Presentation on theme: "Hectomalt Nourishment for the entire family As a product with great heritage faces decline, its management is confronted with the challenge of resurrecting."— Presentation transcript:
Hectomalt Nourishment for the entire family As a product with great heritage faces decline, its management is confronted with the challenge of resurrecting the brand.
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.
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 The Horlicks Legacy 18731909-101914193519482005 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
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.
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?
Research data – Contents Market trends - Hectomalt Gain loss for Hectomalt Hot beverage data Growing Up Milks
Large erosion in Hectomalt’ share over the years (12 years before Y2) Milo Hectomalt
Is Hectomalt relevant to today’s consumers? Where have the Hectomalt drinkers gone? Price? What’s plaguing Hectomalt? Questions confronting Hectomalt Promotion? Place? Product?
Weighted Distribution: a measure of product availability Share of trade for Health Food Drinks: Super / Hypermarkets: 78% Minimarkets: 15% Provision:7% Hectomalt - Weighted Distribution
Share in handlers Hectomalt’s Share in Handlers – (Value Share / Weighted Distribution)
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%.
Hectomalt and Milo Brand Image Profile Brand Image Profile Hectomalt Milo Popular Healthy Younger people Sporty Chocolaty Energetic Smooth For the whole family Affordable Malty
Hectomalt and Milo: Demographic Profile % Buyers Cups per buyer Jul−Dec Y2 Milo % Buyers Cups per buyer Hectomalt Demographic Analysis Total 25-34 years old 35-44 years old With Children Without Children Children 0-4 years old Age of Grocery Buyers 45 years & above 5-14 years old Age of Child
What else do Hectomalt buyers purchase? Jul−Dec Y2 Purchase Basket - %Buyers
What else do Hectomalt buyers purchase? Break-up of volume Jul−Dec Y2 Purchase Basket – Break-up of volume
Gains Loss analysis of Hectomalt within Health Food Drinks Net Loss: - 302 - 181 - 36 Loss ($’000) Gains ($’000) Net - 85 Hectomalt Gain Loss: Period Y1 – Period Y2
Brand Switching behaviour within Health Food Drinks Hectomalt 154 91 109 100 All Other Brands Nestomalt Milo Ovaltine Hectomalt Gain Loss: Period Y1 – Period Y2 Brand Switching ($ ‘000)
Net Hectomalt’s Gain Loss across categories Interaction Index 63 -20 270 -240 45 522 168-36 Hectomalt Gain Loss: Period Y1 – Period Y2 Interaction index provides a measure for the extent to which Hectomalt buyers interact with the categories. Norm is 100 Loss ($’000) Gains ($’000)
Hot Beverages Shopping 80% of homes bought hot beverage over the 6 months Buying on average 450 cups (2.5 cups/day) Over 4.5 purchase occasions 100 cups per trip Jul−Dec Y2 Hot Beverages (Tea, Coffee & HFD)
% Buyers Volume per Buyer: Cups Distribution of volume Beverage Consumers: Demographic profile Hot beverage buying behaviour across age profile of the household grocery shopper Jul−Dec Y2
% Buyers of HFD, Tea and Coffee % Buyers Cups per Buyers a cup a day 2.4 cups per day About half cup per day % Loyalty Hot Beverages - %Buyers, Consumption, Loyalty Jul−Dec Y2
LiptonNescafeMilo Major brands in Hot Beverage Market Y0Y1Y2 Sales Volume (Million cups) Total Hot Beverage: 732 743 746 million cups Hectomalt
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.
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
Health Food Drink and Growing Up Milk Market Size ($M) Growing Up Milk, Health Food Drink Market Size - $M
Overlap analysis for young families 8.3 19.172.6 Hectomalt Relative Penetration 27.4% 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% 70% of Hectomalt Buyers purchase GUM 21% of GUM buyers purchase Hectomalt Y2 Base: young/mixed family (Families with one or more child aged below 10 years)
Growing up milk market volume break-up across of price segments Growing up Milk: Segment Volume Share (%) 2% +23% -6%-6% +30% +27% +34% 59.3% (74% in terms of Value Share)
% Disagree / Strongly Disagree “Higher price means better quality” (% Disagree, % Agree) Agree / Strongly Agree Y2 Y1 To what extent do you agree with the following statement: “Higher price means better quality” Growing Up Milk
Reasons for switching to Growing Up Milk % Ingredients Contains advanced nutrients Higher calcium content Mental / Physical Development Improves IQ Good for brain Weight gain Aids growth What were your reasons for switching to Growing Up Milk?