Marico Is Making a Difference With Its Digital Chemistry
Marico is on a digital transformation journey and going ahead it aims to build a portfolio of at least three digital brands, either organically or inorganically, with a combined turnover of INR 450-500 crore by FY24
The toughest competitor of a legacy brand is perhaps the brand itself. Amid fierce competition in the market, the key challenge is to stay ahead of the curve and what other than innovation can fuel this growth? For a fast-moving consumer goods (FMCG) company such as Marico, adapting to the emerging trends such as digitization, premiumization, acquisition are the secret to its success.
On a day-to-day basis, the FMCG space witnesses new launches forming a cutting-edge competition in the sector. Brands have to constantly innovate in order to stay ahead in the market. Resorting to new-age Internet-born brands have helped companies boost growth.
"We have been driving growth through digitization and premiumizations. The jataa anti-hairfall oil and the onion oil are our specific digital only products. Apart from this, our premiumization at the core of food products, a slew of acquisitions of digital brands and investments in the male grooming and skincare, have been our levers of diversification," said Saugata Gupta, managing director & CEO, Marico Ltd.
The company is on a digital transformation journey and going ahead it aims to build a portfolio of at least three digital brands, either organically or inorganically, with a combined turnover of INR 450-500 crore by FY24. Recently, Marico included True Elements, Just Herbs and Beardo to its portfolio.
While, it may be fancy to look at how startups and corporate work hand in hand, the reality is more than what just meets the eye. Corporates and startups usually have a different operating style. As a corporate, Marico is tuned to the operating model of a large FMCG while its digital brands look at fragmentation, niche SKUs and faster velocity of innovation by taking small, but multiple bets. Taking cues from such scenarios, the company chose to keep the operating models of Marico and its digital brands such as Just Herbs and Beardo separate. These two businesses run on two parallel systems with separate key performance indicators, compensation and talent pool. With any acquisition, the first priority of Marico is to look at companies that align with its values and would therefore be a mutually beneficial relationship.
"I believe, what is important is we build brands which are based on long term sustainability, profitability and potential growth, as opposed to just top line growth and pathway to profitability," the MD added.
Talking about his learnings from the startup ecosystem, Gupta said, "The velocity of innovation, digital marketing and operating model in terms of speed, risk taking and culture, is completely different and should be lauded."
The world is now plagued by rising inflation throwing challenges ahead of companies. Corporates are adopting new routes to navigate through these tough times. Supply chain disruptions, significant inflation in commodities, inflation in shipping costs are some of the key challenges.
"A balance is required between managing costs and ensuring there is no supply chain disruption. Whenever there is high inflation, especially in food, people tend to down trade in FMCG. So, we have not been able to pass on the entire thing to the consumers or in certain cases, we have been able to, by getting into bridge or affordable pricing. We strongly believe that things will be easing out by the end of Q2."
The brand is also counting its blessings as 50 per cent of the company's commodities are not under high inflation circle as these products went through a high inflation cycle last year. "We are a bit fortunate!"
However, the company will continue to manage cost, protect its market share and absorb some of the margin hits over the short term.