Fast-moving consumer goods (FMCG) major Marico, best-known for Saffola and Parachute, announced the acquisition of snack brand 4700BC a day before its third-quarter results this week. The company’s December quarter numbers a day later were strong, led by an underlying volume growth of 8% in the India market and 21% constant currency growth in international markets.
In this interview with Viveat Susan Pinto, Marico’s MD & CEO Saugata Gupta spells out his priorities for the firm including his revenue expectations from 4700BC. Excerpts:
1) For a company playing in healthy foods, what made you consider 4700BC, best-known for conventional snacking products such as popcorn?
The acquisition of 4700BC is a strategic step towards significantly expanding the total addressable market (TAM) of our food business. While our existing Foods portfolio – Saffola, True Elements and Plix – has a strong presence in health and wellness space, we saw a clear opportunity to build a premium gourmet snacking proposition.
In-home gourmet snacking is emerging as a strong trend, particularly in affluent homes and 4700BC fits seamlessly into this space. It is a strong brand with good online, offline and institutional presence. Besides popcorn, the portfolio spans popped chips, crunchy corn, makhanas and nachos, giving us multiple avenues for growth.
We plan to ramp up its presence across channels and product segments. Above all, we remain confident about 4700BC’s potential to strengthen our foothold in snacking, and we aspire to scale it into a Rs 500-crore brand in the next three years.
2) While foods and digital-first brands remain key levers in Marico’s diversification agenda, how are you addressing persistent inflation challenges in Parachute, your biggest brand?
Copra prices have corrected 30% from its highs and are likely to exhibit a downward bias in the months ahead. Parachute has continued to demonstrate strong resilience, particularly during the last two quarters even after a 60% price hike.
While reported volumes declined marginally by 1%, the underlying volume, after adjusting for ml-age reduction, grew by 2%, highlighting the brand’s strong pricing power and enduring consumer loyalty. Revenue growth for Parachute stood at a robust 50% in Q3. As commodity prices soften, we will continue to evaluate opportunities to pass on benefits to consumers.
We remain optimistic about a gradual recovery in volumes for Parachute over the course of the next year, supported by easing inflation, equity of the brand and our strong distribution capabilities.
3) Value-added hair oils have been the quiet performer for Marico, even as your foods business hogs much of the limelight. What is aiding growth in this segment, which gives Marico 18% of its India revenue?
Value-added hair oils (VAHO) delivered a stellar quarter in Q3, recording 29% value growth. The portfolio, led by brands such as Parachute Advansed Jasmine, Nihar and Hair & Care, gained 170 bps in value market share on a moving annual total (MAT) basis, reaching an all-time high of 30%. We remain confident of sustaining this double-digit growth trajectory in the near and medium term.
A few quarters ago, we consciously shifted our focus from excessive reliance on the entry-level price-point packs and trade spends to driving meaningful consumer benefits such as nourishment, problem solving and styling. This has helped broaden participation in hair oils category and build long-term growth.
VAHO has also benefitted from Project Setu, which is our direct distribution initiative. Direct distribution has enabled us to push deeper assortment penetration at the store level. We remain committed to investing in VAHO and strengthening this portfolio further.
For instance, we aim to enhance our presence in the hair fall segment, where premiumisation presents a compelling future growth opportunity.
4) Marico has built a strong playbook when it comes to D2C acquisitions. What is working for you?
Our approach has been to create a distinct operating environment in which digital-first brands can thrive. We understand that the business models of D2C brands are fundamentally different from legacy FMCG companies. Typically, we acquire a majority stake while allowing the founders to continue leading the business for three to four years.
This partnership model enables mutual learning where founders benefit from Marico’s scale, capabilities and ecosystem, while we gain insights into agile, consumer-first digital businesses. Importantly, we believe that growth cannot be engineered through ownership alone – founders must have the freedom to operate and innovate.
Preserving entrepreneurial independence is a critical success factor in our D2C acquisition strategy.
5) What are your expectations from the upcoming budget for the FMCG sector?
We have seen several initiatives in the past year to spur consumption. This includes the income tax relief, easing of interest rates and GST rationalisation. India will continue to be one of the major fastest-growing economies in the world.
Looking ahead, sustained investment in infrastructure and private capex, which leads to job creation, along with controlled inflation, will be key drivers of FMCG growth. These structural factors provide a strong foundation for a gradual and durable recovery in consumption demand.