Nestle India prepares the ground as HUL-GSK Consumer merger nears

Consumer goods major Nestlé India is preparing to take on rival Hindustan Unilever (HUL) in health food drinks as the merger of GSK Consumer Healthcare into the latter nears. The relaunch of Milo, Nestlé’s global malted beverage brand, in August, said industry sources, had received positive feedback and the company could launch more variants as HUL steps on the gas with Horlicks and Boost, brands it will acquire after the merger.

Last month, HUL had indicated in a stock market disclosure that it had received approval from the Mumbai Bench of the National Company Law Tribunal (NCLT) for the merger of GSK Consumer into it. It did add that it was awaiting approval from the Chandigarh Bench of the NCLT for the merger, which sources said could be completed by January-end.

According to executives, Milo had been repositioned as an energy drink, following the August relaunch, and is available in three products formats, including tins, Tetra Pak, and regular packs. While the tins and regular packs are aimed at in-home consumption, as the beverage is in powdered form, Tetra Pak is ready-to-drink and targeted at consumers on the go.

Milo Tetra Pak is available across the country in comparison to the tins and regular packs, which are being pushed in the west and southern markets. The strategy, said sources, was to quietly build a base for Milo in pockets where health food drink consumption was high. Tamil Nadu, for instance, is a key market where Milo is being given an aggressive distribution push. It is also a market where Horlicks is strong.

Globally, Nestlé counts countries such as Malaysia, Singapore, Thailand, and the Philippines among its important ones for Milo and has been looking at a larger India footprint for the brand, which it first revived in 2017. The Milo Tetra Pak was first launched in 2017 (in India) and was spruced up during the relaunch in August in a bid to create excitement. 

According to sources, HUL on the other hand is expected to look at all product formats as it seeks to maintain leadership in health food drinks. Both Horlicks and Boost together enjoy 65 per cent volume share in a Rs 7,000-crore market, said industry experts. Volume-wise, health food drinks are growing at 12 per cent per annum, while value-wise, the category is growing at 9 per cent per annum.

Apart from Horlicks, Boost and Milo, brands such as Complan, acquired by the Ahmedabad-based Zydus Wellness, Bournvita from Mondelez India and Pediasure and Protinex from Abbott and Danone, respectively are some of the other key players in the market.

The Nestlé-HUL battle in health food drinks, said experts, would be interesting to watch owing to the strong nutrition push that the two companies are eyeing with their respective portfolios. HUL had pipped Nestlé to the post in the race to acquire Horlicks and Boost last year, offering to pay Rs 32,000 crore for an all-stock merger of GSK Consumer into it.  

HUL’s Chairman and Managing Director Sanjiv Mehta had said the market opportunity in health food drinks was significant for players, since nutrition needs were steadily growing in the country. 

Suresh Narayanan, chairman and managing director, Nestlé India, said the health food drinks market was an evolving one in the country and that Milo fits in with the company’s broader taste-plus-health narrative.

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