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Nourishment for the entire family

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Presentation on theme: "Nourishment for the entire family"— Presentation transcript:

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


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