Breathing new life into Halls

In April 2003, Cadbury India's foreign parent acquired Pfizer's interests in the confectionery business for $4.2 billion. That included the Warner-Lambert product portfolio, known best for Halls, Clorets and Chiclets. The acquisition is now poised to become a growth area for Cadbury India, whose existing confectionery brands include Eclairs and Googly. But instead of selling confectionery through its existing chocolate network, Cadbury has set up an entirely new network.

The new strategy centres on Halls, a throat lozenge that enjoyed immense popularity in India until some years ago when it was overtaken by Vicks, Polo and now, Chlormint. "We see this move as a major driver of growth," says Vidyut Arte, director, sales and mass markets, Cadbury India.

Historically, Halls has been a strong brand in south and west India. That's probably because, according to research conducted by Warner-Lambert, consumers in those regions prefer the menthol flavour, rather than just sweet candy. Cadbury is now planning to aggressively make a dent in the northern and the eastern regions, where awareness levels of the brand have been dismal.

The company is still chalking out its strategies for this, but promotional schemes and heavy advertising will play an important part.

The wrapper has also been redesigned "" it's now a deep blue pillow pack. And a television advertisement for Halls is already on air, projecting Halls on the relief and refreshment platform. "With Halls being strong in a few markets, the replication of its position in other geographies will increase its national share even further," says Arte confidently.

But while Cadbury plans to pull out the stops to make Halls a successful brand, it's important to know the irritations caused to the brand in the past. Up until the early 1990s, Halls was one of the leading cough lozenge brands: industry sources say its brand awarenes was as high as 90 per cent. But things went downhill from 1997 onward.

The culprit was a 25 per cent hike in the price of Halls, from 50 to 75 paise. Warner-Lambert (the then-owner of the brand) did no consumer research before increasing the price of the lozenge and did not consider the importance of coinage in pricing: it is not difficult to find one 50-paise coin, but the extra 25-paise coin makes all the difference in an impulse purchase. The results were disastrous.

Admits Vikas Gupta, the ex-country business manager of Warner-Lambert, "The price mark-up led to a 40 per cent erosion in Halls' market share, which dropped to 27 per cent." In 1999-2000, according to industry estimates, the cough drop market was estimated at about Rs 160 crore; now, it's a Rs 200 crore market.

Warner-Lambert did make valiant attempts to regain lost ground "" and succeeded, to some extent. An important decision was to change focus from share distribution per se to value-weighted distribution. That means, the company opted for presence in better-quality outlets that would generate more sales. For instance, a small kirana store in Delhi's South Extension area is likely to generate more purchases of confectionery than one in, say, Daryaganj. The focus remained on enhancing the brand's visibility "" crucial for an impulse purchase category. For this, the company introduced long, vertical dispensers and jars for storing Halls at even kirana shops. In what may appear to be a contrarian move, it also brought down its advertising spends "" from about Rs 18 crore in 1997-98 to Rs 6-7 crore in 2000.

But there was a reason: marketing wisdom dictates that it is better to avoid high ad spends on a small-category product. The sales network was also realigned to make it more region-focused, with the result that inventory levels came down from 20 weeks in the mid-1990s to three weeks by 2000.

The next step was a positioning shift in 2001. Since Procter & Gamble's lozenge brand, Vicks, was already selling on the medicinal platform of curing coughs and colds (and was sold mainly through chemists), Warner-Lambert decided to create a distinction for Halls. From the cough-and-cold platform, Halls was transformed into a "cool and refreshing" candy. The brand also, for the first time, reached out to women and younger adults by launching softer flavours that were more fruity with less menthol "" traditionally, Halls has always targeted young adult men. And, most importantly, Warner-Lambert reverted to the original 50 paise price tag.

Warner-Lambert's efforts did pay off. From a Rs 30-crore brand in 1999-2000, Halls is now valued at Rs 40 crore. Industry sources say its market share, too, has increased to about 30 per cent. Now Cadbury plans to take Halls "" as well as the other Warner-Lambert acquisitions "" forward, although company officials are tight-lipped about actual targets.

How is Cadbury planning to market the newly-acquired brands? For starters, it has set up a new division "" mass market "" that will sell all low unit-price products such as Halls (50 paise) and Eclairs (Re 1). Other sugar confectionery products such as Cadbury Dairy Milk Eclairs, Chocki (liquid chocolate), Googly and Gems, as well as low unit-price stock keeping units of the chocolates will also be included in this division.

The reason for the new division? "The dynamics of operating within the sugar confectionery business is different from that of the chocolate market "" price is critical in confectionery," says Arte. The dedicated sales team is composed of people from the existing business as well as new recruits. "The new division has to be run more efficiently in terms of cost because it's primarily targeted at the masses," says Arte.

The distribution model for the confectionery business differs from what already exists for the chocolate brands. For instance, Cadbury has put in place a separate, parallel sales and distribution structure that will focus on the bottom-end of the business. "We plan to reach a much bigger universe of consumers through this new distribution structure," he adds.

The mass market division will target small kiosks, typical paan-bidi and hole-in-the-wall outlets, although the company is not willing to divulge details. Trade schemes are being customised keeping in mind the purchasing power of the retailers and their needs with respect to discounts and give-aways. "Standard trade rules will not appeal to small retailers," adds Arte.

Cadbury doesn't anticipate much overlap in the working of the two distribution networks: although there are similarities in selling sugar confectionery and chocolates, consumers who frequent smaller outlets generally can not afford to buy chocolates. But Cadbury will not focus only on distribution to sell its confectionery. Generating demand and preference for brands will be central to the marketing task, say company officials. This will be done mostly through sampling, on-ground promotions and advertising.

But there is still a question mark on whether Cadbury can make Halls a winner on the lines of Chlormint and Vicks. Says an analyst, "Cadbury is making a mess of the mass market division. It's core competency is selling premium products like chocolates. Any 50-paise product is an impulse category, selling which calls for sharper skills."