HUL Repositions Health Drinks After Government Crackdown On Nutritional Claims

Hindustan Unilever Ltd. has repositioned its 'Health Food Drinks' category to 'Functional Nutrition Drinks' amid a government crackdown on packaged goods companies making false claims on their packs about being 'healthy' when many of them actually contain excess amounts of sugar. The consumer giant said in its investor presentation that it is dialing up benefits and nutrition science on the pack. This will ensure that consumers can make informed choices about their food and beverage consumption.

The owner of brands Horlicks and Boost is not seeing any impact on sales in light of the allegations on social media that has resulted in increased scrutiny for high sugar levels in the so-called health food and drinks.

In the March quarter, Horlicks and Boost delivered high single-digit growth, driven by a healthy mix of pricing and volume growth. HUL also witnessed market share gains in value and volume in the functional nutrition category. Horlicks boasts a turnover exceeding Rs 2,000 crore, while Boost is poised to join the Rs 1,000-crore club, its investor presentation showed.

The Ministry of Commerce and Industry directed e-commerce platforms on April 10 to remove all drinks like Bournvita, Horlicks, Protinex from the category of health drink, saying there is no such thing as ‘health drink' defined under the country's food and safety standards laws.

Manufacturers of these brands do not market their products as 'healthy' products on their packaging. However, in case their advertisement portrays their products as ‘healthy', they will be required to withdraw them. HUL's decision comes as a response to regulatory changes.

Defending its brands amid increased public and regulatory scrutiny of the levels of sugar in food and beverages, Chief Executive Officer Rohit Jawa said "a serving of Horlicks contains less than 1 teaspoon of added sugar".

In fact, HUL uses the least amount of added sugar in Horlicks and Boost as compared to any other brands in the industry. Horlicks' tagline of 'Taller, Stronger, Sharper' is "backed by science", Jawa claimed. "We are fully compliant with (the) FSSAI guidelines."

The management said HUL's adult nutrition portfolio has "no sugar", while products in the kid's portfolio have some sugar, which is in line with local as well as Unilever standards to make the drink palatable. The 'functional nutrition drinks' category serves community needs of protein and micronutrient deficiency, according to the management. "The category has real meaning for consumers, where penetration is low," the management of the company told analysts in a post-earnings call.

HUL's primary focus would be to increase penetration and establish a strong presence in the premium segment, which currently has a turnover of Rs 600 crore. "Horlicks is a generational product with a strong brand recall. The focus remains on reinforcing relevance," according to HUL.

Many more growth levers are being identified. HUL is focusing on more users, more usage, and more benefits. About 40–50 million door-to-door product sampling has been done, which has aided penetration.

HUL, however, does not expect functional science, which makes up 10–15% of the portfolio, to become a 'core' category in the near future.