 "Double-digit sales growth critical but it has to be sustainable: Manoj Kumar")
Manoj Kumar was appointed managing director (MD) of GlaxoSmithKline Consumer Healthcare in May last year. He came at a time when the maker of Horlicks and Boost was seeing top line growth slide to low single digits with consumer sentiment remaining tepid. Kumar, who relocated to India from Australia where he was MD of Procter & Gamble, talks to Viveat Susan Pinto about the company’s strategy to bring back double-digit sales growth. Edited excerpts:
The gap between sales growth and profit growth has widened sharply in the past two quarters for GSK Consumer. What are you doing to reverse this trend?
The environment remains a challenge not only for us, but also for most other companies in the fast moving consumer goods space. This has led to the slowdown in top line growth you are referring to. We intend to stay the course. Double-digit (sales) growth is critical. But, sustainable growth is what counts at the end of the day. Our attention will be on driving relevance and importance of our categories. This approach will help drive growth in our segments of operation.
Both in terms of volume and value, we have seen an increase in share by 200 basis points in our health food drinks portfolio. This has happened in the past year. We now have a value share of 59.1 per cent in health food drinks and a volume share of 67.3 per cent. There were a few things that we did. If you look at our consumer base; we have kids at one end and adults at the other for our health food drinks - Horlicks and Boost. Our strategy was to segment our portfolio. Horlicks, for instance, has become very need-based. From kids to mother to adults - it targets the whole gamut of consumers. Boost is focused largely in the south, but it still has managed to break into the top three a few quarters ago, and more importantly, stay there. We will consolidate these gains.
Will inorganic growth take precedence now, since organic growth is barely showing signs of improvement?
As long as you are doing anything that is tied to the fabric of the company, it will be effective. Otherwise, acquisitions for the sake of top-line growth is not sustainable. While scouting for acquisitions is an ongoing process, as far as we are concerned, we have strong existing brands that enjoy trust with consumers. We are probably better off looking at our existing brands and seeing what we can do with them.
GSK Consumer was pushing its presence into rural areas in the past few years. With the rural economy slowing down, have you put the brakes on this initiative for now?
As I see it, in the future, we need to keep rural growth going even as we continue having the growth rate we do in urban areas. Our village coverage is 20,000 today. In 2015, we had taken a view to improving the quality of that coverage. So we haven't expanded beyond the 20,000 villages we now reach. But, going forward, we will need to expand village coverage, since nutrition is as relevant to a rural consumer as it is to an urban consumer.
What is your retail reach like? Are you making store additions in rural areas?
Our retail reach is 3.3 million outlets now. This has increased from 3.1 million we had earlier. While there have been store additions in urban areas, rural areas have not been ignored.
The gap between sales growth and profit growth has widened sharply in the past two quarters for GSK Consumer. What are you doing to reverse this trend?
The environment remains a challenge not only for us, but also for most other companies in the fast moving consumer goods space. This has led to the slowdown in top line growth you are referring to. We intend to stay the course. Double-digit (sales) growth is critical. But, sustainable growth is what counts at the end of the day. Our attention will be on driving relevance and importance of our categories. This approach will help drive growth in our segments of operation.
More From This Section
You have managed to achieve share gains in health food drinks in a difficult environment. How did this happen?
Both in terms of volume and value, we have seen an increase in share by 200 basis points in our health food drinks portfolio. This has happened in the past year. We now have a value share of 59.1 per cent in health food drinks and a volume share of 67.3 per cent. There were a few things that we did. If you look at our consumer base; we have kids at one end and adults at the other for our health food drinks - Horlicks and Boost. Our strategy was to segment our portfolio. Horlicks, for instance, has become very need-based. From kids to mother to adults - it targets the whole gamut of consumers. Boost is focused largely in the south, but it still has managed to break into the top three a few quarters ago, and more importantly, stay there. We will consolidate these gains.
Will inorganic growth take precedence now, since organic growth is barely showing signs of improvement?
As long as you are doing anything that is tied to the fabric of the company, it will be effective. Otherwise, acquisitions for the sake of top-line growth is not sustainable. While scouting for acquisitions is an ongoing process, as far as we are concerned, we have strong existing brands that enjoy trust with consumers. We are probably better off looking at our existing brands and seeing what we can do with them.
GSK Consumer was pushing its presence into rural areas in the past few years. With the rural economy slowing down, have you put the brakes on this initiative for now?
As I see it, in the future, we need to keep rural growth going even as we continue having the growth rate we do in urban areas. Our village coverage is 20,000 today. In 2015, we had taken a view to improving the quality of that coverage. So we haven't expanded beyond the 20,000 villages we now reach. But, going forward, we will need to expand village coverage, since nutrition is as relevant to a rural consumer as it is to an urban consumer.
What is your retail reach like? Are you making store additions in rural areas?
Our retail reach is 3.3 million outlets now. This has increased from 3.1 million we had earlier. While there have been store additions in urban areas, rural areas have not been ignored.