Presentation on theme: "Nourishment for the entire family"— Presentation transcript:
1Nourishment for the entire family HectomaltAs a product with great heritage faces decline, its management is confronted with the challenge of resurrecting the brand.Nourishment for the entire family
2The 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.
3The Horlicks Legacy18731914193519482005Originated as an artificial infant foodProvision for North & South PoleexpeditionsNutritional drink for soldiers during World War INutrition food for athletes at London OlympicsHorlicks Junior for growing up children in IndiaEnergy booster for soldiers in World War II2010Horlicks Cappuccino in the UKHorlicks has undergone several avatars over the last century & more. Initially introduced as an Infant Food is now a substitute of hot beverages among Adults
5Background 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 JokaJoka 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.
6Case QuestionsIn 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?
7Research data – Contents Market trends - HectomaltGain loss for HectomaltHot beverage dataGrowing Up Milks
8Large erosion in Hectomalt’ share over the years MiloHectomalt(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?
10Weighted Distribution: a measure of product availability Hectomalt - Weighted DistributionShare of trade for Health Food Drinks:Super / Hypermarkets: 78%Minimarkets: %Provision: 7%
11Hectomalt’s Share in Handlers – (Value Share / Weighted Distribution)
13Hectomalt 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%.
14Hectomalt and Milo Brand Image Profile PopularHealthyYounger peopleSportyChocolatyEnergeticSmoothFor the whole familyAffordableMalty
15Hectomalt and Milo: Demographic Profile Demographic AnalysisHectomaltMiloJul−Dec Y2% BuyersCups per buyer% BuyersCups per buyerTotalAge of Grocery Buyers25-34 years old35-44 years old45 years & aboveChildrenWith ChildrenWithout ChildrenAge of Child0-4 years old5-14 years old1
19Gains Loss analysis of Hectomalt within Health Food Drinks Hectomalt Gain Loss: Period Y1 – Period Y2Loss ($’000) Gains ($’000)Net- 181- 85- 36Net Loss: - 302
20Brand Switching behaviour within Health Food Drinks Hectomalt Gain Loss: Period Y1 – Period Y2 Brand Switching ($ ‘000)Nestomalt109154MiloHectomalt91100All Other BrandsOvaltine
21Hectomalt’s Gain Loss across categories Hectomalt Gain Loss: Period Y1 – Period Y2Loss ($’000) Gains ($’000)NetInteraction Index-36168252-145-240270-2063Interaction index provides a measure for the extent to which Hectomalt buyers interact with the categories. Norm is 100
23Hot Beverages Shopping Jul−Dec Y2 Hot Beverages(Tea, Coffee & HFD)80% of homes bought hot beverage over the 6 monthsBuying on average 450 cups (2.5 cups/day)100 cups per tripOver 4.5 purchase occasions
24Beverage Consumers: Demographic profile Hot beverage buying behaviour across age profile of the household grocery shopper Jul−Dec Y2% BuyersVolume per Buyer: CupsDistribution of volume1
25% Buyers of HFD, Tea and Coffee Hot Beverages - %Buyers, Consumption, Loyalty Jul−Dec Y2% BuyersCups per Buyers% LoyaltyAbout half cup per day2.4 cups per daya cup a day
26Major brands in Hot Beverage Market Sales Volume (Million cups)LiptonNescafeMiloHectomaltY0Y1Y2Total Hot Beverage: million cups
27Growing Up MilksGrowing 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.
28Growing Up Milk, Low Fat and Full Cream Milk market size (tons) Note: Population of children and infants is gradually declining in JokaPowdered Milk CategoriesSales Volume: Tons
29Health Food Drink and Growing Up Milk Market Size ($M) Growing Up Milk, Health Food Drink Market Size - $M
30Overlap 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%GUMRelativePenetration 91.7%HectomaltRelativePenetration 27.4%21% of GUM buyers purchase Hectomalt70% of Hectomalt Buyers purchase GUM8.319.172.6
31Growing 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 MilkTo what extent do you agree with the following statement:“Higher price means better quality”%Disagree / Strongly DisagreeAgree / Strongly AgreeY1Y2
33Mental / Physical Development Reasons for switching to Growing Up MilkWhat were your reasons for switching to Growing Up Milk?%Mental / Physical DevelopmentImproves IQGood for brainWeight gainAids growthIngredientsContains advanced nutrientsHigher calcium content