1. Nourishment for the entire family
Hectomalt
As a product with great heritage faces decline, its management is confronted with the challenge of resurrecting the brand.
Nourishment for the entire family

2. The inspiration for the Hectomalt case comes from Horlicks The Horlicks Legacy
Horlicks traces its origins to 1873 when two brothers, William and James Horlicks founded J & W Horlicks in Chicago to manufacture a patented malted milk drink as an artificial infant food.
During 1909 – 10 it was a famous provision for North and South Pole expeditions.
WW1 and 2 saw the increased use of the brand as a nutritional drink at homes as well as the frontlines.
The brand was acquired by the Beecham Group in 1969 which is today known as GlaxoSmithKline.
Horlicks is hugely popular in the UK, India, Malaysia and Singapore. As one of the ‘Most Trusted Drinks Brand’, it has captured more than 50% of the Indian Health Food Drink Market.
As consumer needs changed at the turn of the century, in markets like Singapore, Horlicks was faced with the challenge to re-invent and reposition.

3. The Horlicks Legacy
1873
1914
1935
1948
2005
Originated as an artificial infant food
Provision for North & South Pole
expeditions
Nutritional drink for soldiers during World War I
Nutrition food for athletes at London Olympics
Horlicks Junior for growing up children in India
Energy booster for soldiers in World War II
2010
Horlicks Cappuccino in the UK
Horlicks has undergone several avatars over the last century & more. Initially introduced as an Infant Food is now a substitute of hot beverages among Adults

4. Hectomalt

5. Background Hectomalt is unique among beverages.
It’s consumed by children as well as adults. According to ad claims Hectomalt “relaxes and provides pleasurable nourishment”. It helps people “sleep better and feel better”, and it “makes kids taller, stronger and sharper”.
Is there a need to reframe Hectomalt?
Hectomalt is placed in a category called ‘Health Food Drinks’ (HFD) along with other products like Milo and Ovaltine. Usage habits, however, suggest that it expands beyond the boundaries of HFD. More than its competitors, Hectomalt competes with adjacent categories like tea, coffee and growing up milks.
Hectomalt in Joka
Joka is one of the more important markets for Hectomalt. The brand is in decline in Joka and there is realization that it needs to quickly get competitive.

6. Case Questions
In preparation for a brain storming session on the brand’s strategy, Hectomalt’s brand manager is seeking answers to the following questions:
What are the reasons for decline in Hectomalt's share?
What are the opportunities for reviving Hectomalt?

7. Research data – Contents
Market trends - Hectomalt
Gain loss for Hectomalt
Hot beverage data
Growing Up Milks

8. Large erosion in Hectomalt’ share over the years
Milo
Hectomalt
(12 years before Y2)

9. ? ? ? ? ? ? ? ? Questions confronting Hectomalt Price? Product? Place?
What’s plaguing Hectomalt? ? ?
Price?
Product? ? ?
Is Hectomalt relevant to today’s consumers? ? ?
Place? ?
Promotion? ?
Where have the Hectomalt drinkers gone?

10. Weighted Distribution: a measure of product availability
Hectomalt - Weighted Distribution
Share of trade for Health Food Drinks:
Super / Hypermarkets: 78%
Minimarkets: %
Provision: 7%

11. Hectomalt’s Share in Handlers – (Value Share / Weighted Distribution)

12. Trend in price and volume for Hectomalt

13. Hectomalt is price sensitive with estimated elasticity of -2.3
Given its estimated price elasticity and its price at the end of Y2, a reduction in price would yield an increase in the brand’s profitability only if Hectomalt’s gross margin was greater than 30%. However Hectomalt’s gross margin was 25%.

