Marico, one of the leading home-grown fast-moving consumer goods (FMCG) firms, reveals in its latest annual report an ambitious projection for its food business. Anticipating significant growth, the company envisions its food division scaling up to INR 850 crore in the fiscal year 2023-24.
The report emphasizes that Marico’s master brand, Saffola, which offers a variety of healthier food options, has successfully widened its total potential market to more than INR 10,000 crore. This expansion was achieved by introducing a diverse range of nutritious value-added products.
Marico aims to boost its revenue from the foods portfolio to INR 850 crore by the fiscal year 2024, following a successful performance of nearly INR 600 crore in the fiscal year 2022-23. In recent years, Marico has made significant strides in the food segment, diversifying its offerings with a range of products under the Saffola Munchie brand. This expansion includes oats, honey, noodles, peanut butter, mayonnaise, and ready-to-eat healthy snacks.
The company places great emphasis on several key factors to drive the growth of its food business. These include unwavering focus on market development, brand building, supply chain excellence, distribution expansion, and sustained innovation.
Marico has experienced a significant transformation in its domestic revenue composition, thanks to its innovative portfolios in the areas of food, premium personal care, and digital-first segments. In FY20, these portfolios accounted for only 8% of their domestic revenues. However, by FY23, they have successfully grown to represent 15% of the company’s domestic revenues. Looking ahead, Marico anticipates a further expansion, with the share of these portfolios projected to reach 20% of domestic revenues by FY24.
Marico has set its sights on expanding its premium personal care offerings, with the ambitious goal of achieving a Compound Annual Growth Rate (CAGR) surpassing 20%. This growth will be driven by a combination of innovative product development, deep market insights, and leveraging the company’s robust brand equity.
The existing lineup of digitally-focused brands within the company is displaying robust growth and is projected to achieve a run-rate of INR 400 crore by the end of FY24.
Marico recorded a consolidated turnover of INR 9,764 crore for the fiscal year concluding on March 31, 2023. Within this, its domestic business accounted for INR 7,351 crore in turnover, showing a slight increase compared to the preceding year. However, the volume growth remained modest at 1%, primarily due to ongoing retail inflation, which had an impact on consumption patterns, especially in rural regions.
Despite the challenges posed by inflation, Marico’s India business displayed resilience, achieving an operating margin of 19.8%, surpassing the previous year’s performance. This improvement was attributed to a combination of factors, including a decline in key commodity prices and a favorable mix of products within the portfolio.
In Marico’s domestic operations, the Parachute brand of coconut oil accounted for 37% of the revenue, while the Saffola franchise, which offers high-quality refined edible oils, contributed 23% to the overall revenue.
During the fiscal year 2023, the food sector experienced impressive growth, with a notable 20% increase in revenue, approaching the significant milestone of INR 600 crore. This growth can be attributed to the exceptional performance of the core oats franchises and the growing popularity of newly introduced products throughout the year.
Marico possesses a vast network that caters to 5.6 million outlets via 900 distributors and 7,500 stockists.
During his speech to shareholders, Saugata Gupta, the CEO and MD of Marico, recognized a decline in general trade as a result of consumption challenges faced by rural India and lower-middle-income segments in urban areas. He emphasized the changing patterns of consumer behavior, indicating a growing preference for alternative channels like modern trade and e-commerce, especially in urban regions.
Marico is actively investing in the development of a comprehensive distribution strategy that encompasses multiple channels, embraces agility, and relies on data-driven insights. The company’s objective is to enhance its market position in various channels by forming strategic alliances, implementing channel-specific product strategies, and fostering customer engagement. Marico recognizes the immense opportunities present in the Indian market and firmly believes that both traditional and alternative channels can coexist and thrive in a mutually beneficial manner.
In order to extend its influence in rural areas, Marico intends to broaden its network of stockists and strengthen its presence in urban regions through targeted efforts aimed at chemists, cosmetics stores, and specialty food outlets.
Gupta highlighted the strategic importance of Marico’s dedicated foods Go-To-Market strategy, placing it as a top priority. This strategy is centered around targeting premium specialty food stores, with the objective of achieving rapid growth in the food business by increasing the availability of a wider range of products, ensuring effective in-store execution, and engaging shoppers effectively. The foods Go-To-Market approach has successfully expanded to more than 20 cities and is actively working towards fortifying its network and enhancing distribution coverage.
