketing director in a new country I had to be more fundamentally driven, asking the
team the right questions and guiding them with the basics. I felt it was important to give them the
freedom to execute and initiate various projects without interfering too much. One must be open
to learning and new experiences no matter what level you reach in your career. Being a control
freak will only stifle your team," reflects Modi, who was named as Heinz.
India's managing director last year. But this wasn't the first time that Modi has had her skills put
to the test with Heinz. She was also part of the team who had to see the brand through India's
economic slowdown in 1999. "People were not spending as freely during this period of course.
The challenge was to strengthen the brand and increase its appeal to not just children and the
elderly but also adults who were getting conscious about health and nutrition," explains Modi.
Being a 'Complan Girl' herself, Modi adds that the drink's continued success for the last 50 years
has been a testament to good marketing, leadership and product quality.
'Complete Plan' or Complan currently contributes to nearly 50 per cent of Heniz India's Rs 1,400
crore revenues and has become a household name since its humble inception as a health drink for
World War II soldiers. The brand currently holds 13 per cent market share in the Rs 5,000 crore
malt and milk based drinks market and has grown to include a number of unique desi flavours
such as Badam Milk, Pista Badam and Badam Kheer. Maplan-P, has also been introduced in the
market as a Complan variant especially for pregnant women. Heinz India also sells chocolate
milk biscuits made from Complan, a favourite with children and adults alike. meal substitute and

we ran ads where toothless grandmoms would drink it for nutrition. We then moved to strength
and stamina for sport enthusiasts.
Anita Sood, the national swimming champion was part of our campaign on Complan for
developing strong muscles. It wasn't long afterwards that we targeted growing children and the
phrase 'Complan girl and boy' became popular," says Modi. Now Complan is ready to target
adults with actors Amitabh Bachchan and Suriya and chess champion Vishwanathan Anand
ready to endorse its health benefits. "Around 40 per cent of our consumers in the last 18 months
have been adults. As our daily lives become hectic, more and more adults are seeking food and
drink that are quick to make but cater to all our body's nutrition needs and give us our dose of
strength daily.
This is where Complan steps in," adds Modi. But it's not just Complan that is seeing a makeover
in India. Heinz India's Glucon D, a leader in the Rs 800 crore powdered energy drinks segment,
has also recently introduced Aam Panna and Nimbu Pani flavours to appeal to the ethnic Indian
tastebuds. "Glucon D contains 99.4 per cent glucose which is easily absorbed by the body, giving
one an almost instant dose of energy. Few people know that the brand has been around since
1933. It was earlier available only in the original orange flavour," explains Modi.
Aside from Complan and Glucon D, Modi also swears by Heinz tomato ketchup. "Honestly,
once you've had Heinz ketchup you will be converted forever. It has just the right balance of
sweet and tangy flavours. As much as I love the ketchup, my favourite Heinz India products still
remain Complan, Glucon D and Nycil powder. Perhaps because I grew up on these three,"
reflects Modi.
All three products were a part of Glaxo in India before being acquired in 1994 by Heinz India, a
division of the Rs. 74,000 crore H. J Heinz Company headquarted in the US. Nearly a quarter of
the parent company's revenue comes from its markets in China, India, Brazil, Indonesia and
Russia. "Developing countries are markets with a lot of potential and one where Heinz is rapidly
growing its shares. In India we have gained shares in all our brands in the last seven to eight
months," adds Modi. As MD of Heinz India, her future goal is clear - to increase revenues in the
next four to five years. "The products speak for themselves. While retaining our original appeal,
we are looking to capture more consumers on a national and regional level," she says. With
Modi's dedication to the brand, marketing experience and foresight, one can look forward to
more Complan men and women soon joining the bandwagon.
Key Lessons: Life As A Woman MD
Accept that you are in India and there will be biases. But instead of being the victim and
whining, overcome your limitations by focusing on your strengths.

Power of ambition needs to be high. Lots of professionals often get disheartened and lose interest
in their work in the long run. It's important to love what you do and never give up on your
dreams.
The ethos of the firm you work for is important. Heinz has never looked or judged female and
male employees separately. We are all considered as equal professionals.
There is no substitute for hard work. I lived three and a half years without my family in
Indonesia. But I travelled back every month to visit. It was difficult to manage both but my
efforts paid off in the end. I also gained the respect and support of both my family and company.

2.3 Profile of CEO & CMD

Bournvita
Cadbury's presence in India dates back to 1948, when the parent Cadbury Schweppes set up a
wholly owned subsidiary Cadbury Fry (India) Ltd. In 1978, CSOL diluted its equity stake to
40% to comply with FERA guidelines. The name was changed to Hindustan Cocoa Products in
1982. Schweppes again raised its stake in the Indian subsidiary to 51% in 1992 through a rights
issue. In its 5 decades of operations in the country, Cadbury has remained the market leader in
chocolates with a 70% market share. The company's strong brand equity in the chocolate market
is reflected by the fact that the Cadbury name is used synonymously with the category itself.
Mr Rajeev Bakshi, Managing Director, Cadbury India Ltd is an Economics Graduate from the
Delhi University and a MBA from IIM - Bangalore. He was Vice President (Sales & Marketing)
in Cadbury from 1992-1996 and the Regional Marketing Director of Cadbury Schweppes Plc,
London for a year. He was designated Managing Director of Cadbury India wef January 1998.
Mr Bakshi talks about the chocolate industry in India and Cadburys plans in an interview with
Indiainfoline.
Complan
Jayant Singh, Marketing Director- GlaxoSmithKline Consumer Healthcare
Explaining the partnership with CINI further, Jayant Singh- Marketing Director, GSKCH said,
In order to make this effort a successful one, we are delighted to partner with the Child in Need
Institute in West Bengal. We believe they are the right partners for us as they bring in close to
four decades of grass-root experience in the field of working with mothers and children. CINI is
a national level organization reaching approximately 50 lakh people across the country and we
believe that they will be able to implement the programme in the best possible manner.
The company has taken the onus of improving the nutritional status of about 9,500 children and
reach out to more than 15,000 families with the campaign. Talking about the pilot in West
Bengal, Singh added, Our consumers in West Bengal are our biggest strength and we share a

