Marico eyes Rs 450-500 crore from online-first personal care products by FY24

Marico in July bought a majority stake in direct-to-customer ayurvedic company Apcos Naturals, which makes hair and skin care products branded Just Herbs.

FMCG company Marico is eying a bigger online play, not just in foods but also in personal care, where it has a presence with Livon and Set Wet products.

CFO Pawan Agrawal said Marico plans to build a portfolio of four or five digital-first products over two-three years organically and inorganically, in addition to its existing brands.

“We are targeting about Rs 450-500 crore by FY24 through digital-first brands in the personal care and grooming category,” Agrawal told Moneycontrol. This will comprise about 5-6 percent of the company’s revenue.

The maker of Parachute coconut oil and Saffola cooking oil has been building a portfolio of online-first brands of late, especially in the personal care category. Earlier this year, it completed the acquisition of male grooming startup Beardo and in July it bought a majority stake in direct-to-customer ayurvedic company Apcos Naturals, which makes hair and skin care products branded Just Herbs.

Agrawal said the company plans to tap the online category through in-house brands such as Pure Sense and Coco Soul. The company had launched Coco Soul as a gourmet food brand but is repositioning it as a personal care and grooming brand now.

“Coconut is seen as an exotic ingredient in the West and we thought it can be used as one of the ingredients to develop exotic personal care products,” said Agrawal.

Beardo is on track to end this year with sales of  Rs 100 crore, the company said while reporting its first quarter results. Sale of Just Herbs products will clock Rs 100 crore in revenue in two-three years, Agrawal said.

The company is also working on scaling up Pure Sense and Coco Soul and introducing Beardo products in general trade stores and salons in a few cities. These products were to have been introduced in modern trade stores earlier, but the pandemic interrupted those plans. Currently, e-commerce contributes 8 percent to Marico’s overall business.

Ayurvedic foods

Marico marked its entry into the ayurvedic category last year by launching Saffola Honey and it extended its range with Saffola Arogyam Chyawan Amrut Awaleha in March this year.

According to the company, Saffola Honey’s market share in key modern trade chains has hit double-digits and consolidated above 25 percent in the e-commerce channel. Marico is now introducing the honey in 100 gram packs to get a footing in the general trade segment.

Its other bet in the ayurvedic segment, Saffola Arogyam Chyawan Amrut Awaleha, however, is yet to take off.

“It has not performed as we expected and we are re-working the mix and rejuvenating the brand. We are determined to stay put in this segment,” Agrawal said. “If we’ve been able to succeed in honey, in the immunity space, we believe that we could also succeed in this particular category as well.”

Marico aims to offer a differentiated chyawanprash product and because it has tweaked the formulations, which do not adhere to the Ministry of Ayush guidelines, the company calls the product Chyawan Amrut.

Agrawal told Moneycontrol earlier that Marico is targeting Rs 100 crore in revenue from honey by the end of the year. For its overall food business, including new products such as instant noodles Saffola Oodles and Saffola MealMaker Soya Chunks, the company is eying Rs 500 crore in revenue.

Price rise

Marico’s profit fell 6 percent to Rs 365 crore in Q1 of FY22 from Rs 388 crore in the year-ago period. Revenue climbed 31 percent to Rs 2,525 crore. The company reported revenue of Rs 1,925 crore in Q1 of FY21 as the country grappled with the first wave of the pandemic.

Rising costs for inputs such as copra, the dried coconut kernel from which coconut oil is extracted, have plagued the company for a few quarters, hurting the bottom line. Although the company increased prices of products such as Saffola cooking oil, the interventions could only partially alleviate the inflationary pressure, the company said in filings to the BSE.

“We definitely have seen some correction in copra prices, which did not get reflected in the first quarter. We expect the prices of copra to be rangebound going ahead, while for the entire year FY22 they will remain flat to marginally higher over last year,” said Agrawal.

Edible oil prices, he said, have been volatile and will remain uncertain in the near term but might taper off in six months.

ICICI Securities maintained its ‘add’ rating for Marico.

“While there was significant pressure on gross margins, we like its strategy of prioritising market share/volume growth (still maintaining 19 percent margin print),” ICICI Securities said. “Also, we like the distribution expansion plans in both urban (chemist channel) and rural (expanding footprint by another 25 percent).”