Marico to enter premium segment with Saffola

Purvita Chatterjee Mumbai | Updated on January 12, 2018

Saugata Gupta, MD & CEO, Marico

May consider blended olive oil to compete with olive, canola oil brands

After a muted third quarter due to demonetisation, Marico is hoping to get better margins by making an entry into the super premium edible oil segment under Saffola.

There is a possibility of creating a blended olive oil variant in the franchise to compete with olive and canola oil brands which have eaten into its shares.

“We are looking at creating a super premium extension for Saffola and there can always be blends with olive oil. We have to plug the leaks since we have been losing out to olive and canola oil,” said Saugata Gupta, MD & CEO, Marico, during the third quarter analyst meet.

But this will not be the first time that Saffola is planning an entry into the olive oil category. It had introduced an extra virgin oil under its franchise in early 2000, which was subsequently withdrawn.

But Saffola, with a 65 per cent share, has basically been a blended oil with variants like Gold, Activ, Tasty Blend and Total (with rice bran and safflower), being a major part of its blends.

According to Marico, edible oil has not been impacted by demonetisation and continues to grow as the Saffola refined edible oils franchise has been growing at 6 per cent in volume during the third quarter. “The near term outlook for this franchise is positive with double digit growth prospect. Saffola has been losing out in the super premium segment and will focus on its ability to innovate. It has been a muted quarter but we are hopeful of doubling its performance,’’ he added.

Coconut oil

While Saffola is expected to cater to the super premium segment, Marico is targeting the bottom of the pyramid with its coconut oil franchise under Parachute.

Since coconut oil is also used as an edible oil, Marico may seek opportunities of getting virgin coconut oil into the country. “Coconut oil is a super food and getting virgin coconut in India is an opportunity,’’ added Gupta.

Besides Parachute has recently extended its franchise as a ₹1 sachet for Parachute Advanced Jasmine and an aloe vera variant at the premium end.

Considering the average market price of copra was up by 17 per cent during the quarter but down by 5 per cent on a year-on-year (YOY) basis, there is expected to be further price increases for Parachute.

The FMCG company is expected to take a call on Parachute’s pricing.

“We got the pricing on Parachute wrong in the second quarter and will soon take an attractive pricing call,’’ he added.

According to Abneesh Roy, Research Analyst, Edelweiss Securities, “Marico will see pick up in growth led by the pricing power of Parachute, recovery of growth in its youth portfolio and international business led by Bangladesh.”

Published on February 08, 2017

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