Wockhardt bets big on Farex turnaround

A Rs 250 crore (Rs 2.5 billion) brand a few years back, Farex has now slipped to less than Rs 10 crore (Rs 100 million).

So a few eyebrows were raised when Wockhardt announced the acquisition of the cereal-based infant food brand last week for an undisclosed amount.

In any case, the category has not been growing and, to add to its woes, the government banned advertisement of baby foods from January 2004.

But Wockhardt, which is already the market leader in the Indian nutrition market with a 15 per cent share, says it has a few plans up its sleeve to reposition the brand.

The plans include changing its look and flavour. The in-house spray-dry milk processing technology will come in handy for Wockhardt in adding a dash of fresh milk's taste in bland Farex. It may even launch Farex in different flavours to tingle the baby palate.

This will be done to regain lost market share. Market research showed that babies do not like the taste of the 50-year old infant nutrition product, and seem to prefer Nestle's Cerelac, which has almost 80 per cent share of the baby food market in India and sales of over Rs 200 crore (Rs 2 billion) in 2005.

Wockhardt should know how to make farex grow up. It already has a strong presence in infant nutrition with Dexolac, Nusobee and Firstfood brands, with annual sales of about Rs 60 crore (Rs 600 million). Farex is a natural fit that complements Wockhardt's product range.

For Farex, Wockhardt will be its third owner. The brand had changed hands twice earlier - first, when the original owner, Glaxo, sold it to ketchup major Heinz India almost a decade ago. Subsequently, the brand moved from Heinz to Dumex India, which was acquired by the UK-based Royal Numico in 2004.

Wockhardt had last week announced the acquisition of the brand along with another medical nutritional brand Protinex in a deal, which involves takeover of Dumex India, a company owned by the UK-based Royal Numico.

Besides the two heritage brands with over 50 years of brand equity, Wockhardt inherits a strong sales and marketing organisation with 235 personnel with this deal.

The acquisition follows Royal Numico's decision to exit India and focus on China and other markets.

Royal Numico move to exit India comes less than a year after it acquired Farex from Heinz and at a time when the company was setting up Rs 100 crore (Rs 1 billion)-plus modern manufacturing facility for nutritional supplement products.

Under the agreement, Royal Numico will also offer technical knowhow to Wockhardt for specialised sugar-free infant food products currently marketed in India and internationally, under its brand names Dulac and Dupro.