strong bond of trust with them for more than 100 years. Horlicks as a brand is synonymous with
nutrition and our consumers have always believed in the same and supported us in all our efforts.
Ahaar Abhiyan goes beyond just fulfilling the nutritional needs of our consumers and aims to
reach those who do not have access. We are confident that our consumers will partner with us
whole heartedly in this effort and make this collaboration a truly successful one.
The TVC, featuring Balan as the brand ambassador, will go on air from May 16, 2012.

2.4 CSR Policy

Horlicks
GlaxoSmithKline Consumer Healthcare (GSKCH) added a touch of glamour to its latest CSR
initiative. It recently roped in Bollywood actress Vidya Balan as the brand ambassador for
Horlicks CSR campaign called Ahaar Abhiyaan, which will address the problem of
malnutrition among children. An avoid consumer of Horlicks since her childhood, the actress is
keen to support the cause. Her presence and popularity is claimed to help create mass awareness
about the campaign. Hence, CSR or corporate social responsibility (CSR) is being heavily used
by established brands as a strategic tool for brand building exercise in the most respectable way.
It is believed that CSR works as a catalyst for responsible consumption among consumers. Most
of the big business houses and brands in the Indian market follow a CSR strategy to drive growth
with the consent of the stakeholders.
Marketing experts feel that it not only generates goodwill among a companys stakeholders
(consumers, business partners and community at large) but also helps generate strong brand
recognition and awareness.
Helping the economically weaker sections of society through CSR efforts always creates a
positive view of the companys contribution to the society at large. On its part, GSKCH aims to
address the issue of malnutrition among young children through an integrated programme that
will be implemented in a phased manner beginning with a pilot project, in partnership with the
Child In Need Institute (CINI), in the state of West Bengal.
As part of this project, Horlicks aims to partner with its consumers to raise funds for the
integrated child development programme developed by CINI. During the campaign period, with
the sale of every large pack of Horlicks in West Bengal, the company will contribute Re 1
towards the initiative, which will be deployed by CINI in the state. A similar initiative is
followed by FMCG major P&G for the empowerment of women and education of girl child.
Thus, GSKCHs initiative will not just help create responsible stakeholders but also increase
brand building efforts for Horlicks. Its partnership with CINI will help the brand communicate
with the end consumer more noticeably.
Bournvita

Corporate Social Responsibilities: An obligation, beyond that required by the law and
economics, for a firm to pursue long term goals that are good for society . The continuing
commitment by business to behave ethically and contribute to economic development while
improving the quality of life of the workforce and their families as well as that of the local
community and society at large. About how a company manages its business process to produce
an overall positive impact on society.
About the company Cadbury is a global confectionery and beverage manufacturer having its
presence in more than 200 countries worldwide. The company started its operations in India in
1948 and is the leading manufacturer with 70% volume share of the chocolate market. In India,
Cadbury began its operation in 1948 by importing chocolates. The company is also a key player
in malted food drinks and sugar confectionery. The company after becoming a founder member
of BCF embarked upon social and community development initiatives and attaches a lot of
importance to social development initiatives. Core purpose creating brands people love
Cadbury Product the market major of Chocolates offers the following products in the market
:Chocolates like Cadbury dairy milk, perk, celebrations, temptations, five star, clairs, gems,
fruit & nut, Cadbury crackle and many more Snacks like Cadbury bytes Beverages like
Bournvita, Cadbury delight Candy like Cadbury halls Gums like Bubbaloo.
What Cadbury believes: Corporate Social Responsibility (CSR) is at the heart of our success. At
Cadbury India we have always believed that good values and good business go hand in hand. It's
part of our heritage and the way we do things today. CSR is about growing our business
responsibly.
Migratory birds stop over at Bangalore factory Water is a precious resources. As part of
Cadbury Indias effort to continuously increase water conservation Cadbury. Bangalore factory
has constructed a check dam to store the rainwater. This dam not only acts as a major ground
water replenishing source for the bore wells in the factories and surrounding community, but is
also a stopover location for some of the migratory birds.
Pioneering cocoa cultivation in India, Since 1974 Cadbury has pioneered the development of
cocoa cultivation in India. For over two have worked with the Kerala agriculture university to
undertake cocoa research and released Hybirds that improve the cocoa yield. Cadbury efforts
have increased cocoa productivity and touched the lives of thousands of farmers.
Bangalore factory: the sun shines at night Sun shine now lights the pathways on streets out side
Cadbury Bangalore factory at night rising energy costs. And 300 sunny days a year, inspired the
factory to install 28 solar powered streetlights. It will reduce annual carbon dioxide (a major
greenhouse gas) emission by ten tonnes, playing a part in the effort to reduce global warming. In
appreciation of Cadbury commitment to implement environment friendly initiatives, the
Karnataka State Pollution Control Board has honoured the Bangalore factory with the Parisara
Premi (Preserve of the Environment) Awarded for the second year in a row.

