The COVID-19 pandemic has changed the way Indians consume products. As home takes a centre stage with consumers staying indoors, the at-home consumption of foods has risen, while the need to groom has declined.
There is also growing health-consciousness among people, which has led to the emergence of several new product categories such as vegetable washes. Over the last year, FMCG companies have been on their toes to tap these trends.
Jyothy Laboratories, too, has been impacted by these trends. The company has seen an increase in demand for its dishwashing brands such as Pril and EXO, while the sales of post-wash fabric care products such as Ujala and have declined.
The company on Tuesday while reporting its earnings for the fourth quarter ended March, said that it witnessed double-digit quarter-on-quarter growth across categories such as personal care, household insecticides, dishwashing, and fabric care (main wash). Jyothy Labs reported a 2.59 percent rise in consolidated net profit at Rs 27.28 crore for the March quarter of the last fiscal year, on account of the exceptional expense of Rs 23.5 crore. It had posted a net profit of Rs 26.59 crore in January-March 2019-20. Revenue from operations was 26 percent higher at Rs 495.11 crore during the period under review as against Rs 393 crore in the same period a year ago.
Ullas Kamath, Joint MD, Jyothy Laboratories, in an interaction with Moneycontrol, talks about how the various consumption trends have impacted their business, performance of newly-launched products such as sanitisers, surface disinfectants and vegetable washes, channel strategy, and impact of the second wave of the pandemic. Edited excerpts:
How has the increased at-home consumption impacted your product portfolio and has it sustained?
Even since the last wave, we have seen an increase in demand for our dishwashing products such as Pril dishwashing liquid and Exo dish wash bar as consumers stayed at home and consumed more food at home. The category grew about 35% last quarter. We have positioned both these products as anti-bacterial so that also helps their growth. This trend should continue going forward also. Similarly, consumers are washing more clothes due to infection fear, taking more bath, which has helped our fabric care (main wash) where we have Henko detergent and Margo bathing soap. About 85% of our products are under the health and hygiene category and they are seeing double-digit growth across.
But how are your post-wash fabric care products faring, which contribute about 15% of your sales?
We have two post-wash products — Ujala Supreme and Ujala Crisp And Shine. Though Ujala Supreme is a fabric whitener and people use it out of habit for while clothes, we witnessed a 10-15 percent year-on-year reduction in the category. The schools have been closed for a large part of the year and the product is used for school uniforms and this has impacted the sales. But of late we have seen recovery. Ujala Crisp And Shine have been impacted as people are working from home and not going to the office. Its sales are down by about 50% year-on-year. Its sales will only recover as offices open. The impact of this on our overall sales is negligible as their contribution is small.
We think the demand for these products will continue to be impacted with the second wave but it won’t be as bad as last year. With increased focus on e-commerce and general trade, we will be able to get back some sales. Between the two products, Ujala Supreme will recover soon and Ujala Crisp And Shine will take time.
What kind of traction have you seen for newly launched products such as surface disinfectants, sanitsers, vegetable washes, and handwashes?
The surface cleaners are doing well but vegetable cleaners, being a new category, are yet to take off. Consumers, especially, housewives are reluctant to try out the products as they think that washing their vegetables with water is enough. There is also a tendency to think that the product has chemicals despite its ‘organic’ messaging. We have realised that it is a new category and adoption will take time.
We had a similar experience with sanitisers. The sales of sanitisers have seen a dip between the first wave and now. The consumers are not hoarding sanitisers anymore and using it only when needed so it is not a permanent stock-keeping unit at retail outlets. Handwash, however, has found a permanent place at homes.
What steps did you take to bring down your dependency on the struggling modern trade and canteen stores department (CSD), which contributed about 20% of your sales in pre-Covid times?
We shifted our focus to general trade and e-commerce. We already had the infrastructure in place in urban India so much effort was not needed in the region. CSD supplies to a different segment of customers who will buy from the channel because it offers cheaper products. That took some time for us to recover. Overall, we were able to manage the transition and since September, MT was back. However, as malls are closed now due to the lockdown, MT has been impacted a bit and we are again relying on kirana stores. The share of CSD and MT has come down to 15 percent.
What measures have you taken to ensure a steady supply of products in rural India?
Rural India has always brought big business for us and we understand the segment well as our brands like Ujala were initially rural-driven. With the pandemic, wholesalers which supply to rural India were majorly impacted. Their businesses were shut down to avoid crowds. Hence, we decided to appoint sub-stockists in the rural areas, who will act as a wholesaler and cover 8-10 villages. We currently have 5000 sub-stockists across the country, of which 500 were added just in the last quarter. Going ahead we plan to keep adding more of them.
Given that several states are under lockdown, are you seeing an impact on sales?
Our products are in the essentials category, so we do not expect an impact on our portfolio. The demand for our products exists and given their essential nature, consumers stock them during a crisis. Also, even a smaller retailer is selling products through WhatsApp today. Most of the stores are equipped with these kinds of facilities. We do not see any dip at this point.
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