Coke-GSK deal in the making: Are you ready for diet Horlicks?

It’s not about brand positioning as it is about corporate positioning, brand expert Harish Bijoor says. He explains, “I do believe there is a global quest by brands to acquire positive labels, that speak the story of health and wellness.  For a cola company, Horlicks would be that kind of a positive label. For Coke in India, the potential buyout will help redefine its presence in the category of beverages – both cold and hot. It rewrites the history of a beverage major that is equally at ease selling carbonated beverages as well as malted-food staples. It’s also about balancing a portfolio between non-staple and staple beverages. The overall brand imagery of Coca Cola gets a positive spin for the future.”

N Chandramouli, CEO, Trust Research Advisory (TRA), a brand intelligence and data insights company believes the fortunes of the aerated drinks industry have been on a down-swing for a while now, owing to consumers looking for healthier options like juices and natural ingredient based drinks. He says, “Many such companies are moving into the snacks and food spaces. One of the largest growing sectors is nutrition which is a lucrative market for such entrants. The idea is to move from a low growth sector to a high growth one, which will also help Coke transform its brand image, like how ITC did with its foray into the FMCG and stationery space.”

However, he goes on to add, “In my opinion, Coca Cola’s sense of responsibility, when it comes to selling beverages with high sugar content, which is lapped up by customers in the vulnerable age groups (such as children) is questionable. On the other hand, Horlicks which pitches itself as a nutritious health drink, is now under consideration to be bought over by a company, whose primary stock in trade is aerated drinks. The question is, if the buyout takes place, whether Coca Cola can look beyond toplines and bottom lines and retain Horlicks’ promise of responsible nutrition that people have known it for?”

The value of GlaxoSmithKline’s Horlicks health nutrition business is roughly $4 billion, according to a Reuters estimate.