Non-formal school set up by Cadbury for children of migrant workers in Baddi .The efforts of
the Baddi factory team over 50 children of migrant workers living in and around Cadbury Baddi
factory will now have daily access to non-formal education. Cadbury has set up a non-form
school as part of Cadbury commitment to create prosperous, inclusive and healthy communities.
This is the first phase of project SAHYOG an 18 month project which commenced in January
this year in partnership with an NGO RUCHI. The project reaches out to over 400 poor &
marginalized families in sandholi village near Cadbury Baddi factory and apart from education.
Gurikha Project in 1999, we community initiative programme under the banner: Nutrition,
Malanpur factory (MP) As a result, we focused on healthcare and education in the nearby village
of gurikha. A nursery school was started and key improvements were made in the primary
school.
The consolation and a bit of lateral thinking led to some real social improvements: fresh
drinking water from a new village pump, a doctor s clinic, vet services for milk producing
animals and fruit trees for each household to plant during the monsoons. They also helped
increased attendance in school. In 2005, the education programme supported the in
empowerment Special focus was given to the rights and contribution of girls and to the
counteraction of female in fanticle through a variety of initiatives.
DearCadbury.com: DearCadbury.com Cadbury launched a corporate social responsibility Web
site called DearCadbury.com, which provides consumers information on ethical sourcing,
responsible consumption and the environment. The site features Cadburys 2007/08 Corporate
Responsibility and Sustainability report, which revealed that the company has reduced carbon
emissions almost 4 % to date; Cadbury aimed for a 10 % reduction by 2010. As part of
Cadburys Purple Goes Green program, the company committed to a 50 % absolute reduction
in carbon emissions by 2020. Cadbury also reported that it has met its 2007 goal of reducing
water use by 10 %
Complan
When children are developing, it is important to make sure they are receiving the essential
vitamins and nutrients to reach their fullest potential. In India, Complans long line of products
for kids of all ages helps your children grow mentally and physically, with flavors theyre sure to
love.
Marketing experts feel that it not only generates goodwill among a companys stakeholders
(consumers, business partners and community at large) but also helps generate strong brand
recognition and awareness.
Helping the economically weaker sections of society through CSR efforts always creates a
positive view of the companys contribution to the society at large.

Hence, CSR or corporate social responsibility (CSR) is being heavily used by established brands
as a strategic tool for brand building exercise in the most respectable way. It is believed that CSR
works as a catalyst for responsible consumption among consumers. Most of the big business
houses and brands in the Indian market follow a CSR strategy to drive growth with the consent
of the stakeholders.

2.5 Corporate Governance Initiatives

The mother and son are hard to miss on the small screen. You can see them running through the
woods or quietly speaking to each other in an empty stadium, the mother goading the son to
carry on despite repeated falls. Over the last two years, Bournvita, the chocolate health food
drink (HFD) from Mondelez International, the demerged snack powerhouse of Kraft Foods, has
used the lasting theme of mother and child to convey its role as a complement during one's
growing-up years. The theme (with a tagline Tayyari Jeet Ki or preparing to win) does not go
over-board with highlighting the nutritional aspects of the brand. Mondelez has, of course,
supported it with a series of ads for its kids variant, called BournvitaLi'l Champs, on the presence
of vitamin D (one of the campaigns last year was 'Doodh ka calcium waste nahin hota hai'
talking about the product benefits). Bournvita Li'l Champs targets young mothers with kids aged
two-five years. The recent spate of brand-building has led to Bournvita, which stepped into India
in 1948, moving past Heinz's Complan. It has emerged as the number two player in the Rs 3,000crore health food drinks market after GSK's Horlicks, according to Nielsen data sourced from the
industry. For the quarter ended March, Bournvita has a value share of 16.2 per cent to Complan's
13.9 per cent value. GSK's Horlicks, of course, has over 50 per cent share of the HFD market
and remains the leader by a huge margin. Horlicks was one of the first health food drinks to enter
India (launched in the 1930s) and remains firmly entrenched in the minds of Indian consumers. It
grew rapidly during the milk shortage of the 1960s, and has been able to re-invent itself despite
the subsequent Operation Flood (in the 80s), when consumers started veering away from just
milk additives to traits like taste. It has not only launched different flavours such as chocolate,
vanilla and elaichi, apart from the regular malt, but has even come up with special formulations
for different audiences: Young children (Junior Horlicks), pregnant and lactating mothers
(Mother's Horlicks) and for older adults (Horlicks Lite). In recent years, Horlicks has also been
extended to other product lines such as noodles, oats and biscuits as GSK has attempted to tap
the growing packaged foods segment in India. Given its equity, challenging Horlicks, say
analysts, has not been an easy task for Bournvita so far. It, therefore, makes sense, experts add,
for Bournvita to target Complan in its quest to move up the pecking order in the HFD space.
Complan, like Horlicks, had been an early entrant and a consistent number-two in HFDs. Mohan
V, whole-time director, (business development & corporate affairs), Heinz India, Says,"Complan
has been growing steadily, recording a four-year compounded annual growth of 21 per cent and a

share gain of 100 basis points. Due to its proven nutritional superiority, the brand has always
commanded a premium of 40 per cent over major competing brands.
The growth has to be seen in this context. Complan has successfully innovated and introduced
new variants - in a category characterized by very few innovations. Complan Kesar Badam,
Complan Pista Badam, Complan with Memory Chargers and Complan NutriGro have all created
a niche for themselves - both in terms of contemporary taste and traditional nutritional value."
But market experts point out that the tussle for the number-two slot in HFD had become.

2.6 Initiatives towards social inclusion.

Horlicks
Our goal was twofold: to build a strong infrastructure; and to serve the rural community by
enhancing awareness on health and nutrition in these markets, thereby building a more
sustainable business. We planned to reach 20,000 villages by 2014 aspired to go far beyond our
existing direct distribution network covering those villages where we had no control over the
products purchased by retailers and the communication that our customers received around those
products.
In the short span of three years we have built a huge distribution network and today we cover
over 16,000 villages directly. In these villages we have managed to supply relevant products
across our entire range of wellness, oral health, nutrition and foods are available to rural
consumers.
The rural business model in India has been highly successful and in the first half of 2014, grew
three times faster than the rest of the India Consumer business. We expect to exceed our goal for
2014 by covering nearly 15% of Indias total rural population by the end of the year. The
initiative is designed to be replicated in other emerging markets, and is already being rolled out
in Bangladesh. The principles of this model can easily be applied to various other markets across
the world including Asia, Africa and Latin America.

