Inflation hurts Horlicks sales even more than pandemic

Infograph: TBS

When the average consumer families have been struggling to meet their inevitable expenses, health food drink Horlicks often gets dropped off their shopping list.

Unilever Consumer Care Ltd, the company behind the making and marketing of the most popular health food drink in the country, faced a 24% decline in its revenue quarter-on-quarter in April-June this year, while its quarterly revenue of Tk82.6 crore was even lower than that for the same period during the pandemic years of 2020 and 2021.

Meanwhile, Horlicks prices surged a lot due to the soaring costs, which means sales volume dropped more than the decline in revenue. 

"Affordability and the inflation-hit consumers' ongoing struggle to manage their family expenses were the reason behind the sales slowdown," said Unilever Consumer Care Chairman Masud Khan.

During the pandemic, the company launched "Horlicks Sachet" a Tk10 mini pack to prepare a glass of Horlicks with milk which played a significant role in reaching more households and growing sales.

At the end of the tough year 2022, Horlicks reached over 26% of Bangladeshi households, up from less than 16% two years back.

The mass people, especially during their stressed financial condition, find it convenient to spend little to consume today, instead of buying a large jar for the entire month, he told TBS.

However, the rising cost of production as a global economic impact of the Ukraine War – soaring raw material and dollar prices – weakened even the winning pack's appeal as its price initially at the end of 2022 was raised to Tk12 and again earlier this year to Tk15.

Khan, however, did not share the breakdown of segment details.

Various Horlicks products were making over 90% of the company's total revenue over the years, while its other health food drink brands are Boost and Maltova. The company also makes and sells the glucose product GlucoMaxD.

The price hike this year was not enough for the company to retain its profitability as the gross profit margin – how much of the revenue a company has after costs of production – dropped below 47% for the April-June quarter, from over 54% a year ago.

Unilever Consumer Care, as a publicly traded company, managed to significantly cut its operating expenses and increase financial income which together helped arrest the decline in net profit for the quarter.

For the three months, Unilever Consumer Care's net profit was Tk16.52 crore, down from Tk18.06 in the same period of 2022.

However, the first quarter that ended in March was a robust period for the company and that helped post a half-yearly profit growth, defying a smaller half-yearly decline in revenue.

The company's half-yearly earnings per share stood at Tk19.02, up from Tk18.33 for the first six months of 2022.

At the end of June, the net asset value per share stood at Tk91.27.

Unilever Consumer Care shares having a face value of Tk10 closed 0.4% lower at Tk2029 apiece on the Dhaka Stock Exchange on Wednesday.

Amid stiff competition with local champions, GlaxoSmithKline Bangladesh, an arm of UK-based global healthcare giant GlaxoSmithKline, shut its pharmaceuticals plant at Chattogram in 2018 which was set up in 1963.

It continued with its winning business health food drinks, glucose, and Sensodyne toothpaste, and over-the-counter antacid product Eno.

Following the global buyout of GlaxoSmithKline's health food drink and glucose brands by Unilever, GlaxoSmithKline Bangladesh in 2020 became Unilever Consumer Care.

Global GlaxoSmithKline, on the other hand, continued its business of importing and selling Sensodyne toothpaste and Eno through its subsidiary Burroughs Wellcome and Co (Bangladesh) Limited.