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GlaxoSmithKline Consumer Healthcare’s share in the health drinks market in terms of value fell by 170 basis points in 2018-19, the steepest in at least five years, even as Mondelez and Abbott made up ground.
The maker of Horlicks and Boost saw its value share declining to 53.8% in FY19, according to its investor presentation quoting Nielsen data. Mondelez, maker of Bournvita, increased its share by 30 bps to 15.2% while the share of Abbott, maker of Pediasure and Ensure, rose 50 bps to 9.2%. “I think the biggest gainer has been Bournvita. Then there are some fringe players,” said Navneet Saluja, managing director, GSK Consumer, at an investors call. “In volumes share, it’s been really good in the last couple of years, but in value market share, we have been facing headwinds for 8-10 years.”
GSK Consumer’s volume share remained unchanged at 63.9% in FY19. In the first month of the new fiscal, it managed to increase to 65.2%, from 63.8% in April 2018. The company said volume is the “most critical measure” as it shows the number of consumers using its brands.
India’s health food drinks category is valued at Rs 6,500 crore, growing 12% a year by volumes and 9% by value.
Unilever had bought GSK’s Indian consumer business for $3.8 billion in December last year to cash in on the rising market for health and fitness products. The deal is said to be going through regulatory approval process and expected to be completed by the year-end.
“Our volumes share has gone up on account of the positive impact of GST (since we passed on benefits to consumers) and thematic campaigns such as ‘exam time’ and ‘hunger to grow’,” Saluja told ET. “Value share was impacted due to the price reduction post GST rollout.”
Analysts, however, pointed out that rivals Mondelez and Abbott went for sharper price hikes and premium products to boost their value share. “This was the fourth consecutive quarter of value market share decline for Horlicks; Bournvita has been wresting market share from GSK,” said Abneesh Roy, senior vice-president, Edelweiss Securities. “However, the pace of decline has slowed and Horlicks continues to be the leader in the health food drinks category.”
GSK Consumer’s management believes its high science portfolio will help it regain market share, Roy said. “With portfolio eventually being taken over by HUL, we expect distribution synergies-led growth for GSK,” he said.
The contribution of Horlicks’s age group-related brand extensions to the main brand has increased from about 20% in FY11 to 30% in FY19, which has also expanded margins over the years.