UNIT 03

EXTERNAL ENVIRONMENT

External Enviornment
3.1 Controlling ministry
Malted milk and other milk drinks Manufacture and serving regulations.
No person shall operate or maintain an establishment serving malted milk, malted skim milk or
other milk drink without complying with the following regulations:
A. Malted milk shall be a mixture of Grade A raw or pasteurized milk, containing not less
than three and three-tenths percent of milk fat, with malted milk and flavoring
substances, and either ice cream containing not less than 10 percent of milk fat or ice
milk containing not less than four percent of milk fat. All ice cream or ice milk shall
conform to the provisions of the Agricultural Code of the state of California. It is
unlawful to prepare, serve, sell or distribute in an establishment any malted milk unless
made of Grade A raw or pasteurized whole milk, which milk either has been poured from
the original standard container from which the cap has been removed in the presence of
the customer or patron, the contents of said container containing no more than the
individual requirements of the customer at the time of service, or poured from a standard
milk bottle, the maximum content of which does not exceed one quart and which has
attached a metal top designed to cover the pouring lip, which top must be approved by
the health officer and sterilized as soon as said bottle is empty; provided, however, this
subsection shall not prohibit the use of a milk-dispensing device in accordance with
CVMC 8.16.330.
B. Milk shakes and other milk drinks served or prepared with the addition of flavoring
substances or other ingredients added thereto shall be prepared from whole milk or skim
milk which has met the required standards of Grade A pasteurized milk.
C. Malted skim milk is a mixture of skim milk with malted milk and flavoring substance and
ice cream or ice milk containing not less than four percent of milk fat. Skim milk used in
an establishment where skim malted milk is prepared, served or distributed shall meet the
standards required for Grade A pasteurized milk and shall be pasteurized and bottled in
standard milk bottles in an approved pasteurizing and bottling plant. The bacterial count
of skim milk shall not exceed the minimum standard for Grade A pasteurized milk.
D. The establishment shall display a sign, in legible lettering at least four inches high, which
shall state that malted milk or malted skim milk is served.
Sensory Panel
A sensory panel may be described as a group of testers who have exceptional sensory faculties
and can describe products on the basis of taste, smell or feel. The sensory panelists are trained to

describe their sensory experiences using words they generate in previous training sessions.
These words are more detailed than those used by consumers, and more useful for R&D
departments.
The parameters they can measure:

Smell: Perfumes and Aromas etc.

Taste: Flavor, Texture etc
Touch: Viscosity for cosmetics, roughness/smoothness for a leather steering wheels, for
instance
Other sensations like vibration of a drill, smoothness of a car ride etc.

Linking data from a Sensory Panel and Consumer Tests for a common set of
products is a very powerful development tool. By statistically linking, i.e., mapping the expert
descriptions and consumer liking, the key elements that actually drive preference can be
optimized to meet consumer needs. This technique can be used to great effect by identifying
"taste segmentation groups".
When to use Sensory Panels?
Sensory Panels may be used as part of market understanding to:

Describe current products in the market (mapping a market)

Tracking competitive product changes over time

They can be used as part of product development program to :

Develop a new product from gaps in existing market maps

Determine if it is possible for
consumers to notice changes
Understand the magnitude of changes that will get a particular consumer reaction
Determine which products and concepts in a range of new ones are the most promising
Substantiate advertising propositions and label claims

Sensory panels can also be utilized in the Quality management process for:

Determining product changes over time for shelf life evaluation

Determining the effect of in-house ingredients and process changes (Quality
Improvement
and Cost Reduction)
Understanding tolerances for a QA program

A sensory panel is more appropriate for repeated assessments.

Objective of Sensory Panels
Any decision related to sensory evaluation begins with identifying what the researcher wants to
accomplish. The most common objectives pertain to product development and quality.
Specific functions could include product matching, enhancement of ingredient specifications,
shelf-life determinations and cost optimization. When detection, not identification, of
differences is the goal, it involves less time and training. However, situations that require
attribute-specific quantifiable data, such as target matching, demand a trained panel of product
specialists. Every panelist must be competent in using the sensory method, terminology, rating
scales, and evaluation ballots or programs.
Descriptive stats reveal background flavors and textures, as well as intensities that explain
consumer choices. Combined analysis of consumer and descriptive data reveals key drivers
of consumer liking and how to make a product that meets acceptance standards.
Many companies use trained sensory panels to gather objective analysis. The sensory panels are
different than a consumer tasting panel. "Sensory panels guide product development while
consumers help with market acceptability."
Sensory panels use descriptive analysis, to allow the flavor group to understand the attributes of
the functional ingredients or formulations, and to create flavors that allow the final product to
have enhanced palatability. They can identify flavor, aromatic and texture characteristics and rate
those characteristics on an intensity scale."
Members of such panels undergo training to be able to provide specific, objective details on
scent and flavor attributes. Trained sensory panel judges are not determining drinkability or
acceptability. They help determine whether a flavor characteristic is perceptible and to what
degree.
Sensory panelists are given an intensive 3-week training, using a barrage of samples and
studying sensory techniques such as profiling, scaling and references. They also learn the
difference between flavor facts (quantitative attribute measurement that is based on training) and
opinions (qualitative judgment).
A highly trained sensory panel does not generate fuzzy directions. Theres no subjectivity in a
professional descriptive food panel.

