Marico ramps up food play, sets Rs 850-cr revenue target

Identifying right spaces for growth critical: Analysts

marico, industry news
Experts say that with high competition in the segment, identifying the right spaces for growth is critical.

Consumer goods major Marico has set itself a topline target of over Rs 850 crore in the food business in the current financial year (FY24), the company said in its latest earnings call, as it eyes fast-growing spaces in the category.

The company closed FY23 with a topline of nearly Rs 600 crore in the food segment, which has been a key pillar for Marico in its diversification exercise over the last few years. The company counts Parachute and Saffola among its key brands.

While Parachute is a hair oil brand, Saffola has several products in the edible oil and food categories such as oats, honey, noodles, soya chunks, peanut butter and munchies. The push into the food segment began a few years ago with masala oats, which is a category leader, sector experts said.

“The food segment grew 18% in Q4 (of FY23),” Saugata Gupta, MD & CEO, Marico, said in the call with investors on Friday. “Saffola Oats continued to anchor the growth as it maintained its leadership position in the category with a 43% value market share. Newer offerings such as Honey, Soya Chunks, Peanut Butter, Munchiez and Mayonnaise witnessed healthy traction. We expect the franchise to close above the Rs 850-crore revenue mark in FY24,” he said.

Experts say that with high competition in the segment, identifying the right spaces for growth is critical.

“Food is a crowded market with small and large players vying for attention. While Marico is looking at spaces that can give it scale over time, there is no stopping competitive intensity. That is the challenge,” Kaustubh Pawaskar, deputy vice-president, fundamental research, Sharekhan, said.

Marico says that competitive intensity is not a concern, since there is enough headroom for growth in the food business in India with rapid urbanisation, higher disposable incomes and the need for quick meals owing to limited time available to consumers.

“People are also looking for healthier meal options. We want to replicate the journey in segments such as masala oats where we have grown through value addition in categories such as soya chunks, munchies etc,” Gupta said on the call.

The introduction of Saffola Soya Bhurji a few months ago, for instance, is part of this strategy, experts said, where the company introduced value-added soya products, as against launching plain Soya Nuggets, which is a commoditised segment.

“The opportunity in soya is to convert it into a snacking option from being a main meal,” analysts at brokerage ICICI Direct said. Gupta had said earlier that soya chunks had the potential to touch `100 crore in revenue, given the runway for growth in plant-based protein products.

The company is also expected to maintain its momentum in terms of food launches in FY24, much like it did in FY23, analysts said, targeting three to four new product launches a quarter.

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First published on: 09-05-2023 at 02:15 IST