Zydus Wellness: Leveraging FMCG Trends To Turn Around Tables Price-pack architecture, e-commerce, Internet first brands and increased penetration in smaller pockets, are the current focus of the company

If you are a 90s kid, the jingle "I'm Complan Boy-Girl", must be etched on your memory. A decade ago, Complan's market share, in the overall malt-based beverage category, was in the double-digit which dropped to single digit and the brand's value took a toll. What was to be blamed? Frequent change of hands and formulations. The brand was under the GSK portfolio and then went to Kraft Heinz. In 2019, Zydus Wellness acquired Heinz India and took the challenge to turn around brands such as Complan, Glucon D and Nycil into high performing FMCG powerhouse.

Upping the ante

In 2019 when Zydus Wellness decided to acquire Heinz India, it seemed a non-conformist decision: The HFD (health foods drinks) category was already slowing down and the brand was losing its share. Tarun Arora, the CEO had an insurmountable task ahead of him, "We were taking on a double responsibility of reviving the brand to recover growth against a tide which was already slowing down," Arora explained.

Over the years, the market dynamics changed with the inception of COVID-19. "In the last few years, we are in the right space because nutrition is going to gain momentum. The opportunities in the sector have increased than the previous years as people are more health conscious," he said. The current market trend indicates no such shift in Complan's market share as the entire HFD category is facing its set of challenges, however, the CEO is bullish on growth, "During the peak waves of the pandemic, the health drink segment witnessed a spike in consumption, post that there is a slump in demand. We saw very high double digit growth during COVID-19 and the category slowed down after that as it began to balance the bases."

Complan's current market share stands at 4.5 per cent. The company is now focusing on innovations to focus on portfolio diversification and expansion with an aim to recruit new customers through differentiated propositions supported by strong go-to- market (GTM) strategy.

Glucon D, which is currently the company's largest brand, Sugar Free and Nycil, have a majority market share of 60 per cent, 96 per cent and 35 per cent respectively. The personal care brand Everyuth Naturals is divided among the scrub and peel-off range which lead the market and its cleanser has an overall fifth position in India.

One of the biggest benefits of acquisition has been the direct distribution: the company has increased its direct reach to 6 lakh outlets from the 2.5 lakh outlets earlier and all its brands are available in about 2.9 million outlets currently. Further, it has plans to take it to 3.5 million stores.

Restructuring with innovations

The company is focused on driving the category growth, winning in competitive markets, building relevance to new age consumers and navigating challenges. Double digit growth is fuelled by consistent volume jump, wide portfolio and focused B2B, B2C teams with support from increasing penetration of digital media, e-com channel activations and consumer sampling initiatives.

Rural distribution continues to be an opportunity for growth and currently contributes to 50 per cent of total stores presence. Over the last few years, the brands have witnessed 25-30 per cent increased penetration in small population towns, which are access points to rural and Tier III, IV towns. Glucon D and Nycil are substantially more rural brands – one of the key drivers in smaller pockets have been sachetization of products – which stands at 25 per cent of overall sales.

"Sachets are not our core market strategy, still we participate because it drives growth in smaller regions. Another reason for our volumes to shoot up in the last one year is different price points and our pack price architecture which lends itself into deeper penetration. Similarly, in the higher end of the market, e-commerce is driving growth," Arora explained. E-commerce contributes to almost 9 per cent of the company's overall revenue and sales from Internet first brands are a substantial part.
source: NielsenIQ

The roadmap ahead

The company has manufacturing direct units in Ahmedabad, Aligarh and Sikkim; and around five third party facilities in India. Internationally it has presence in Bangladesh, Oman and New Zealand. "We are fully capacitated and have no plans to increase manufacturing units in India, however, as we have new product portfolios, from a third party perspective, we may look at expansion," the CEO added.

In terms of international business, the company is focusing on SAARC, MEA and SEA and suitable innovations to grow them further, with an eye on bolt-on acquisitions at the right time.

Compared with the last five to six years, the company is at the top of its market share and taking the growth momentum further in 2024, Zydus Wellness is concentrating on getting back to high double digit growths. "We are seeing some green shoots of recovery. Inflation is ebbing and hoping to deliver better value to consumers," he said.