Fast moving consumer goods company Bajaj Corp is sharpening focus on rural areas to drive volumes and is also scouting for acquisitions in the personal care category, a company official has said.
Fast moving consumer goods company Bajaj Corp is sharpening the focus on rural areas to drive volumes and is also scouting for acquisitions in the personal care category, a company official has said. With a rural focused-Budget, the company expects demand from the hinterlands to revive in the upcoming financial year. The company has been witnessing tepid growth in the rural markets for the past many months. “Our growth is coming largely from urban markets now and the growth rate in rural markets is a lot slower since the past 18 months or so. This year our focus will be to both sustain urban growth at the same time also accelerate growth in rural markets,” Sandeep Verma, sales and marketing president at Bajaj Corp told PTI. He said the prof-rual budget coupled with a good monsoon should bring back rurla demand. “It is not as though rural market is degrowing, it is just not growing as fast as urban.
Till two years ago, rural was growing at 10 percentage points higher than the urban markets but it has now slowed down. We expect rural demand to come back in FY19.” Urban areas contribute 60 per cent of its sales and the rest come from the hinterlands. To drive rural sales, the Shishir Bajaj-led company is allocating a large portion of its marketing budget for. “We are spending a huge amount for rural marketing. We are over indexing rural to 1.5 times when it comes to TV spends and even some of the other above-the-line spends,” he said.
The Rs 800-crore company normally spends 16-18 per cent of revenue on advertising and marketing. Bajaj Corp, whose popular products in the hair oil segment include Bajaj Almond Drops, Bajaj Kailash Parbat and Bajaj Brahmi Amla, is also planning to amplify its lower priced products in the rural market. “Our Re 1 packet contributes to 40 per cent of our rural sales by volume. We are going to focus on it a lot more and drive its depth. Next financial year we would be launching Rs 10 almond oil in rural and semi-urban markets,” he said. It has also increased its direct coverage in rural areas by 20 per cent after GST by appointing more distributors, dirct sales agents.
The Rs 6,500-crore hair oil industry is growing at 7.5 per cent and Bajaj Corp aims to increase its market share to 16-16.5 per cent in FY19 from 14.5 per cent now. The company focuses on the Rs 4,000-crore valued added hair oil category that is growing at 13 per cent and would be launching a new hair oil next quarter. It recently launched Coco Jasmine hair oil in Maharashtra, making its foray into the coconut hair oil space. It had acquired NoMarks brand from Ozone Ayurvedics in 2013 to enter the skin-care and Verma said they are looking at inorganic growth opportunities in the personal-care segment.
“We are open to acquisitions in the personal care category if they have some sort of synergy with our distribution system,” he said, adding he expects NoMarks to become a Rs 100-crore brand in the next two years. “The anti-marks category us growing at 30 per cent and is a Rs 350-380 crore category. We will continue to invest very strongly in the NoMarks and we will have new products in the skincare segment under the NoMarks brand,” he said, adding in FY17 it contributed Rs 28 crore to the turnover.