14. Hectomalt and Milo Brand Image Profile
Popular
Healthy
Younger people
Sporty
Chocolaty
Energetic
Smooth
For the whole family
Affordable
Malty

15. Hectomalt and Milo: Demographic Profile
Demographic Analysis
Hectomalt
Milo
Jul−Dec Y2
% Buyers
Cups per buyer
% Buyers
Cups per buyer
Total
Age of Grocery Buyers
25-34 years old
35-44 years old
45 years & above
Children
With Children
Without Children
Age of Child
0-4 years old
5-14 years old 1

16. What else do Hectomalt buyers purchase?
Purchase Basket - %Buyers
Jul−Dec Y2

17. What else do Hectomalt buyers purchase? Break-up of volume
Purchase Basket – Break-up of volume
Jul−Dec Y2

18. Gain Loss for Hectomalt

19. Gains Loss analysis of Hectomalt within Health Food Drinks
Hectomalt Gain Loss: Period Y1 – Period Y2
Loss ($’000) Gains ($’000)
Net
- 181
- 85
- 36
Net Loss: - 302

20. Brand Switching behaviour within Health Food Drinks
Hectomalt Gain Loss: Period Y1 – Period Y2 Brand Switching ($ ‘000)
Nestomalt
109
154
Milo
Hectomalt 91
100
All Other Brands
Ovaltine

21. Hectomalt’s Gain Loss across categories
Hectomalt Gain Loss: Period Y1 – Period Y2
Loss ($’000) Gains ($’000)
Net
Interaction Index
-36
168 2 52 -1 45
-240
270
-20 63
Interaction index provides a measure for the extent to which Hectomalt buyers interact with the categories. Norm is 100

22. Hot Beverage analysis

23. Hot Beverages Shopping
Jul−Dec Y2 Hot Beverages
(Tea, Coffee & HFD)
80% of homes bought hot beverage over the 6 months
Buying on average 450 cups (2.5 cups/day)
100 cups per trip
Over 4.5 purchase occasions

24. Beverage Consumers: Demographic profile
Hot beverage buying behaviour across age profile of the household grocery shopper Jul−Dec Y2
% Buyers
Volume per Buyer: Cups
Distribution of volume 1

25. % Buyers of HFD, Tea and Coffee
Hot Beverages - %Buyers, Consumption, Loyalty Jul−Dec Y2
% Buyers
Cups per Buyers
% Loyalty
About half cup per day
2.4 cups per day
a cup a day

26. Major brands in Hot Beverage Market
Sales Volume (Million cups)
Lipton
Nescafe
Milo
Hectomalt Y0 Y1 Y2
Total Hot Beverage: million cups

27. Growing Up Milks
Growing Up Milks are powdered milks specially formulated for toddlers and young children with vitamins and minerals that aid their mental and physical development. Premium growing up milks also include ingredients such as AA, DHA, taurine and nucleotides, some of which exist as tissue in the human brain.

28. Growing Up Milk, Low Fat and Full Cream Milk market size (tons) Note: Population of children and infants is gradually declining in Joka
Powdered Milk Categories
Sales Volume: Tons

29. Health Food Drink and Growing Up Milk Market Size ($M)
Growing Up Milk, Health Food Drink Market Size - $M

30. Overlap analysis for young families
Base: young/mixed family (Families with one or more child aged below 10 years)
Note:
16.5% of young/mixed families buy Hectomalt and/or GUM :
Penetration = 16.5% (rebased to 100)
Relative penetration =100%
GUM
Relative
Penetration 91.7%
Hectomalt
Relative
Penetration 27.4%
21% of GUM buyers purchase Hectomalt
70% of Hectomalt Buyers purchase GUM
8.3
19.1
72.6

31. Growing up milk market volume break-up across of price segments
Growing up Milk: Segment Volume Share (%)
+23%
+30%
59.3%
(74% in terms of Value Share)
+27%
+34% 2%
-6%

32. “Higher price means better quality” (% Disagree, % Agree)
Growing Up Milk
To what extent do you agree with the following statement:
“Higher price means better quality” %
Disagree / Strongly Disagree
Agree / Strongly Agree Y1 Y2

33. Mental / Physical Development
Reasons for switching to Growing Up Milk
What were your reasons for switching to Growing Up Milk? %
Mental / Physical Development
Improves IQ
Good for brain
Weight gain
Aids growth
Ingredients
Contains advanced nutrients
Higher calcium content

34. Re-inventing Hectomalt

35. What are the reasons for decline of Hectomalt?

36. Growth Opportunities for Hectomalt