With three digital-first brands already in its stable including True Elements and Pure Sense, Marico is working hard to grow its D2C portfolio, with a target to reach Rs 450-500 crore in revenue in FY24. To that end, the company would be strengthening its distribution capabilities and scaling up innovation this year, says Sanjay Mishra, COO, India, & CEO, new business, Marico. In an interview with Akanksha Nagar, Mishra discusses how Saffola became a Rs 2,000-crore brand and why he thinks the signs of rural slowdown are bottoming out.
Edited excerpts:
Please take us through the journey of Saffola and what is the next milestone the brand is eyeing.
This is an oil brand created with a sharp positioning — that of being good for your heart. Today it is synonymous with health and great taste. Saffola is in multiple categories now where it is seeing great successes. Our largest food offering oats is now the market leader. The brand saw a great start this year expanding into new categories including spreads, peanut butter, and mayonnaise. Our focus now will be to strengthen these and keep spreading ourselves through innovation.
In terms of the new offerings we have chosen categories that are large, have growth momentum behind them, and where we have the capabilities to create a product.
Health has always been a need gap in various food offerings and that was the reason why Saffola got its initial success. Today, a lot of people are moving into urban areas, and with increasing awareness, consumers are seeking healthy options.
The company has said premiumisation and digitisation are key planks of your growth strategy.
Marico is trying to chart its own digital transformation journey and it is doing so by creating brands in-house and also by acquiring brands. Since there is a premiumisation need and people are looking for quality products, our launches are across our portfolio. Saffola from being a single face for food for Marico, now has True Elements, which is a digital brand. But can Saffola per se do D2C? Yes, if there is a need but it is not the priority at the moment.
We are clear that digital brands will be an important part of our portfolio. In fact, we have three digital brands. For our digital-first portfolio, we have set a target of Rs 450-500 crore in revenue in FY24. We continue to explore opportunities as strategic investors to grow our D2C portfolio, focusing on the personal care and food categories.
Given the general inflationary trends, many brands have introduced smaller packs to woo the frugal consumer. What is your strategy for non-metro markets?
Rural consumption in the country has been stressed for the last three to four quarters. Further, events like the Ukraine-Russia war have caused high food inflation, which has led to a tightening of spendings and hence a lot of downtrading in the FMCG sector. But things are changing and my view today is that commodity-led inflation is moderating and there are signs of the rural slowdown bottoming out. My expectations are that food inflation will ease and consumers will have more disposable income to spend.
From our side, we will definitely keep passing on the benefits of the moderation of inflation to consumers; we will keep trying to give them more value in our products, be it by giving them additional choice, grammage — by taking a price cut — and through that we will remain focused on making sure that we are well penetrated in our consumer households. Urban growth, especially in foods, is still robust.
What steps are you taking to improve penetration in consumer households?
Saffola stands for health and taste, and in many people’s eyes it’s a premium brand. However, that should not be a reason for thinking that there is no demand for Saffola in rural markets. Although we are a dominant urban brand, we sell everywhere. The categories we are in get consumed by a large consumer cohort in India and thus we believe in being present across channels.
Today, e-commerce is a big part of our play and so is modern trade but general trade is possibly bigger than both put together. We have the right pack-price combo, which does sell in all channels. But depending on time and situation, we dial up one channel versus another through the pack-price combo. Offline continues to be bigger and it’ll be the dominant channel. Having said that, e-commerce is known as the channel of strength for Marico and we have built capabilities ahead of the curve.
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