BUSINESS OF BRANDS. How Hamdard wants to keep its cool

This summer is crucial for Hamdard Laboratories as the herbal and natural products maker is betting big on the fast-growing ready-to-drink (RTD) segment. Last year, the company announced it was extending its 110-year-old brand RoohAfza to the ready-to-serve format by blending it with fruit juices to launch RoohAfza Fusion. After test-launching it in over 20,000 outlets in Delhi and Uttar Pradesh, it is now ready for launch across India.

Mansoor Ali, Chief Sales & Marketing Officer, Hamdard India, said, “Right now Fusion is positioned as an offshoot of RoohAfza. But test marketing has shown us that it has immense potential to become a standalone brand. It is aimed at a completely new target segment, the youth, and developed for on-the-go consumption.”

By March, the company aims to make RoohAfza Fusion available across 50,000-60,000 outlets in several States including Maharashtra, Andhra Pradesh, Telangana, Gujarat and West Bengal besides the traditional strongholds such as Punjab, Haryana and Uttar Pradesh.

It will be made available in five variants. The company is already working on 3-4 new variants which include a dairy-based variant. A no-brainer, given thousands of households in India still gulp down home-made RoohAfza milk shakes.

But Ali said this extension was not on account of the company’s heritage brand RoohAfza seeing any de-growth. The ₹350-crore brand is still growing at double digits year on year. Offering RoohAfza in PET bottles, in smaller trial packs and adding the modern trade channel has helped the company grow the brand. Last year, it launched its Go Greedy campaign for RoohAfza ( Lalach ek kala hai ), in a bid to make it cool for the youth.

By extending it to the RTD format, Hamdard believes it will not only offer new consumption occasions, but also bring in younger consumers.

This will be one of the first key brand extensions after the company kick-started a restructuring and revamp exercise about four years ago when it roped in EY. Over the years, it has been streamlining its distribution, adding new channel partners and stockists and stepping up focus on modern trade and e-commerce channels.

This is a particularly difficult time for the FMCG companies. Demonetisation and tepid rural sales apart, consumers are looking for natural and healthier alternatives across segments. The Patanjali wave has forced both home-grown and multi-national companies to add natural and herbal ingredients to their products. Amidst this disruption, Hamdard believes it is sitting in a sweet spot.

“Developing natural and herbal solutions based on the Unani system of medicine is part of Hamdard brand’s DNA. All our products are natural and herbal. Unani and Ayurveda are similar. So while the MNCs are busy opening new divisions to launch ayurvedic products, we are focusing on leveraging our natural positioning and creating more awareness,” said Ali.

In the past two years the company has doubled its overall ad spends and increased its digital spends. From spending about 7-8 per cent of the turnover on media spends, the company has now hiked it to about 15 per cent of its turnover on ad spends. Despite demonetisation, Hamdard did not cut down on media spends, unlike many others. Ali said the company believed it was good time to invest in brand building as there was “not much clutter”. “We have seen some temporary impact because of demonetisation. But we believe we will continue to grow faster than the market,” he added.

After RoohAfza, the company is looking at more brand extensions around Safi and almond oil Roghan Badam Shirin.

“Safi offers us a massive opportunity in the skincare segment,” Ali said, without giving details. The company may look at introducing face packs and moisturisers which are focused on treating acne and blemishes in the next three years.

“The idea is not to enter a lot of new categories and spread ourselves too thin but look at meaningful brand extensions that focus on our core strengths,” he added.

An aggressive corporate campaign for brand Hamdard that will emphasise its Unani DNA and its legacy is in the works.

The company is also betting big on its wellness centres, now numbering six, in Delhi, Hyderabad and Patna. These are modelled as experience centres that offer traditional Unani medicines and disease management, besides its consumer products. “We are hoping to have about 15 company-owned, company-operated Hamdard wellness centres in the next three years. We are also targeting urban catchment areas, which are not where consumers traditionally use Unani medicines,” Ali added. Hamdard Laboratories is currently about a ₹700-crore company and aims to touch the ₹1,000-crore mark by 2019-2020.

Experts believe that at a time when consumers are willing to embrace concepts of natural products, Hamdard India should take the lead in promoting the goodness of Unani.For heritage brands, connecting with younger consumers through extensions can be challenging, said brand domain strategist Harish Bijoor. “But we are seeing a revival of natural, Ayurvedic and herbal products, and companies like Hamdard need to strongly piggyback on their core strength for any brand extension to become successful,” he added.