Marico plans to scale down investments in hygiene products

Abhishek Law Kolkata | Updated on February 23, 2021

Pawan Agrawal, CFO, Marico

FMCG major sees green shoots in foods, immunity and premium personal care segments

Home-grown FMCG major, Marico, will look to scale down investments in the hygiene segment and instead redirect them towards healthy foods, immunity and discretionary categories such as male grooming, premium hair nourishment and so on.

Offerings in the hygiene segment include sanitisers (under Mediker), disinfectant sprays (House and Travel Protect), vegetable wash (Veggie Clean) and fabric sanitisers (Revive), among others.

The move comes as discretionary categories are witnessing a revival in demand while there has been a visible slowdown in sale of sanitisers, disinfectant sprays and allied products following fewer incidences of new Covid infections and vaccinations going-up.

Also read: As Indian instant noodles market hots up, Marico makes entry with Saffola Oodles

According to Pawan Agrawal, Chief Financial Officer, Marico Ltd, discretionary categories saw a “strong sequential recovery post a very subdued Q1FY21”, but demand in the hygiene category has been “moderating”. In the light of subdued demand in hygiene categories, post the initial surge, Marico will consciously withdraw investments and “defocus from this segment”.

“It is not like we have withdrawn the products or exited the segment. We will cater to existing demand, but not push forth new offerings. It is too cluttered and we believe only the brands with a strong legacy in hygiene space have a greater right to win,” Agrawal told BusinessLine.

“We would rather channelise investments towards foods, immunity and discretionary category (in premium personal care) that are seeing green shoots of recovery, and offer a sustainable growth potential over the medium term,” he added.

Premium personal care

The premium personal care portfolio — comprising premium hair nourishment, male grooming and premium skin care — witnessed “sequential recovery” but “de-grew by a modest 4 per cent in volume terms YoY”.

According to Agrawal, Marico is building the premium personal care portfolios into “growth engines of the future”.

For instance, Beardo – a male grooming start-up that the company acquired and subsequently integrated into its fold – is “tracking healthily” with demand recovering. The business should touch a run rate (expected sales on a 12 monthly basis) of close to ₹100 crore in the next year.

“The premium personal care segment is expected to deliver healthy double digit value growth over the medium term. In the near term, we expect the demand in the segment to gradually revert to pre-Covid levels,” he said.

Other offerings

Marico’s Parachute Coconut Oil (Rigids) posted an 8 per cent volume growth during the December quarter (Q3FY21) while the Value Added Hair Oils (VAHO) segment registered volume growth of 21 per cent driven by double-digit volume growth across all brands in the portfolio.

“Nihar Naturals Shanti Amla Badam sustained its growth momentum across markets; and Parachute Advansed Aloe Vera Enriched Coconut Hair Oil continued to gain salience. The recently-launched Nihar Naturals Almond also saw an encouraging response,” the company had said during its earnings call.

Over the medium term, Marico aims to build on to the growth by “aggressively participating at the bottom of the pyramid”, grow in the mid segment “through pricing & brand renovation”, and gain market share in the premium segment – where it is “relatively under-represented” – through brand building and innovations, the company management had said during a recent analyst call.

Food continues to be another big bet for the company that will see “continued investments and innovations”. The launch of instant noodles (Oodles) under Saffola was its latest offering, after immunity boosting kadhas, turmeric milk, chyawanprash and honey. The company aims to clock ₹450-500 crore revenue in its foods business by FY22, on the back of continued innovation.

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Published on February 23, 2021
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