Enhancing presence in smaller towns and rural areas pays off

Written by Dalip Sehgal | Updated: Dec 29 2009, 06:07am hrs
I do not think fast-moving consumer goods were really hit by the slowdown. Daily-use products were not impacted. The kind of things that Godrej Consumer Products has donewhich, in a sense, we would have done irrespective of whether there was recession or not--the only difference is that, maybe, some of the processes were accelerated in the changed scenario.

For instance, there has been a huge focus to accelerate growth in rural areas. In the last seven to eight months, we moved up from 4,000 sub-stockists to 6,000. Our original plan to scale up would have been over a three-year period.

In addition, we focused substantially on cost efficiency and productivity right across the business, including at our manufacturing facilities, supply chain and marketing expenses. We have identified a set of 35 cost-effective programmes, which are monitored on a monthly basis and delivering excellent results. Would we have done that even if there were no fear of recession, but the urgency may not have been as much as it is now.

In addition to distribution reach, we have focused strongly on building our brands. Our advertising & promotion investments have gone up by 50% in the first half. Godrej Consumer Products has reported strong revenue and profit growth despite the challenges in the macro environment. The benefits of our thrust on enhancing our presence in smaller towns and rural areas are already visible.

Both toilet soap and hair colour categories have shown healthy growth, combined with encouraging improvement in marketshare. We are the second-largest soap player in the country with three strong brands, namely, Godrej No 1, Cinthol and Fairglow. Godrej No 1 is now a Rs 500-crore brand and is a leading brand in north India (by value and volume). In hair colour, we have consistently been market leaders.

The key learning is that putting the consumer and customer at the centre of what we do is critical for growth. For our brands in the soaps and hair care categories, we rolled out special schemes targeted at trade and customers. For instance, we had an attractive consumer offer on our Cinthol Fresh Lime and Aqua variants wherein consumers could avail 20% extra free during the festive season.

Cinthol has seen a good increase in sales under the offer. Rural revenues have grown from 38% to 41% (according to Nielsen for the period April-October for 2008 and 2009). Rural share of soaps has moved up by 130 basis points and the hair colour share is up 300 basis points to 44%. We do not share guidance and, therefore, cannot divulge how much the company intends to grow by 2010. The key reasons for this growth are: stronger brands fed by great innovation; distribution expansion, especially in rural India; higher investments behind brands; and improved processes.

Godrej Consumer Products has successfully launched several new products such as Cinthol Fresh Aqua soap, Cinthol Deo Spray new variants Unleash and Rainstorm, Godrej No1 lime & aloe vera variant, Godrej No 1 moisturising soap and relaunched Nupur mehendi.

We have received great consumer response for our launches. Godrej No 1s lime & aloe vera variant received an overwhelming response and the recently launched milk cream & almond moisturising soap for naturally soft skin during the winter season is another example of innovation based on consumer insight.