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Malted Beverages: An insight - Views on News from Equitymaster
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Malted Beverages: An insight
Sep 22, 2005

The total malted beverage market in India is valued at approximately Rs 13 bn, a market that has been stagnant for around 3 years. One must note that malted beverages is the only FMCG product whose per capita consumption in India is the highest in the world and Indians account for 22% of the total malted beverages consumed worldwide. Lets’ take a closer look at this market, who are the players and what are their products?

The Indian food industry is yet at a nascent stage with processed food accounting for less than a percent and hence the industry has immense growth potential. Currently, penetration level of malted beverage drinks is only around 6%. MNC’s like GSK Consumers have tried hard to promote their products, but have failed to generate much interest and thus, today there are very few players existent in the market.

The malted beverage market can be broadly classified into two categories, White (Horlicks and Complan) and Brown (Boost and Milo). Whites account for 65% of industry revenues while Brown accounts for the rest. It must be noted that energy drinks are perceived as a luxury and hence offtake is slow. White beverages are hailed for their therapeutic offerings, while consumers look at browns as mere taste additives. Brand loyalties are not very strong as the key target, children, are always looking for new products.

However, Operation Flood, launched in the 1980s, changed the scenario of this segment. A project undertaken by National Dairy Development Board, Operation Flood, made milk available in all parts of the country and the demand for white drinks was hit. With a view to revive demand for their brands, malted foods were repositioned as strength and energy drinks with a nutritional thrust.

GSK Consumers is the largest player in this category with a market share of around 70%. Its closet rival, Complan, from Heinz, holds a 13% market share followed by Cadbuy and Nestle. Malted beverages are popularly known as health beverages and historically these health drinks have had a strong association with milk and hence sells more in milk deficit regions like the southern and eastern markets. It must be noted that almost 80% of GSK’s sales come from these two regions alone.

Product offerings from the above majors include Horlicks, Boost, Viva and Maltova from GSK, Bournvita from Cadbury, Complan from Heinz and Milo from Nestle. However, competition is fought only for the second place as the first one is occupied by Horlicks, which is the undisputable leader.

Market prospects
Growth opportunities in this segment are tremendous and malted beverages are one of the most under penetrated FMCG products in the country. The total market size is estimated at around 82,000 tonnes per annum and is growing in single digits (7% to 9% per annum). Although companies like GSK have taken initiatives by launching smaller packs of 100 gms for rural markets in Tamil Nadu and West Bengal, sales have not picked up as per expectations. Going forward, we expect the sales growth of brown malted beverages to be more than that of white, as these days white drinks are perceived as old/sick man’s drink. Also, product/brand positioning will play a vital role as children influence their parents to buy these products.

The scenario in the most developed country…
In the US, there was a sharp decline in value sales of both malt and chocolate-based drinks over the past few years. This was primarily owing to certain changing trends and consumers’ inclination towards newer product offerings (like chocolate drinks). In fact, malt-based drinks have an almost negligible presence in the US, with manufacturers largely failing to attract the important child and youth consumer groups – a category more interested in soft drinks.

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