Companies

General trade channels have made a comeback; distributors operating at 100% : Marico CFO

Abhishek Law Kolkata | Updated on July 12, 2020 Published on July 11, 2020

Vivek Karve, CFO, Marico

Home-grown FMCG company Marico is witnessing a recovery in domestic sales on the back of healthy traction of its food and edible oil brand Saffola and coconut oil brand Parachute. Personal care demand continues to be slow, says CFO Vivek Karve.

In an interview to BusinessLine, Karve talks about channel normalcy, buying trends, international operations, among others. Edited excerpts:

Has channel normalcy returned for Marico?

Most of the distributors are operating at 100 per cent levels or are fully into operations. General trade channels or the mom-and-pop stores have made a comeback as people are not willing to go to super/hyper markets. Rather, people are making trips to the neighborhood stores. The other channel that has benefited a lot is e-commerce or online.

In the initial days, the modern trade channels suffered because of social distancing issues. But, B2C channel is now coming back.

The wholesale channel has suffered a lot. My prognosis is that the wholesale channel will continue to suffer till the first half of this fiscal. In fact the traditional wholesale is slowly being taken over by the organized players now.

What has been the experience with new delivery channels, such as tie-ups with food aggregators? Are they long term scalable models?

We have been looking at new go-to-market models such as having telecaller facilities so that retailers can place their orders. Marico has also launched a consumer website where people can place their orders online. We prototyped Swiggy and Zomato. Some of them will succeed depending on the scalability and profitability. Some will not be viable in the long-run.

How is international business been doing?

We are trending at higher than 100 per cent of annual average monthly run rate (of sales).

Bangladesh has shown resilience. The Middle East and North Africa region is under a bit of stress because of macro economic conditions and also because of our portfolio there. For example, in Egypt we are into male grooming and styling so that has been witnessing some headwinds.

Vietnam was amongst the first countries that unlocked. We have male grooming and foods portfolio in this market. The foods portfolio has done better; while we are seeing good demand in male grooming category now.

Any buying trends you saw in domestic markets, apart from increasing demand in health and hygiene categories?

I don’t think we are out of a full-fledged lockdown. But in terms of trends, the first two-to-three months have seen premium personal care and male grooming – which is largely discretionary – go through some rough weather. In the hair oils, the mass portfolio has done extremely well. But, the premium hair nourishment brads like Hair & Care or Livon have been a bit under the weather. Saffola Edible Oil has grown YoY vis-à-vis last year; while Parachute has maintained the annual average monthly run rate from last year.

Do you see any consumer down-trading happening?

In Parachute, we enjoy a strong consumer trust and brand equity. So we should be able to accelerate and gain market share there. Saffola also is a trusted brand. Consumption will be better with people staying indoors. Our hypothesis is that there could be better customer acquisition for Saffola edible oils. We also have plans to expand Saffola foods portfolio over three to six months.

What is FY21’s strategy for VAHO (value added hair oils) and premium male grooming?

The premium end of VAHO and large part of male grooming are expected to be under stress this year therefore we may go slow on innovation. But, we will allow them to float. We may not invest aggressively on brand building here. Rather, we will re-prioritize our advertising spends towards Foods and Health and Hygiene.

Beardo as a brand is in the niche category and discretionary spend. How do you see its integration?

We have integrated the brand with the main company. Yes, it is discretionary category spend. But our attempts will be to keep growing the franchisee. We will follow a cautious approach on the brand building side.

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Published on July 11, 2020
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