Sudhir Sitapati joined Godrej Consumer Products Ltd (GCPL) as managing director and CEO last year, just as the world had begun to open up in a post-pandemic era. In a candid interview with Storyboard18, Sitapati tells us how he articulated his vision for GCPL back then and his approach towards marketing and brand building. Sitapati also shares how Godrej is democratizing categories and the secret to building enduring brands.
You joined the company in year two of a life-changing pandemic. How did you articulate your vision for GCPL at the time?
I think the vision that I articulated for GCPL was based on what I found Godrej to be good at and what I found it to be not so good at.
I found GCPL to be a very innovative company. I found it to be a frugal company. I, however, found it to be relatively poor in terms of category development or market development. And I found it to be more complex than necessary for a company of its size.
So what we basically said is that we need to grow this company at close to double digit volumes, right? That's what the potential of this company is. We said that strategy is market development and we will release the funds for market development by radically simplifying the organization. So that was the basic vision that I laid out to the company which is to focus on developing categories.
One of your key strategies is the democratization of categories through innovation and accessibility. Can you elaborate on that and is the launch of a ready-to-mix body wash a part of the plan to democratize categories?
The DNA of GCPL in terms of frugality and innovation is geared towards democratization and not premiumization.
Strategy is about making choices and the first big choice is really about democratization. It has to do with getting access packs. Now, if you take body wash as a category, we’re the number two player in India in the soaps category or the skin cleansing category. It is one of those categories that is very underdeveloped. In many other parts of the world it's a very large category. And our thesis for underdevelopment was that the category's pricing is not accessible. So this was certainly one of the levers for launching Godrej Magic body wash
What were the other levers? And will we see more of these launches and incentives for consumers coming up?
The big sort of parallel track for some time has really been our commitment to sustainability and ESG. GCPL is not the largest company in India, but it's always a top five in terms of sustainability and takes it very seriously. Reduction of plastics has been a big drive within GCPL and this innovation has the intersection of making body wash more accessible and by reducing plastic and energy footprint. They're not two independent things. I think that's the really interesting thing about this product, which is that it's not ecological and economical. It is ecological because it is economical. Because you remove plastic, because you remove the diesel that it takes to carry bottles of body wash into shops from factories, we've been able to get the economy right. I think in both these dimensions we will continue working because if we're about democratization, we've got to bring categories at the right price to consumers and we have a deep commitment to sustainability. So we're going to try and do this in a way that minimizes the footprint to the environment.
What are some of your key focus areas in terms of categories and markets?
GCPL is blessed to have three of our markets account for about 80 percent of our revenues, which is India, by far the largest market, Nigeria and Indonesia. We've actually got a very large global footprint or almost half our business is outside India and this is not from Indian exports. They're all independent businesses in those countries. These three are really the focus countries. The three categories that are the core of our business are household insecticide, hair colour and aircare. Hygiene is the emerging one that has a lot of potential which is where Magic body wash is. So this is a 3+1 - three is where we are today, and +1 is what we're trying to do with Magic body wash.
Let’s dial back to the point about sustainability. So sustainability is a bit of a buzzword these days at all major organizations. But we also know that sustainability is an essential operating principle for any organization striving for financial success. How are you driving the sustainability agenda at GCPL and what are the challenges to putting some of the strategies and philosophies in action?
GCPL along with a lot of companies has focused a lot on sustainability in its own operations. So, for instance, 30 percent of the energy we use is renewable. We've cut our emissions by 50 percent in the last decade. All our factories have targets on water usage. We don't send anything to the landfill. One of the targets for every factory manager is the environment friendliness of the operations. Now, what we're trying to do with Magic body wash is to move one step forward. Our own operating footprint is a fraction of the footprint of our consumers, and what consumers use with our products. That's where the real big impact can be.
So that is a big jump that GCPL is making and I certainly think Magic body wash is a unique product anywhere in the world because I've seen it, we've studied a lot of countries and products. We haven't seen a super concentrated product anywhere in the world at this kind of discount. We've seen green products at a premium where you make consumers pay a premium for being green conscious. But we haven't seen a green discount. The handwash which we launched a few years ago was a good proof of principle. But I think
if we can contribute to the idea of having a green discount, and sell cheaper products which are green, I think it would be a really big step in sustainability.
Are Indian consumers ready for that?
I think so. Indian consumers are both environmentally friendly and very conscious on the economy. I mean, I remember that my grandmother used to hang milk packets in her washing line. She would wash them, dry them and reuse them anytime somebody had to go out or to give something. So it was both environmentally friendly and economical. She needn't have done it. So I think it's very ingrained. Probably one of the reasons why Magic hand wash has worked in India is because consumers are both.
I think this can be a contribution because I know there's a lot of conversation going on in countries like the US on super concentration. I saw Target having products that were at a green premium. But dollar stores don't have green products. So this disrupts their whole thinking and says get to the belly of the market or, in fact, the bottom of the pyramid with green products.
What do you think is the secret to building future-ready homegrown brands and businesses that are built to last? What are the lessons younger Indian companies and brands can take away from legacy organizations like GCPL?
I think all companies that succeed, young or old, definitely have consumer focus and are, you know, solving unmet consumer needs. I don't think young companies have that much to learn from the older companies on that front because I think they do it very well. Older companies that have lasted for a long period like Godrej have value systems and commitment to the environment is an example of a value system that sometimes transcends profits and, in the long run, it pays off. So companies that last a long time almost always have very strong value systems ingrained in them. Second, you have to have a manic focus on cash and you have to pay for whatever you do. Your own investments have to be paid from your own pocket, in general, I would say.