FMCG major Marico Limited is going to focus on “in between healthy foods” and expand the Saffola brand of premium edible oils and oat as a part of its three-year growth strategy.
“I want to concentrate on food today which is planned food, which is aligned with our distribution,” said Saugata Gupta, Managing Director and Chief Executive Officer of Marico, in an interview with Livemint.
Marico, one of the India’s biggest packaged consumer goods companies, is best known for parachute oil and the Saffola brand. The company had been looking to expand products under the packaged goods category.
“The reason I am saying in-between healthy foods is because that is still a modern trade, metro distribution business, in line with Saffola,” Gupta told Livemint, adding consumers often indulge in these healthy planned meals around 11 am and 6 pm.
Gupta said he would like Marico to focus on expanding the Saffola brand of premium edible oils and oats to extend the food business.“Ultimately, Saffola is a brand that has a huge health connotation,” he said.
In May, Gupta had identified super-premium edible oils (Saffola Aura), male grooming (Set Wet, Beardo), and food (Saffola) as segments that would drive the company’s growth in the next three years.
The expansion strategy is limited to the above segments considering the Marico’s interest to expand only its core products.
“What are the kinds of food a Saffola consumer eats? You will have breakfast cereals, you will have healthy snacking. If I had gone into Saffola juices, hypothetically, it would have been a very good opportunity. But the moment five players get into a business, you can’t make money in it,” Gupta explained.
Gupta further clarified that Marico is not looking to build a mass foods business, which is driven by volume growth.
“I don’t see myself getting into either impulse food or commodities, say staples, because they need a different business model,” he told Livemint, adding that the biggest (sales) channels for snacking and impulse items are small local shops where Marico does not reach at the moment.
Market analysts feel that the selection of the area of expansion within the markets plays an important role.
“Several companies have been trying to crack the packaged foods market but no one has been able to become very big,” Sachin Bobade, senior analyst at Dolat Capital told Livemint.
“It all comes down to the category you pick in the food business,” Bobade added.
The personal care products and large scale food business follows two different business model. Amidst Marico’s expansion to food business, Gupta said, “It is not easy to run a personal care and large scale food business because they are two different business models.”
However, Marico’s plan is to take small steps in achieving the goal. “I don’t have an ambition of having a Rs 5,000 crore food business. Our first destination is to do Rs 200 crore, because Rs 200 crore is break-even,” Gupta added.
Source: http://bit.ly/2tYXH7U
