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Zydus Wellness’ big ticket acquisition of Complan comes at a time when multinational GlaxoSmithKline looks to sell its Horlicks brand of beverage.
It’s certainly a mixed bag of fortunes out there for drug companies, as they take different approaches to what is loosely defined as a nutritional or health beverages category. Especially at a time when childhood obesity is seeing consumers migrate from “sugary” drinks to pro-health products.
The conundrum exists, where one drugmaker sees an opportunity in a category and another does not, says consulting firm Technopak’s Senior Vice-President Ankur Bisen. A multinational drugmaker may not see an opportunity in the nutritional beverages segment as it requires a more FMCG (fast moving consumer goods) type of treatment in terms of marketing and advertising, and product innovation, he says, explaining the move to sell Horlicks.
The owners of Complan may have had a different set of objectives, which is why it was on the block. But new owners Zydus Wellness, who have along with Cadila Healthcare signed up to acquire Complan and a clutch of brands from Kraft Heinz for ₹4,595 crore, have entered the category knowing the threats and challenges, says Bisen.
The food category has seen much health activism and companies will adapt to these challenges. Zydus will look to hit the road running as it gets a distribution channel and a known brand, that takes about 10 years to build.
New opportunities
Local drug companies, which have generic drug businesses, may see the beverages category as an opportunity to expand margins and grow, says another industry observer. Industry estimates peg the category at about ₹7,000 crore. And key players here include Abbott with its specialised drinks and Nestle with Milo, for example, besides Britannia, Emami etc which operate in the wellness category. Even ITC is scouting for opportunities in the non-tobacco, consumer goods category.
Bisen says consumers are shifting from beverages to nutraceutical products including pellets, powders and tablets, among other things, and that comprehensive ₹15,000 crore category includes the likes of Amway too.
But as traditional food players face challenges and health activism, where there is a crackdown on sugar, salt and so on — the space is opening up for new entrants and thinking and that is where Zydus sees its opportunity, says Bisen.
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