The FMCG firm expects the heightened focus on health and surge in sales of ready-to-cook and ready-to-eat products to drive growth in the coming years
The Covid-induced shift towards in-home cooking as well as ‘ready-to-cook’ and ‘ready-to-eat’ foods has played out well for Marico. The company now wants to set a bigger target for its food business in the coming years.
In a candid chat with Moneycontrol, Pawan Agrawal, Chief Financial Officer, Marico Ltd, said: “We aspire to take our food business to Rs 450-500 crore by FY22. It was just below Rs 200 crore until last year.” In FY21, the company expects its food business to reach about Rs 300-350 crore.
Marico sells its foods under the brand Saffola. Products under the brand include Saffola edible oil, oats, masala oats, FITTIFY Gourmet Hi-Protein Meal Soup, Hi-Protein Slim Meal Shake, and FITTIFY Gourmet Green Coffee.
In Q1 of FY21, Marico reported a 23.2 percent year-on-year increase in profit to Rs 388 crore. For Q2 (July-September) of this year, Agarwal said the company will register strong growth numbers as there has seen robust demand for edible oil, and Saffola ready-to-cook products and coconut oil.
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“Even for the rest of the year if things were not to drastically worsen from here from a pandemic standpoint, there is no reason why we should not be in the green,” Agrawal added.
Covid-19 has helped the ready-to-cook market to grow. A recent report by RedSeer consulting indicated that India's ready-to-cook market stood at Rs 2,100 crore in 2019 and, going by growth rates, assessed last year, it was poised to touch Rs 4,800 crore by 2024.
However, the consultancy believes that India may achieve this number much sooner as the Covid-19 outbreak has seen consumption of ready-to-eat surge in India.
Most supermarkets said they have witnessed around 60-70 percent growth in ready-to-eat products during the last six months.Advantage, Saffola
Saffola edible oil has been one of the biggest beneficiaries of in-home consumption during the Covid lockdown, Agrawal said.
Also, ready-to-cook products, a segment in which Saffola oats is present, have also registered robust growth in the last few months.
The company has delivered more than 40 percent growth in the oats segment during the lockdown and “very healthy double-digit” growth in Saffola oils, Agrawal said.
Conversion to branded products from loose non-branded products also helped the company to register strong growth.
“Saffola portfolio consisting of edible oils and foods which is about 25 percent of Indian business revenue and coconut oil which consists 40-45 percent are both positively placed in the current environment,” Agrawal said. However, he expressed concern that in the premium hair oil segment, the company has witnessed a downtrend.
Apart from the premium oil segment, discretionary categories like male grooming and premium hair and nourishment skincare have seen a slowdown in demand.
Agrawal feels premium categories will continue to face headwinds as overall disposable incomes have come down.
He said premium categories will see demand only when consumers start spending on these categories because overall disposable incomes have gone down and thus these will continue to face headwinds.Expanding e-commerce
The lockdown helped Marico’s e-commerce platform grow from 5 percent in FY20 to 7 percent in Q1 of FY21.
Agrawal feels e-commerce could gain as modern trade did not do well because of heightened physical distancing norms.
“During the lockdown, retailers were not open and therefore we tried out various delivery models and tied up with food aggregators who were allowed to deliver our products,” Agrawal said.
In April, Marico opened a Saffola Store on online food-ordering platforms Swiggy and Zomato to deliver essential food items to consumers during the lockdown period.
Under the partnership, Swiggy and Zomato delivered these essentials from the Marico portfolio at customers’ doorsteps.
Agrawal said looking at the high demand on ecommerce platforms, Marico will continue to invest in the online channel.“We are scaling up our direct-to-consumer platform as sales have been increasing with every passing month on the portal,” he added.