Horlicks Vs Complan GlaxoSmithKline Consumer Healthcare (GSK) and and Heinz India (Heinz) got into a legal fight in late 2008, over the advertisements of their respective health drinks Horlicks and Complan. It all started when GSK come out with an Advt. for Horlicks which directly said that it has more nutritional content and is also cheaper than Complan. Heinz India retaliated claiming that the higher price that consumers were paying for Complan was for a much higher nutritional value. Heinz moved the Bombay High Court in December 2008, challenging GSK’s claim. GSK on its part questioned Heinz India’s advertisement in the Delhi High Court. Comparative advertising is not new in India. Comparative advertising, as the name suggests, is advertising where a party (the advertiser) advertises his goods or services by comparing them with the goods or services of another party. Experts felt that certain product categories such as electronic items, real estate, automobiles and mutual funds require some form of comparative advertising and that consumers also benefit from such fact-based comparisons. Comparative advertising has also been observed in price-sensitive markets which are crowded with numerous brands and where a specific benefit of a brand is used to distinguish and differentiate the product from others. Earlier such advertisements relied on tricky lines that had enough ambiguity to keep consumers guessing. But this is the first time that ad campaigns have targeted competing brands directly. Indian Health Drinks Market The shortage of milk and suspicion among public about existing milk fuelled the growth of the Milk Food Drinks (MFDs) market in India in 1960s as milk substitutes. To cash in on the demand for milk substitutes, several health drinks were launched in the subsequent years. In the 1970s, the health drink market witnessed a growth of 8-10% with the launch of health drinks such as Complan, Nutramul, Boost, and Maltova. The biggest markets for MFDs were in the milk-deficient Southern and Eastern regions of India. In the 1980s, because of Operation Flood, the quality of milk improved and consumers refrained from buying milk substitutes. As a result, the sales of milk food drinks began to drop. They repositioned themselves health drinks. In the 1990s health drinks were trying hard to get a foothold in the market and were coming out with re-launches and freebies to boost sales. After a growth of 10% between 1996 and 1997, the market again slumped in 1998. The reasons for the slow growth of health drinks was that Indians mostly preferred plain milk and consumers felt that these drinks were expensive and offered no apparent advantage to the consumer. A series of marketing campaign in 2000s resulted in creating awareness about the products particularly in urban market. GlaxoSmithkline (GSK) with four brands - Horlicks, Boost, Viva and Maltova - is the leader in Indian health drink market. Complan, GluconD from Heinz India and Cadbury India's Bournvita are also popular among the Indian health drink brands. In 2008, Horlicks led the Rs. 18 billion health drinks market in India with a market share of 55%, with Bournvita a distant second with 16-17% market share and Complan and Boost with share of 14-15 % each. The picture of Indian food drink market gets more clarity when we divide into two segments namely, the white beverages and brown beverages. White beverages focused on therapeutic properties and were perceived as convalescent foods. Being water additives, they were considered as substitutes for milk in areas where there was shortage of milk. On the other hand, the brown beverages were generally used by mothers as taste modifiers and their usage was restricted to children. GSK‘s Horlicks ruled the roost in the white beverages segment and other dominant player is Complan.. 1 Cadbury‘s Bournvita is the leader in the brown beverages market. In 2000, white beverages accounted for 65% of the sales of the total health drink market whereas brown beverages accounted for 35% of the market share. Below is the History timeline of the two leading players in Indian White health beverages segment. Product Timeline- Horlicks 1869: William Horlick from Ruardean, Gloucestershire, UK emigrated to the United States. 1873: James Horlick, a pharmacist, joined his brother, William, in the U.S. and together they founded the company J & W Horlicks in Chicago to manufacture a patented malted milk drink as an artificial infant food. 1875: Business moved to larger premises at Racine, Wisconsin, with an abundant supply of spring water. While James was responsible for sales, William looked into production and financial matters 1906: James returned to London to set up an factory in UK at Slough to manufacture Horlicks 1909-1910: Horlicks became popular as a provision for North Pole and South Pole expeditions by Robert Peary, Roald Amundsen, and Robert Falcon Scott. 1914: James made a baronet. World War I saw extensive use of Horlicks drink at home and at the front. 1921: Death of James led company to split, with William having responsibility for the Americas and the sons of James for the rest of the world. 1928: William Horlick High School founded just north of Horlicks’ headquarters in Racine, Wisconsin. 1930: Horlicks enters India through Imports and the first Indian press ad campaign for Horlicks was released positioning Horlicks as a baby food. 1931: "Night Starvation" story developed to promote Horlicks as a bedtime drink. 1945: The U.S. company was acquired by the British Horlicks business. 1955: Government protectionist policies in India stop the import of Horlicks. 1958: Horlicks opens a factory in Nabha, Punjab, India, to make Horlicks from Buffalo Milk. The subsidiary company is called ―Hindustan Milkfood Manufacturers Pvt. Ltd. 1960: Horlicks was promoted as an energy health drink for adults. 1969: Horlicks acquired by the Beecham, a leading UK-based pharmaceutical and healthcare company. Its positioning was shifted to “The Great Family Nourisher” 1975-1978: Factory construction and expansion in Rajahmundry, Andhra Pradesh. Horlicks created the character of a modern urban housewife Suchitra, concerned about her family‘s health, to advertise the product. 2 1980s: Despite Operation Flood, the market demand for the Horlicks brand in India remained unchanged as it was able to reinvent itself with positioning strategies that were in sync with consumer needs 1989: Beecham Group became SmithKline Beecham. 