As a leader and entrepreneur, it is imperative to stay ahead of the curve in the fast-paced digitisation that our economy is headed towards; especially post the pandemic.
By Malini Bhupta
Consumer companies have to transform and become more agile, if they want to remain relevant in the new normal. Marico’s Chairman Harsh Mariwala in a free-wheeling conversation with Malini Bhupta explains what’s in store. Edited Excerpts:
How do you see consumer companies change post the pandemic as behaviour patterns have changed?
Let me start with the opportunities the pandemic has thrown. Branded consumer companies which have immunity boosting products will see higher traction even post-pandemic. The other trend we see is the shift towards e-commerce. Prior to the pandemic, we were selling 3% of our products via the e-commerce route, which rose to 7% during the pandemic, and the way it is going it may go up to 10% within a year. Consumer companies will have to learn to deal with these e-commerce companies and once they have a critical mass there may be a squeeze on margins.
Consumer companies have not dealt with consumers directly and now direct to consumer is big and also a risk. How will D2C play out?
I want to first explain why D2C has done well. There are a lot of good entrepreneurs who have been able to identify consumer needs that were not satisfied by the larger FMCG companies. With the emergence of e-commerce, these brands can do digital marketing at a fraction of the cost compared to television or press. Today D2C brands account for 20% of FMCG sales.
I have a window of opportunity to tackle 20% of the overall FMCG distribution available to me through e-commerce and modern trade. At some point, these D2C brands will face headwinds and may be forced to sell out and that is where FMCG players would have the opportunity to acquire them like we have acquired a brand called Beardo.
Runaway inflation is a concern. Do you expect prices to correct?
Prices of copra have corrected after going up sharply. Edible oils too have seen some correction. It is difficult to predict prices as there are multiple reasons behind inflation in commodities. One of the reasons is liquidity. The other is a shift in commodity use like biofuels and it also depends on the crop.
You have been a great votary of innovation. What kind of innovations are needed today across sectors to solve problems?
I see a huge opportunity for innovation in the three large challenges we are facing as a country. The first is education because it is a challenge to set up so many schools in a country of our size. Can we use the technology and virtual route to teach our children? The second is in agriculture, our farmers are not following the right farming practices in terms of fertilisers and pesticides. And number three I would say healthcare is the other sector that can be hugely impacted in the pandemic because of technology. We also have started online consultations for Kaya from across the country who could not earlier come to big cities for consultations.
Digitisation has accelerated over the last one year. How will it impact consumer companies?
As a leader and entrepreneur, it is imperative to stay ahead of the curve in the fast-paced digitisation that our economy is headed towards; especially post the pandemic. I also run the ASCENT Foundation, a not-for-profit foundation to help upscale entrepreneurs. Now almost 800 entrepreneurs are actively associated with the foundation, and we use the digital route a lot to connect with them to mentor and do activities like huddles, workshops, and conclaves. This was a big help to entrepreneurs during the pandemic.
What made you write a book on your journey and your experiences?
When I stepped down as managing director, I had to plan what should I do with my time, I had to be occupied mentally and I reinvented myself in the last five years. One of the things on my mind was writing a book on my journey. The whole objective is not to sell or make any money out of it in fact, my journey had a lot of learnings and I felt I could share them to help entrepreneurs, professionals, students to learn. In my book ‘Harsh Realities’ I have also written about my failures, and I feel there’s nothing wrong with failing or failure but more importantly, what is the learning out of failure and how can you apply that in your subsequent journey.
How do you see Marico transforming in times to come?
The environment is changing, and companies need to look at opportunities and risks. The key thing is to identify which part of the organisation needs to transform. One area that we want Marico to transform is the product portfolio. We expect the overall Marcio turnover to touch Rs 10,000 crore by next year. We have a hair oil pillar, edible oil pillar, healthy foods pillar, and the last being international business.