GlaxoSmithKline to tap modern retail

With the modern trade route working wonders for its core health food drinks brands, FMCG firm GlaxoSmithKline Consumer Healthcare now plans to give its over-the-counter brands a similar push.

For instance, two of GSKCH's OTC products -- Eno and Iodex -- command a household penetration of 9 and 10 per cent respectively in metro cities. GSKCH has already drafted a channel strategy for modern trade in collaboration with South African retailer Shoprite, where cross-category and checkout placements were identified as an opportunity to create a shopping occasion through impulse buying.

"As a result of this exercise, the antacid category has grown six times in Shoprite and the pain balm category has doubled. Today, GSKCH brands of Eno and Iodex contribute 86 per cent and 47 per cent to the antacid and pain balm category respectively in Shoprite," Navneet Saluja, executive vice-president (sales), GSKCH, told Business Standard.

OTC products in India are marketed under the allopathic and ayurvedic categories. Allopathic OTC products require a drug license to sell, whereas ayurveda-based OTC products can be sold without a drug license.

Modern Trade is a very fast-growing business and has contributed 4.4 per cent to GSKCH's sales turnover in 2008. That figure is estimated to move up to 6.7 per cent in 2009 and 10 per cent by 2010, according to Saluja. The company has also launched new pack sizes, including recently launched chocolate Horlicks 1kg pack and Boost 750gm pack, which are exclusive to modern retail.

"These initiatives give multiple benefits as these packs offer more value," said Adityea Kapoor, general manager (modern trade and CSD). "On the one hand, consumers trade up and on the other it helps increase the basket size for the retailers," he added.

Further, the company will introduce a range of new products over the next 12-18 months. A special focus would be on products under its Horlicks brand, which accounted for sales worth Rs 1,200 crore (Rs 12 billion) out of GSKCH's total sales of Rs 1,592 crore (Rs 15.92 billion) last year.