In addition to assisting in formulation work, sensory panels can also assist in the characterization
of raw materials. This lends insight, into what a company or flavor house might expect, in a
formulation combining several functional ingredients.
Industry Vertical where the Sensory Panel method is used:

Food and Beverage

Pharmaceutical
Agriculture
Flavor
Consumer Products

3.2 MRTP Commission

Monopolies and Restrictive Trade Practice Commission
Procedure of action on complaint:

Inquiry may be initiated through a complaint by an individual or registered consumer

organization.
Fact finding investigation is carried on by the Director General.
If no prima facie case is made, the complaint is dismissed, else an order is passed to that
effect.
The commission may restrain the party concerned from carrying on the impugned trade
practices by granting temporary injunction.
Final order is passed. Compensation may be granted to the complainant.

The Monopolies and Restrictive Trade Practices Act, 1969, aims to prevent concentration of
economic power to the common detriment, provide for control of monopolies and probation of
monopolistic, restrictive and unfair trade practice, and protect consumer interest.
Monopolistic trade practice:
Monopolistic trade practice is that which represents abuse of market power in the production and
marketing of goods and services by eliminating potential competitors from market and taking
advantage of the control over the market by charging unreasonably high prices, preventing or
reducing competition, limiting technical development, deteriorating product quality or by
adopting unfair or deceptive trade practices.

Unfair Trade Practice:

Misleading advertisement and False Representation

Falsely representing that goods and services are of a particular standard, quality, grade,
composition or style.
Falsely representing any second hand renovated or old goods as new.
Representing that goods or services, seller or supplier have a sponsorship, approval or
affiliation which they do not have.
Making a false or misleading representation concerning need for, or usefulness of goods
or services.
Giving to public any warranty, guarantee of performance that is not based on an adequate
test or making to public a representation which purports to be such a guarantee or
warranty.
False and misleading claims with respect to the price of goods or services.
Giving false or misleading facts disparaging the goods, services or trade of another
person or concern.

Restrictive Trade Practice:

To maximise profits and market power, traders often attempt to indulge in certain trade practices
which tend to obstruct the flow of capital into the stream of production. It may also bring
manipulation of prices or conditions of delivery or affect the flow of supplies in the market so as
to impose unjustified costs.

3.3 Competition Commission of India

Competition Commission of India is a body of the Government of India responsible for
enforcing The Competition Act, 2002 throughout India and to prevent activities that have an
adverse effect on competition in India. It was established on 14 October 2003. It became fully
functional in May 2009 with Dhanendra Kumar as its first Chairman
The Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007, follows
the philosophy of modern competition laws. The Act prohibits anti-competitive agreements,
abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of
control and Merger and acquisition), which causes or likely to cause an appreciable adverse
effect on competition within India
The objectives of the Act are sought to be achieved through the Competition Commission of
India (CCI), which has been established by the Central Government with effect from 14 October
2003. CCI consists of a Chairperson and 6 Members appointed by the Central Government. It is
the duty of the Commission to eliminate practices having adverse effect on competition, promote

and sustain competition, protect the interests of consumers and ensure freedom of trade in the
markets of India.[5] The Commission is also required to give opinion on competition issues on a
reference received from a statutory authority established under any law and to undertake
competition advocacy, create public awareness and impart training on competition issues.
The main objective of competition law is to promote economic efficiency using competition as
one of the means of assisting the creation of market responsive to consumer preferences. The
advantages of perfect competition are three-fold: allocative efficiency, which ensures the
effective allocation of resources, productive efficiency, which ensures that costs of production
are kept at a minimum and dynamic efficiency, which promotes innovative practices.

UNIT 04

FINANCIALS

Financials
4.1 Horlicks profitability

From 2002 to 2005 the company witnessed poor growth registering low or negative growth
rates.
Q2 2008 sales soar up 19.3%
GSKCH has also performed well over the last 5 years Its Net Sales and EPS have clocked
impressive 5 yr. CAGRs of 17.44% and 27.97%.
11.5% sales growth, 2009.
Net sales of Rs. 720 corers over 2010
Impressive sales growth of 18% over 2010
Q4 2010 sales up 21% ad profits up by 58%
Q2 2011 sales up 22% ad profits up by 15%
17.85 per cent rise in net profit at Rs 69.65 crore for the fourth quarter ended December 31,
2012
16 per cent increase in sales in the quarter ended March 31,2013.
Glaxosmithkline Consumer spurts on reporting 19% rise inQ1FY13 net profit
March 31, 2013, the total income from operations (net) was Rs 975.38 crore against Rs
836.41 crore during the same period in the previous financial year.

Revenues
Horlicks, along with Sensodyne toothpaste and Eno antacid, helped push up Indian sales of
Glaxos non-pharmaceutical products 19 percent last year with operating profit growing just as
fast, Ahmed said. That compares with 1 percent sales growth for the division in the U.S. in the
nine months through September and a 1 percent drop in Europe.
London-based Glaxo plans to expand distribution of its consumer products to 50,000 rural Indian
villages over four years and spend as much as 40 million pounds ($62 million) to boost
production capacity at its three plants in the country, Ahmed said. The company is also seeking
wider distribution of its Lucozade sports drink in China through a local partnership.
Glaxos consumer health sales in India totaled about 350 million pounds, or 9 percent of global
sales for the division in the nine months through September. Worldwide sales including
pharmaceuticals totaled 20.4 billion pounds in the period.
GSK Consumer Healthcare Q3 profit up 36.7% at Rs 131.85 crore
GlaxoSmithKline (GSK) Consumer Healthcare Ltd today reported a 36.75 per cent increase in its
standalone net profit to Rs 131.85 crore for the third quarter ended on December 31, 2015 as the

company has gained shares in the health food drink category. The company had reported a net
profit of Rs 96.41 crore for the October-December period a year ago, GSK said in a BSE filing.
Net sales of the company during the period under review were up 1.39 per cent...