2000: SmithKline Beecham became GlaxoSmithKline. Between 2001 and 2002, Horlicks faced tough challenges as there was a decline in sales. Analysts felt that the brand suffered as its consumption by medium and heavy users had come down as due to better availability of milk, consumers looked more at the taste ‘factor .Moreover, children were unable to identify with it and did not perceived it as modern and contemporary. 2000s: GSK revamped Horlicks by improving the product, introducing new flavors, new packaging\, and a new advertising campaign. The brand indulged in consumer promotions such as merchandising and sampling programs in schools, shopping malls, and at sponsored events. For the first time in the brand‘s history, it decided to target children directly by introducing Junior Horlicks. The focus was on nourishment of the child. As better taste was the only way to make Horlicks the preferred choice among children, special flavors such as honey and vanilla were developed to appeal to children. Packaging was made more vibrant and attractive with new attractive packaging options including jars, refill packs, and sachets. Other variants of Horlicks like, ‘Mother Horlicks’, ‘Horlicks Lite’ were introduced targeting specific customers. Product Time line of Complan Year 1939-1945 1950s 1964 1969 1969-1973 1970s 1975 1990s 1995 2000s 2003 Event Glaxo introduced Complan during World War II in the UK. It is used as a powdered food in hospitals. Glaxo introduces Complan in India. Complan goes OTC. It is advertised as a product meant to compensate for dietary deficiencies. Flavored varieties of Complan are introduced. Complan is established as a nutritional supplement for growing children. Complan grows at an average compounded annual growth rate of 10-12% per annum in India. Heinz acquires Complan from Glaxo. Heinz revamps the looks of Complan and starts new advertising campaigns. Complan is introduced in biscuit form and is retailed in 225,000 outlets in India. Complan and Horlicks in Indian Market Analysts felt that Complan has never been aggressive in the market compared to market leader Horlicks. This explains the reason why such a powerful brand is languishing in a distant position of 15% market share compared to the 60 % share of Horlicks. But after mid-nineties Complan also increased its marketing campaigns not only to compete with Horlicks but also with new entrants like Viva. Both Horlicks and Complan introduced new flavors and specifically targeted children in their advertisements. The advertising war between Horlicks and Complan continued in 2000s. . In 2004, Complan came out with an ad based on the format of a health talk show. In the advertisement, two cups marked ‘C’ and ‘H’ were used, with C implying the brand Complan and the cup ‘H’ indirectly 3 refers to brand Horlicks. It advt explained how brand ‘C’ was better than brand ‘H’ in terms of its protein content. GSK, which owned the Horlicks brand, went to court, and obtained an order restraining Heinz from airing the advertisement. Later, the advertisement was aired with the requisite changes and the letter ―H‖ was replaced with the letter ―X. Horlicks’ counter ad showed a scene inside a classroom where a teacher was shown taking attendance. The teacher called out ‘Calcium’ and a group of students raised their hands. She called out ‘Iron’, another group raised their hands. Then a doctor came to the picture and talked about 23 vital nutrients that were necessary for the growth and claimed that these nutrients were present in Horlicks. In September 2008, the health drink war was rekindled with Horlicks launching a comparative TV ad against Complan. The ads were first aired on regional channels and later rolled out nationally. The ad claimed that Horlicks provided more value for less money while Complan provided less value at a higher price. The ad compared the prices of both the products and communicated the price advantage and the nutritional benefits of Horlicks. At that point of time a 500-gm Horlicks chocolate pack is priced at Rs 128 compared to Complan's similar size pack priced at Rs 174. The ad featured a discussion between two kids and their mothers. In the ad, Horlicks compared itself with Complan and claimed that although both the drinks contained 23 nutrients, it was Horlicks that made a child taller, stronger, and sharper as opposed to Complan‘s claim that it only made a child taller. GSK has backed its claims that consumption of Horlicks makes children "taller, sharper and stronger" with scientific data from the Hyderabad-based National Institute of Nutrition (NIN), which is under the aegis of a central government body, Indian Council of Medical Research (ICMR). "Horlicks has always created well-researched and credible advertising. Our communication has responsibly adhered to marketing and advertising guidelines and our ad claims are based on an independently-conducted clinical studies that kids who drink Horlicks become taller, stronger and sharper," Shubhajit Sen, executive vice-president (marketing) at GSK, told Economic Times Newspaper. After a few days, Heinz also came up with a television commercial. The advertisement showed two mothers with their sons shopping in a supermarket, with one of them buying Complan and the other Horlicks. Through this ad, Complan tried to cash in on its high price tag and convey that higher price translated to better quality and lower price meant the product was of poor quality. Heinz, quoted a study by Department of Food Science and Nutrition at Avinashilingam University in Coimbatore, Tamil Nadu, which claims that children who drink Complan grow in height twice faster. As per a report in Business Line newspaper which quoted the study, “children served with Complan with a regular diet grow twice as fast compared to those only on a regular diet, because Complan contains 100% milk proteins and 23 vital nutrients.” Though both the companies backed their claims with scientific research data, they were still locked in a legal battle. Issues of disparaging ads by rival companies were often resolved by the Advertising Standards Council of India, which is a self-regulatory voluntary organization of the advertising industry. But with constant mudslinging at each other, the two companies decided to battle it out in the courts instead. 4