RP-Sanjiv Goenka Group is looking to build a ₹10,000-crore worth FMCG business in the next five years.

In an interview with BusinessLine , Suhail Sameer, CEO of the FMCG business, RP-Sanjiv Goenka Group, spoke about the company’s plans, need for the brands to have a differentiated proposition to woo the new-age consumers and opportunities for inorganic growth. Excerpts :

Is inorganic growth part of your strategy for a ₹10,000-crore FMCG business?

We are open to acquisitions and strategic partnerships, and are exploring opportunities. This will be in categories other than snacks. In snacks, we have already done the tough part, which is to build a strong brand with Too Yumm! Though an acquisition would help, our plans are not contingent on them. It is always tough to predict if and when we would find the right opportunity.

Factors such as consumers’ shift towards branded products, higher disposable incomes and increased FMCG penetration and premiumisation, are fuelling the growth of the sector. And, we want to build a large FMCG business. We want to look at many categories and figure out ways or propositions to disrupt them.

What is the overall turnover of the FMCG business combining the two snacks brand — Too Yumm! and Evita which you acquired in 2017? When do you think the FMCG business will become profitable?

We have had a good year, and have more than doubled our FMCG revenues.

Too Yumm! has grown around 6x from a smaller base. Evita too has delivered a strong growth. Our ambition is to become profitable in each of the categories that we enter within 3-5 years.

How has brand Too Yumm! performed?

FY2018-19 was the first full commercial year for the brand. We started with the launch of ‘new to the market’ healthier products (like Foxnuts) so that a differentiated brand gets established. Now, we are deepening our focus on the core product segments in the snacking space by launching innovative offerings (like Karare). Customer off-take has been very good. There is now greater brand awareness, especially in the metros and Tier-1 cities, since we launched in Tier-2 markets only mid last year.

Having a fitness icon like Virat Kohli as Brand Ambassador also helped. We were also very clear from the start that consumers choose snacks based on taste, hence, the approach was built around offering consumers incredibly tasty products, which also happen to be healthy.

What are your plans for Too Yumm!?

While we will expand the brand’s presence to some additional towns, the focus this year will be on deepening the penetration in the existing cities. We are today available in 2.5 lakh outlets in the country. We are in the middle of launching the ₹5 price point, which is crucial in the snacking business. We believe this and further investments in brand building will help us double the distribution of the brand.

We will optimise the product and flavour availability at a regional level. We will also focus on restricting the number of flavour variants in a city to 12-13 SKUs. We are not exactly cutting down on variants, but focussing on delivering products better attuned to the regional taste profile of consumers.

Will you look at launching new products within the snacks business this year ?

We are working on new products in the snacks space for Too Yumm! While existing products have significant potential to be scaled up, we will also look to introduce 2-3 new products this year, which will help us address gaps in our product portfolio.

We are in advanced stages of development, and will be launching the first set of products around mid-FY2020.

Which are the other categories that you are looking at for expansion?

There is potential to extend brand Too Yumm! to other categories within the food space, as long as its proposition is not compromised. So if a new category in the food space could be launched with a healthier proposition, then it could be an extension of the Too Yumm! If not, then we would look at creating a new brand.

We are evaluating many categories across food and non-food. We are crafting consumer propositions which we think can work, and testing them with historical data, trends and consumer discussions. It is too soon to talk about which categories we want to fast-track.

Is there a concern regarding muted consumer sentiments?

I think there has been a bit of slowdown in consumer spending in both urban and rural centres across discretionary spend categories due to uncertainties such as liquidity slowdown, elections and forecasts of a sub-par monsoon.

But we believe this is temporary and we will start seeing signs of a revival by May-June.