4.2 Bournvita Profitability

Cadbury Nigeria released its 2015 Half year results showing a pre-tax loss of 252 million
compared to the 1.79 billion it posted the same period in 2014. In fact, profits fell 95% if we are
to look at second quarter this year compared to second quarter in 2014.
The slide with Cadbury began in 2014 ironically a year after it posted its best results in recent
years. In 2013, Cadbury posted a profit after tax of 6 billion, representing an 80% jump from the
year before. Cadbury followed up that impressive result with a capital reduction program that in
retrospect should have been a sign of what was to come. The company was so cash rich it
decided to return over 11 billion in cash to its shareholders.
The slide began when it released its 2014 Q1 results showing revenue had dropped 25% from the
same period in 2013. Revenue will continue to drop every quarter since then and now averages
just over 7 billion per quarter compared to 8.6 billion in its pivotal year of 2013.
For an FMCG, revenue is the major driver of profitability. Competition is rife and expenses are
not letting off. To increase margins, the company will have to increase topline volume sales. It
has failed to do this consistently since 2014.
A major reason for their revenue drop is in its Refreshment Beverage Section where most of its
sales come from Bournvita {66% in 2013 and 55% in 2014). In 2014, sales from Bournvita was
17 billion representing a 26% (N6 billion)drop compared to the N23 billion reported same period
2013. The evergreen beverage drink is facing tough competition from the likes of Milo and
other cheaper chocolate drink available to most Nigerians. Margins are taking a heat from
premium and value brands in a fight that it appears to be losing really fast.
It also now lacks the same financial muscle it had a couple of years ago that it probably would
have used to fight of competition. From about N16billion in 2013, cash in bank is now about
N3.9billion. Though it is still a lot of cash when compared to its peers, the fast depleting
profitability suggest that cash pile will likely face a decline than an increase. In fact, working
capital is now in negative territories (-N2.2billion) suggesting it is fully funding operations with
suppliers money. For shareholders, they may as well hold on tight to the 65 kobo per share
dividend paid on the 11th of June 2015. Dividend based on recent results, may be a luxury too
much for the company to contend with going forward. The Share price is also down 16.5% in the
last 6 months and 53% in the last one year.

Revenues
With aggressive advertising, distribution and direct door-to-door sales in the smaller markets,
Bournvita believes in literally preparing to win. But can it win against another heritage brand
such as Horlicks or even its flanker brand Boost in the Rs 4,500-crore malted foods category?
Bournvita has always been pitted against GSKs Boost with almost equal shares, and Horlicks
way ahead as the market leader. Today Bournvita claims to have gained share and overtaken
Boost, which has a 12 per cent value share. Bournvita has a 16.2 per cent share (as per Nielsen
data for the quarter ending March). It has also become the market leader in modern trade
surpassing GSKs Horlicks with 29.3 per cent share.
Bournvita claims to be ahead of Horlicks (22.6 per cent) with 36 per cent share in northern India.
But GSK is not too perturbed about the strides made by Bournvita. Boost has always been strong
in the South while Bournvitas strength has been the North and West. Boost has registered strong
growth at 20 per cent on yearly basis and has not seen any slowdown in sales, says an official
from GSK.Compalin

UNIT 5

RECENT DEVELOPMENTS

Recent developments
5.1 Impact of latest fiscal policies
Whether its Complan or Horlicks, they claim to make a child taller and smarter. But their
promises are not based on any scientific data. Now such food products in the Indian market have
come under the scanner of Food Safety and Standards Authority of India (FSSAI) for making false
health claims on the labels of their products.
Abu Hasem Khan Choudhury, minister of state for health and family welfare informed Lok
Sabha in a written reply on November 30 that the food regulator has begun prosecution proceedings
against manufacturers of 19 leading brands and has issued show cause notices to 19 others for
making false claims regarding the nutritional value of the product in advertising and on the label.
List of brands against which action has been recommended
1. Complan
2. Complan Memory
3. Boost
4. Horlicks
5. Emami Healthy and Tasty Soybean Oil
6. Saffola
7. Engine Mustard Oil
8. Nutricharge men (Daily nutrition supplement capsules)
9. Kellogg's Special K
10. Britannia Nutrichoice Biscuits
11. Kelloggs Extra Muesli
12. Bournvita Little Champs
13. Today Premium Tea
14. Pediasure
15. Real Active Fibre
16. Nutrilite
17. Kissan Cream Spread
18. Rajdhani Besan
19. Britannia Vita Marie

5.1 Latest Exim Policy

These food products violate Section 24 of the Food Safety and Standards Act (FSSA).
According to Section 24, no person can make false claims in oral, writing or even by visual
representations regarding the nutritional value of the product or efficacy of the product without
providing any scientific justification.

