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Vinay Kamath

HE's been a Horlicks man right through (`I grew up on the stuff,' he jokes!). Simon Scarff, Chairman, GlaxoSmithKline Consumer Healthcare Ltd, is an old Horlicks hand and an old India hand as well. He joined the company when it was Horlicks Ltd way back in 1963 in the UK and came to India in 1978 as the MD and never went back! Due to retire as chairman in 2004, Scarff does not intend to go back to cold England. Instead, he's going to settle down in Sri Lanka, where he's bought himself some property in Southern Sri Lanka fairly close to the coast. In Chennai recently for a celebration of 25 years of Boost, Scarff was sharing the dais with master bat Sachin Tendulkar and Virender Sehwag, both brand ambassadors for Boost. Scarff spoke to Catalyst before the event. Excerpts from the interview:

On the consumer business's relevance for GlaxoSmithKline after the merger.

Glaxo's seen as a solid, serious company. On the other side of the spectrum they see brands like Horlicks and Ribena, which are nutritional brands. On the consumer side of the business, we have a variety of products - OTC medicines, oral healthcare products like toothpaste (Sensodyne) and toothbrushes. We've been doing work to give our consumers more reason to buy the products. The other thing is that these brands are so successful that if anybody wanted to pay for them, they would have to pay in multiples far in excess of what they would expect to pay for this type of products. Any company would have to pay more than what they would want to. So, as long as we remain successful, the brands will be in our stable. The other thing is that there is a tendency in the West to move from prescription drugs to OTC drugs; the marketing skills don't necessarily exist on the pharmaceuticals side. So, there is a strong cross-functional reason for working together.

On the new manufacturing facility at Sonepat

If we did not have it, we would have just run out of capacity. With this, we have quite a lot of capacity. What we're doing now is seeing how we can most economically rotate demand at our various plants. Our plants are world-class and turn out the best quality - it means we have a strong reason to export. So we're exploring those opportunities. We do expect to supply to our packing station in Bangladesh and there's another in Sri Lanka. Geographically it makes sense to supply from here.

On the expectations for the Boost re-launch against Bournvita

(Gaining ground) is very clearly one of the objectives. They are pretty neck-to-neck nationally. We've been up and down in the11.8-12.4 market share range. The re-launch now offers a clearly different product; it has tested extremely positive in consumer research and is now taking Bournvita on in its stronghold - North and West. In the South, we are clearly dominant - we are over double the size of Bournvita.

On new products

We are constantly looking for new products and brands that we can introduce. If you take the total GSK portfolio from around the world, it's like Aladdin's cave; there is any amount of stuff that we can bring in. Unfortunately most of these things are uneconomical to introduce it, unless we take up local manufacture and for us to take up local manufacture, we have to be very sure of the size of the market. That's one of the hurdles. But now that import regulations are changed, we can test the market and see whether they have a future with local manufacture.

There's nothing planned in the immediate future. We are working on a few variations of Horlicks and Boost, which we think could add to our volumes. We've got to keep in mind that we have to increase capacity utilisation of our new factory

On competitors like Nestle

Nestle are very tenacious and they have deep pockets and they are spending hugely behind the brand (Milo). To give you an idea, Jr Horlicks, is about three times the size of Milo. In some of the towns, they have done well; every pack is always on promotion, so they are constantly spending. Milo is the number one HFD brand in the world, so they are bigger than Horlicks around the world - in Thailand, Malaysia and parts of South East Asia and it irritates them that they are not number one here. So we know that we are in for a long haul.

On why Horlicks becomes lumpy

Our new plant at Sonepat should take care of that. The current drying process is a vacuum oven, you get a cake, like the middle of a crunchy bar which is then powdered. The new plant uses a spray drying technique, so the powder is formed into little granules and it's 98 per cent solid. In other forms it varies between 80-85 per cent. A lot of people say that's where the mystique of the product lies (laughs heartily). One of the reasons that Horlicks is so well liked is that during the process the milk never boils because we process it under vacuum, so the temperature never reaches 100 degrees C, boiling point. That changes the flavour but by doing it the way we do, it retains that delicate milk flavour.

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