The FSSAI monitors labels on various food items and claims advertised for food items
by different companies in print and electronic media. Such findings and complaints received
from stakeholders are analysed in FSSAI and show because notices are issued to the
manufacturers. Their replies are examined at FSSAI by a three-member committee constituted
for this purpose. As per recommendations of this committee, actions including prosecution are
initiated by designated officers at the regional level, the minister informed.
According to him, companies were found to be making false claims about issues like childrens
health and memory, cardiac health and obesity. For instance, Complan, a leading drink brand,
claims that it makes children grow twice faster. Horlicks promises to make children taller,
stronger and sharper. Kellogg's Special K claims that people, who eat low fat food in their
breakfast, tend to be thinner than those who do not, without providing any scientific study to
back up this claim. Products like Saffola Oil, Rajdhani Besan and Britannia Vita Marie have
been booked for making false claims of being heart-friendly and reducing cholesterol.
Double Standards
Many of these brands also show double standards. Complan and Horlicks, which claim to
make kids taller in India, do not make any such claims in the UK. They also use kids on their
labels as well as in advertisements in India but not in the UK. FSSAI has also booked Complan
Memory for showing on its label students with books which can mislead people that after
consuming the drink, one will be good in studies or pass exams.
The regulations in India allow companies to get away with whatever they want to
advertise to people. Companies can be a fined a maximum of Rs.10 lakh for false and misleading
claims under Section 24. This is negligible amount for the companies which make crores by
selling their products.
The Truth
As a first and most basic step, lets look into the ingredients of some of these health drinks.
Horlicks Malted barley, milk solids, sugar, wheat flour, malted wheat, minerals, protein
isolate, emulsifier, salt, acidity regulator, vitamins, natural color.
Bournvita Malt extract, sugar, cocoa solids, milk solids, caramel, liquid glucose, permitted
emulsifiers, vitamins, minerals, raising agent, salt.
Complan Skimmed milk, lactose, vegetable oil, maltodextrin, sugar, glucose syrup, fat
reduced cocoa powder, dextrose, flavourings, magnesium sulphate, thickener (xanthan gum),
vitamin mix, mineral mix.
Boost Malted barley, wheat flour, sugar, milk solids, minerals, colour, glucose, salt, acidity
regulator, cocoa powder, vitamin, protein isolate, edible fiber, nature identical flavouring
substances.

Big Food Brand Hide Harmful Effects, Misleading Consumer For Selling Product In India
With False Promise-Be Aware Of Them
The Union government informed Parliament today that the health ministry's Food Safety and
Standards Authority of India (FSSAI) has initiated prosecution in 19 cases where companies
have been charged with making misleading claims about their food products in either labels or
advertisements.
The authority has also sent notices in 19 other cases in which various companies appear to have
either made false or dubious claims or released misleading advertisements about their food
products, the information and broadcasting ministry said in a statement laid in the Rajya Sabha.
Several of the complaints had been reported earlier but they have now been put in the public
domain through the official statement in the House. The FSSAI is expected to first send notices
to companies that it believes have violated rules and wait for their responses before initiating
prosecution. During the hearings, both sides ' the FSSAI and the company ' would have
opportunities to argue their cases. The 19 prosecution cases were all filed earlier this year and
most hearings are yet to begin. The country's food standards laws impose certain restrictions on
nutritional and health claims on labels and in advertisements to ensure that products are not
mislabelled
or
promoted
through
exaggerated
claims.
The safety watchdog is prosecuting manufacturers of several children's health drinks, including
Complan Memory, Boost, Horlicks and Bournvita Little Champs, for what it says are
"violations" of food regulations. The agency said Complan Memory, produced by Heinz India,
comes with a declaration that it contains "memory chargers" and the product label shows pictures
of students with books which, the FSSAI said, "will mislead the public" into assuming that the
drink
will
improve
children's
performance
in
studies.
Last year, Jay Karan, a pharmacologist at the Government Medical College in Surat, had written
in the journal Indian Pediatrics that the claims relating to the growth of children made by the
makers of Complan were "exaggerated". The food regulator has also objected to
GlaxoSmithKline Consumer Healthcare's claim that its drink called Boost "provides three times
more stamina than sadharan chocolate drink". The FSSAI said this claim was misleading and the
producer had not submitted a specific study on this product to substantiate this claim. The FSSAI
has said that GlaxoSmithKline's claim that Horlicks helps children become "taller, stronger, and
sharper",
is
"misleading
and
deceptive
in
nature".
The agency has described the claim made by Kellogg that people who eat low-fat breakfast like
its Special K cereals tend to be slimmer than those who don't as "misleading and deceptive". An
expert in human nutrition said that while children's health drinks are designed to deliver
concentrated levels of nutrients, they typically do not contain the mix of fibre and range of
nutrients available from wholesome food. "The labels always show what a product contains, not
what is missing," said R. Hemlatha, a senior scientist at the National Institute of Nutrition in
Hyderabad. Wholesome food, Hemlatha said, is available through a standard mix of cereals,
pulses, vegetables and fruits. The FSSAI is also prosecuting the producers of two brands of

edible oil ' Saffola and Engine Mustard Oil ' for what it says are misleading claims in
advertisements. "A claim about a food product needs to be clinically proven, supported by
research published in peer-reviewed scientific or medical journals," said Kamala Krishnaswamy,
former
director
of
the
National
Institute
of
Nutrition,
Hyderabad.
The FSSAI has also indicted Abbott India for what it says is the company's misleading claim that
its product, Pediasure, "helps in a child's growth and development".

5.2 Corporate wars

According to analysts, until the 1990s, Horlicks was the more aggressive player in the health
drink market compared to Complan. While Horlicks introduced a series of variants aimed at the
family segment and promoted its products well, Complan lay low on the promotional front, with
its ads just focusing on the "extra growth" attribute.
The health drink from GSK (GlaxoSmithKline), Horlicks, has been traditionally targeted
at elders and positioned as a 'great family nourisher'. However, about five years ago, the
communication was changed to 'pleasurable family nourisher' with the introduction of different
flavours such as chocolate, vanilla and 'elaichi'. The TV commercial had children going around
the town, cheering Epang Opang Jhapang a chant without any meaning. However, the TVC
showed
their
mothers
deciding
on
the
choice
of
health
drink.
Horlicks' competitor, Complan, promised to make the kids taller. Shorter kids' friends
coaxed them to request their mothers to give them Complan. Now, Horlicks has gone a step
further in promising not only height, but a stronger body and a sharper mind. Horlicks wants the
children to decide on their health drink. The new campaign for Horlicks gives the kids a motto:
'Badlo Apne Bachpan ka Size'.

The new TVC has Darsheel Safary, the child protagonist of Taare Zameen Par, in the
lead. Safary and his friends are on a mission to change things they don't like and question age old
practices around them.

Is Horlicks taking kids on a rebellious path? Prashant Pandey, general manager,

marketing, GSK, disagrees. "Kids today are different from their counterparts five years ago.
They have their choices and have taken the purchase decision in their own hands. They are
confident of what they are doing and what they want to do," he says. Safary was taken as the lead
for the TVC with that thought in mind.
Swati Bhattacharya, senior creative director, JWT India, the agency handling the account,
says, "Darsheel represents the attitude the kids have today. He dared to question the Filmfare
Awards with questions such as why he wasn't nominated for the Best Actor in the Main Lead
award, instead of being nominated in the Children's category. Children today want to create
opportunities and have more autonomy."
Pandey adds, "There is nothing rebellious about the ad. Even Nike's 'Just Do It' has a
positive aspect to it. Horlicks as a brand is conscious about its image and doesn't want to be
rebellious. It is a portrayal of the confidence level of the kids today and Horlicks can help them
achieve what they want in a positive way. Even in the TVC, Horlicks is not portrayed as an aid,
just an onlooker or nutrition inspector of childhood. Horlicks is their playmate which believes in
their philosophy and stands as an accomplice to their intentions."
According to Pandey, the brief to the agency was: The target group (TG) is a savvy
audience with a short span of attention. So, step into their issues, get into their skin and raise
their issues and concerns.
The TVC will be supported by print, radio and on-ground activities and extended to
Horlicks' school programme, Whiz Kids Contest. On the digital platform, a site,
activityindia.com/horlicks, has been launched through which kids can communicate about the
things they want to change. The winners with the best ideas will get a chance to compete in the
Whiz Kids Contest.
For a short while, Horlicks has also come up with a packaging innovation in which the
Horlicks bottle will be placed inside a graphical can to attract attention at retail stores.
At the same time, Horlicks hasn't neglected the elders altogether. It has a sugar free
variant, Horlicks Lite, especially for diabetic patients and those who are health conscious.
Besides Horlicks, GSK also has brands such as Boost, Maltova and Viva in the health drinks
category. The segment also has competitor brands such as Bournvita (Cadbury), Complan
(Heinz) and Milo (Nestle).
On the other hand the Horlicks (GSK) ad in NTV claimed: "Children have become taller,
stronger and sharper. The Horlicks challenge now proven!"
A slightly different version of the Horlicks ad aired in Zee Bangla, an Indian regional TV
channel:
"The Horlicks Ad would have been banned if it were running on a national channel.
Here's how it goes. Scene outside store. Mother and adoloscent child duo - 2 pairs; one Mother's
bag showing a refill pack of Complan and the other Mother's bag showing a Horlicks bottle
(Both very very CLEARLY - no pixelations, no attempt to hide whatsoever).

The spot goes on with the Complan boy saying, my health drink has 23 nutrients, how
much does yours have? To which the Horlicks boy's answer is 23 nutrients and also something.
The Complan boy goes on to say, Mine makes me 'Taller' with the show of measuring up
the height on one's shoulder at the Complan ads, the Horlicks boy replies, mine makes me
'Taller, Stronger & Sharper'.
The Complan boy then says, mine costs Rs.178 and the Horlicks boy replies, mine costs
only Rs.124 (please pardon if the prices are off by a few rupees). The Complan boy then
jubilantly says, Mummy, In this case we are higher right with the Mother making a grimace of
I've-been-had kind of look.
The Ad ends with a couple of people carrying a Horlicks billboard with the 3 tenets of
Taller, Stronger & Shraper clearly written in the background."
The truth emerged after both Nestle and GlaxoSmithKline claimed that the ads had been
broadcast in the UK without their knowledge or consent. Interestingly GSK said that its claims
were accurate for "children in that part of the world" and they complied with the regulatory
requirements of Bangladesh. A GlaxoSmithKline spokesman added that the Horlicks sold in
India is a completely different formulation and product to the one in the UK.
The market has always been flooded with ads showing the competitor product in bad
light when compared to the company's products. Mostly, this has been displayed in the form of
similar coloured product packages or name initials shown in the ad against which the advertising
company shows its superiority (functional or emotional). While the viewers could identify, the
competitors could never win the legal battle.
But that wasn't enough. The latest Horlicks - Complan tussle sees both products
compared in the Horlicks ad. Well, Complan decided to come up with an ad claiming that
Complan consumers grew taller at a rate twice than the growth of the non-consumers.
Horlicks has now arrived with an ad which entails a discussion between two kids and their mothers.
Both the products are compared based on the nutrients, the claims and finally the price. The "Taller
Stronger Sharper" campaign of Horlicks is used to counter the claims of Complan (and pretty
convincingly if you'd ask me!). The ad communicates the price advantage of the product and the
functional benefits. Overall, it shows the supremacy of the brand over the competitors.
The advertisement showed the competitor brand clearly while making the comparison. Heinz later
followed up with its own ad comparing Horlicks unfavorably with Complan. This prompted GSK to file
a case in the Delhi High Court8 in December 2008 claiming that the ad released by Heinz disparaged its
brand by calling it low priced, and thereby damaging its reputation.
Horlicks and Complan were popular health drinks in Indian households. The estimated Rs.9 18
billion health drinks market in India was growing at an annual rate of 20% as per AC Nielsen10 data. As
of 2008, GSK was the market leader in the health drink category in India with a share of 55%, while
Complan's market share was about 14%.

The ongoing war for supremacy between these two brands in the Indian health drink
market started as early as in the 1960s. According to analysts, the latest round in the health drink
war was initiated by the makers of Horlicks; the makers of Complan retaliated.
Issues

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.